For the second consecutive year, employers will be reducing the amount of Iowa tax deducted from employees' paychecks. The new Iowa withholding tax tables take effect on April 1, 2006. The Iowa Department of Revenue will mail the new tables and formulas to more than 80,000 withholding agents at the end of February.

Most taxpayers will see an increase in their take-home pay. However, the amount of their refunds after filing their 2006 tax returns will decrease. Some taxpayers that now receive refunds may end up paying additional tax when they file their 2006 tax returns. To increase or decrease withholding amounts, employees should complete a new Iowa W-4 with their employers, which can be done at any time during the year.

Changes to Iowa withholding tables last occurred on April 1, 2005. Tables are revised when changes in state or federal law create a significant imbalance between the amount of tax withheld and the amount of tax actually owed. The new tables are intended to restore the balance.

...back to 16 February 2006

Further information:
Iowa Withholding Tax Tables To Change April 1, 2006

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