Iowa Dept. of Revenue publishes 2022 individual tax brackets, interest rates and deductions

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DES MOINES, Iowa – The Iowa Department of Revenue has finalized personal income tax brackets and standard personal income tax deduction amounts for the 2022 tax year (applicable taxes due in 2023) and the 2022 interest rate, which the agency charges for late payments.

Interest rate

As of January 1, 2022, the interest rate for overdue taxpayers will be:

  • 5.0% per year
  • 0.4% monthly
  • 0.013699% per day

Section 421.7 of the Iowa Code specifies the department’s procedures for calculating annual and monthly interest rates. The annual rate is based on the average monthly prime rate over the previous twelve month period, October through September. Iowa law requires that this average be rounded to the nearest whole percentage and that two percentage points be added. The prime rate has averaged 3.25% over the past twelve months. Rounded to the nearest percent, this average is 3.0 percent. Adding two percentage points gives an annual rate of 5.0 percent. The monthly rate is the annual rate divided by 12, rounded to the nearest tenth of a percentage point. The daily rate for 2022 is the annual rate divided by 365.

Standard personal income tax deductions

The standard deductions from personal income tax for the 2022 tax year are:

  • $ 2,210 for single taxpayers
  • $ 2,210 for married taxpayers filing separately
  • $ 5,450 for married taxpayers declaring jointly

Personal income tax brackets

The tax brackets for the 2022 tax year are as follows:

ADVERTISING

  • 0.33% for taxable income between $ 0 and $ 1,743
  • $ 5.75 + 0.67% for taxable income between $ 1,743 and $ 3,486
  • $ 17.43 + 2.25% for taxable income between $ 3,486 and $ 6,972
  • $ 95.87 + 4.14% for taxable income between $ 6,972 and $ 15,687
  • $ 456.67 + 5.63% for taxable income between $ 15,687 and $ 26,145
  • $ 1,045.46 + 5.96% for taxable income between $ 26,145 and $ 34,860
  • $ 1,564.87 + 6.25% for taxable income between $ 34,860 and $ 52,290
  • $ 2,654.25 + 7.44% for taxable income between $ 52,290 and $ 78,435
  • $ 4,599.44 + 8.53% for taxable income over $ 78,435

Iowa law provides for indexation of personal income tax brackets and standard deduction amounts. These tax characteristics are determined each year by applying inflation factors or by “indexing” the amounts for the previous year. Indexation of standard deductions is covered by Sections 422.9 and 422.21 of the Iowa Code. Section 422.5 of the Iowa Code details the indexing of Iowa tax brackets. Indexation is aimed at preventing taxpayers from paying higher income taxes solely because of inflation. Sections 422.4 of the Iowa Code define the procedures for calculating inflation factors.


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