For tax year 2023, the top Iowa corporate tax rate will be reduced from 9.8% to 8.4%. Following the close-out of the state’s fiscal year, the Governor’s office made the announcement in a press release at the end of September. The second highest bracket, which today stands at 9 percent, will also be reduced to 8.4 percent. 

The announcement reflects tax changes that were adopted by the legislature last session. While the elimination of taxes on retirement income and reductions in personal income taxes were guaranteed under the law, corporate tax rates were only to be reduced if the state hit certain revenue triggers tied to corporate tax payments.

The new rates reflect a 14.2% savings over current rates. Additional rate calculations will be conducted annually. Each year that state collections from corporate payers exceed $700 million, the rate will be adjusted downward until a single flat rate of 5.5% is reached.

Separately, the Iowa Department of Revenue issued a tax guidance for corporate taxpayers that can be found here.