DES MOINES, IOWA (October 13, 2021) – The Iowa Department of Revenue has finalized individual income-tax brackets and individual income-tax standard deduction-amounts for the 2022 tax-year (applicable for taxes due in 2023) and the 2022 interest-rate, which the agency charges for overdue payments.
Interest Rates
Starting January 1, 2022, the interest rate for taxpayers with overdue payments will be:
* 5.0% annually
* 0.4% monthly
* 0.013699% daily
Iowa Code Section 421.7 specifies the procedures for calculating the Department’s annual and monthly interest rates. The annual rate is based on the average monthly prime rate during the preceding twelve-month period, October through September. Iowa law requires that this average be rounded to the nearest whole percent and two percentage points to be added to it. The prime rate averaged 3.25 percent over the past twelve months. Rounded to the nearest whole percent, this average is three percent. Adding two percentage points results in the annual rate of five percent. The monthly rate is the annual rate divided by twelve, rounded to the nearest one-tenth of a percentage point. The daily rate for 2022 is the annual rate divided by 365.
Individual Income Tax Standard Deductions
The tax year 2022 individual income tax standard deductions are:
* $2,210 for single tax-payers
* $2,210 for married tax-payers filing separately
* $5,450 for married tax-payers filing jointly
Individual Income Tax Brackets
Tax year 2022 income tax brackets are shown in the table below.
Taxable Income | Tax
Over; But Not Over | Tax Rate; Of Excess Over
$0; $1,743 | $0.00; +(0.33%; x; $0)
$1,743; $3,486 | $5.75; +(0.67%; x; $1,743)
$3,486; $6,972 | $17.43; +(2.25%; x; $3,486)
$6,972; $15,687 | $95.87; +(4.14%; x; $6,972)
$15,687; $26,145 | $456.67; +(5.63%; x; $15,687)
$26,145; $34,860 | $1,045.46; +(5.96%; x; $26,145)
$34,860; $52,290 | $1,564.87; +(6.25%; x; $34,860)
$52,290; $78,435 | $2,654.25; +(7.44%; x; $52,290)
$78,435; ------- | $4,599.44; +(8.53%; x; $78,435)
Iowa law provides for the indexation of individual income-tax brackets and standard deduction-amounts. These tax features are determined each year by applying inflation factors to, or “indexing,” the previous year’s amounts. Indexation of the standard deductions is covered in Iowa Code sections 422.9 and 422.21. Iowa Code section 422.5 details indexation of Iowa income-tax brackets. Indexation is meant to protect tax-payers from paying higher income-taxes solely as a result of inflation. Iowa Code sections 422.4 defines procedures for the calculation of inflation factors.
