Did you notice? Take-home pay in January was up a bit for most university employees, a reflection of new -- in most cases, lower -- state income tax rates. In HF 2317, the 2022 Iowa Legislature simplified Iowa's personal income tax structure from nine rates in 2022 to four this year. According to the timeline, in both 2024 and 2025 the highest rate will be eliminated, so in 2026 Iowa will have a single rate.
Changes to Iowa personal income tax
|
|
Tax year |
|
|
|
Gross income* |
2023 (4 rates) |
2026 (1 rate) |
2022 (9 rates) |
|
Up to $6,000 |
4.40% |
3.90% |
0.33%-2.25% |
|
$6,001-$30,000 |
4.82% |
3.90% |
2.25%-5.96% |
|
$30,001-$75,000 |
5.70% |
3.90% |
5.96%-7.44% |
|
$75,001 or more |
6.00% |
3.90% |
7.44%-8.53% |
*Upper and lower limits of income brackets double for married taxpayers filing a joint return
The lower rates mean most employees get to keep more of their salaries, and the Iowa Department of Revenue has updated its tax tables and withholding instructions to employers for 2023. The two key variables in how much tax employers withhold are salary and the tax elections an employee sets in their W-4 form. The latter can be changed anytime.
Employees can confirm their state and federal withholdings in Workday under the "pay" icon (among "actions," select "withholding elections"). They can make changes to their Iowa W-4 or federal W-4, both of which also are available in Workday. But complete your calculations first; once you click "update" for either form, the previous tax elections are gone.
If you're uncertain about whether the university is withholding enough Iowa income tax, the state revenue department updated its basic withholding estimator to help individuals calculate their 2023 withholding amounts. Employees also are encouraged to talk to a professional tax advisor about whether to adjust their withholdings, said senior payroll manager Teri Kruse.
