Highest income earners in Iowa taxed at 7.7% rate

The top 1 percent of earners in Iowa are taxed at an effective rate of 7.7 percent, compared to the state’s 10.7 percent tax rate on the middle 20 percent of income earners, according to a new 24/7 Wall St. analysis.

The study, which used data from a 2018 report by the Washington-based Institute on Taxation and Economic Policy (ITEP), did not include federal taxes paid. Iowa ranked 38th on the study’s list of the most tax-friendly states for the rich.

On average, the top 1 percent of earners in the state take in $960,000 annually, according to 24/7 Wall St.

Nationwide, the top-earning 1 percent of families pay 7.4 percent of what they make toward state and local levies, the ITEP study concluded. The middle 20 percent of U.S. earners, in contrast, paid more – 9.9 percent.

States with no income tax – or a very low income tax – tended to be the most friendly to wealthy individuals, 24/7 Wall St. reported. That’s because those states tend to rely more on more regressive taxes, placing more of a burden on poorer households, the study found.

Which States Are the Most Tax-Friendly to the Wealthy?

RankStateEffective Tax Rate for Top 1% of Income EarnersEffective Tax Rate for Middle 20% of Income EarnersAverage Income for Top 1%State and Local Revenue From Sales TaxesState and Local Tax Revenue From Income Taxes1Nevada1.9%7.6%$1.7 million39.4%0%2Florida2.3%8.1%$2.3 million34.1%0%3South Dakota2.5%8.9%$1.5 million39.6%0%4Alaska2.5%4.3%$1.1 million8.3%0%5Wyoming2.6%7.5%$2 million25.2%0%6Tennessee2.8%8.5%$1.3 million41.5%1.5%7Washington3%11%$1.6 million46.4%0%8New Hampshire3.0%8.1%$1.5 million0%1.4%9Texas3.1%9.7%$1.6 million35.4%0%10North Dakota4.5%8.5%$1.3 million25.6%7%11Alabama5%9%$955,60030.7%23.2%12Arizona5.9%9.4%$1.1 million38.7%16%13Pennsylvania6%11.1%$1.3 million17.2%26.2%14New Mexico6%10.2%$845,40037.8%17.4%15Louisiana6.2%10%$1 million41%15.7%16Oklahoma6.2%10.7%$1.1 million33.3%22.1%17Missouri6.2%9%$1.2 million27.3%28.6%18Michigan6.2%9.2%$1.3 million22.6%24.2%19North Carolina6.4%9.4%$1.1 million25%30.3%20Colorado6.5%8.9%$1.5 million26.5%25.4%21Ohio6.5%10.7%$1.1 million28.2%25.6%22Massachusetts6.5%9.3%$2.5 million13.8%32.7%23Montana6.5%7.1%$1.1 million0%29.7%24Delaware6.5%5.6%$1 million0%25.8%25Utah6.7%8.2%$1.3 million24.8%29.6%26Kentucky6.7%11.1%$935,40020.4%33.3%27Mississippi6.7%10.8%$802,20030.6%16.7%28Indiana6.8%11.1%$1 million28.4%25.5%29South Carolina6.8%8.1%$992,30022.1%22.7%30Arkansas6.9%10.8%$1.1 million37.5%23.5%31Virginia7%9.2%$1.4 million13.8%31.9%32Georgia7%9.8%$1.2 million24.1%27.7%33Idaho7.2%8.1%$1 million26.5%25.8%34Kansas7.4%10.6%$1.3 million32.1%17.1%35West Virginia7.4%8.5%$702,40018.4%25.8%36Illinois7.4%12.6%$1.7 million19.3%19%37Wisconsin7.7%10.1%$1.2 million19.8%27.1%38Iowa7.7%10.7%$960,00022.8%23.9%39Rhode Island7.9%9.5%$1.1 million16.6%21%40Oregon8.1%9.1%$1.1 million0%41.7%41Connecticut8.1%12.2%$3.2 million14.5%29.2%42Maine8.6%9.6%$877,20019.6%22.4%43Nebraska8.7%10.8%$1.1 million22.4%23.1%44Hawaii8.9%11.6%$984,20037.2%22.9%45Maryland9%10.6%$1.5 million12.4%37.8%46New Jersey9.8%10.1%$1.9 million15.4%22.2%47Minnesota10.1%9.7%$1.5 million17.1%31.9%48Vermont10.4%10.1%$993,60010.4%19.8%49New York11.3%12.4%$2.5 million16.7%32.7%50California12.4%8.3%$2.2 million21.9%33.8%

Source: 24/7 Wall St.; Institute on Taxation and Economic Policy

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