DES MOINES, Iowa – The Iowa Department of Revenue 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 3.0 percent. Adding two percentage points results in the annual rate of 5.0 percent. The monthly rate is the annual rate divided by 12, 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 taxpayers
- $2,210 for married taxpayers filing separately
- $5,450 for married taxpayers filing jointly
Individual Income Tax Brackets
Tax year 2022 income tax brackets are:
- 0.33 percent for taxable income between $0 and $1,743
- $5.75+.67 percent for taxable income between $1,743 and $3,486
- $17.43+2.25 percent for taxable income between $3,486 and $6,972
- $95.87+4.14 percent for taxable income between $6,972 and $15,687
- $456.67+5.63 percent for taxable income between $15,687 and $26,145
- $1,045.46+5.96 percent for taxable income between $26,145 and $34,860
- $1,564.87+6.25 percent for taxable income between $34,860 and $52,290
- $2,654.25+7.44 percent for taxable income between $52,290 and $78,435
- $4,599.44+8.53 percent for taxable income above $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 taxpayers from paying higher income taxes solely as a result of inflation. Iowa Code sections 422.4 defines procedures for the calculation of inflation factors.
