labor lawAdivision of labor law center

Lend me your ears – and I don’t mean corn! I have compiled the basics of what you need to know about individual income tax in the state of Iowa. Each person living in, or earning a wage in, the state of Iowa, must pay state income taxes in addition to federal income taxes. But how much should come out of each person’s income for state income taxes? Excellent question – and figuring it out is easy because there is a simple form to help determine this.

In addition to the federal income tax withholding form, W4, each employee needs to fill out an IA-W4 form for their Iowa State income tax withholding. This form has essentially the same information on it, but makes sure you have the proper withholding allowances for state-level withholdings. This form is available online here.

Also, to avoid double-taxation of income, the state of Iowa has a Reciprocal Agreement in effect with Illinois – meaning that if the individual lives in one state and works in another, income tax will only be withheld for the state of residence. A form 44-016 should be used to establish the state of residence for any employee that wishes to alleviate themselves of the burden of double-taxation in these particular states.

For residents of Iowa that are earning income in a state other than Iowa or Illinois, they must still pay Iowa State Income Tax, but will only pay the difference between what is being deducted by the other state and what would have been deducted in Iowa. Again, having an IA-W4 on file will aid in determining that difference.

And, please take note! If no income tax withholding form is filled out, taxes must be withheld at the highest level possible – single, no deduction allowances – even if the employee is known to be married. To prevent things like this from happening, I cannot stress enough the importance of having each employee file both their IA-W4 as well as a W4 form for federal income taxes, so please make their completion a priority.

Last 10 posts by Cara

• Massachusetts W-4 - September 24th, 2006
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• Kansas W-4 - September 24th, 2006
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• Illinois W-4 - September 24th, 2006
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• Federal W-4 Form - August 27th, 2006