Kiplinger’s Ranks Iowa As a Tax-Unfriendly State

Writer: Steve Dinnen

If you already live in Iowa, this will not come as a surprise. But if you’re retiring and considering a move to the Hawkeye State (how large an audience can that be?) Kiplinger’s Personal Finance magazine has a bone to pick with us as being an unfriendly state tax-wise.

In its recent listing of the least tax-friendly states, Iowa is ranked eighth. We’re one of the highest states in the nation on income taxes – topping out at 8.53%. Yes, Iowa does not tax Social Security income, and the state provides an exclusion for most types of retirement income. But Kiplinger’s notes that these are only modest concessions that most other states offer as well.

State and local sales taxes average out at 6.95%, which isn’t far out of synch with other states. (Nebraska, for instance is 6.94%; Illinois 8.82%.) But the state also gets a downgrade on property taxes, where the median rate is 11th-highest in the nation. Estimated taxes on a $250,000 home are $3,823 a year. Arizona and Nevada, both of which are among the most tax-friendly, charge just $1,543 and $1,333, respectively, for similarly valued homes. Additionally, Nevada has no state income tax, while Arizona’s equals Iowa’s top rate.

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