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Old 02-08-2010, 07:14 AM
 
Location: Austin, TX
1,808 posts, read 2,262,735 times
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Hi there,

Asked this at the tail end of another thread that was about finding a rental, but thought it should have its own thread.

Probably moving to IC within the next few months. Fiancee will be in grad school for two years and then we're off again (though, thankfully, not back here to NYC!).

Does Iowa City have local income or sales tax on top of the state/county taxes? Or are all the taxes done on the state and county level? I only ask to determine whether or not it's at all beneficial to live in, say, Coralville rather than IC. A 'yes' answer wouldn't be a dealbreaker -- no matter what it's better than NYC taxes - just trying to make an informed decision.

Thanks very much!
Aq
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Old 02-08-2010, 06:38 PM
 
11,289 posts, read 23,025,880 times
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Iowa City and Coralville don't have any local income tax. I think NYC might actually be the only place to do that.

Iowa City actually does have a sales tax that's 1% higher than Coralville's - but that just is based on where you purchase items, so it makes no difference at all regarding where you live.
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Old 02-09-2010, 06:17 AM
 
Location: Austin, TX
1,808 posts, read 2,262,735 times
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Thanks!

NYC's not the only place that does it. There are lots of cities (and some counties) that tack on a 'city' or 'local' tax - even in my home state of Delaware, you pay an additional tax if you live in Wilmington. It's not much (and causes fewer ulcers because it's not paired with New York State's income tax) but it does add up.

Unfortunately, Iowa's top personal income tax bracket kicks in at about $65,000, which makes Iowa's income tax HIGHER than New York if you're set up like my business (in which business taxes are paid on our personal income tax forms). New York's highest bracket doesn't kick in until $200k.
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Old 02-09-2010, 08:07 AM
 
Location: Davenport, Iowa
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I would imagine that has something to do with the fact that $65k goes a lot farther here than it does in NY. Probably not $200k's worth unless you're talking NYC though.
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Old 02-09-2010, 08:19 AM
 
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Yeah, income tax rates can be weird sometimes. In Illinois we just have a flat 3% regardless of where you live or how much you make.

Iowa has quite a few brackets, but the bottom 4 all cover you if you're making less than $12,000 a year. You'd think they could clean it up a little and make it less confusing - I mean most people make more than $12,000 a year.

In Iowa the top rates are 6.8% when you get up over $30K to $40K, and then around 8% and 9% if you're making over 50K and over 65K. Of course it's all graduated, but you hit those higher rates fairly quick.

New York has fewer rates, but the top rate is $20K at 6.85%, so Iowa's top brackets are higher as far as %, but you also have to make more money to hit those top brackets. New York City looks to be about 3% to 3.2%, so I guess NYC's rates are going to be quite a bit higher regardless of how much you're making (state+local) - which obviously makes sense given the level of services the city has to contribute.
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Old 02-10-2010, 01:36 PM
 
Location: Austin, TX
1,808 posts, read 2,262,735 times
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Yeah, I'm coming from NYC, so it will still be a step down (if not a terribly big one). The drop in sales tax will be nice. Even though nobody owns a car here, if you have to rent one then you get hit with about 15% between sales tax and rental taxes.

Also absolutely true that $65k goes a lot further. I pay about $1300/mo right now for a room in a decent 3BR in a nice Brooklyn neighborhood (that's with two roommates - not quite $3900 for the whole place each month) whereas a comparable apartment in Iowa City looks to be just over a quarter of that.

The only trouble with the '$65k goes a long way' thing is that, like a lot of small businesses, it's not as if every new dollar we take in goes into my salary; if the business pulls in $100k versus $60k one year, that's the gray area where you're looking to maybe add your first (or second, or whatever) employee. If the government wants an additional 3 cents on the dollar for every dollar over $65k that we don't spend, it's tough to plan long-term for stuff like that. I'm not a finance guy and don't know anything about supply-side on the national level, but at least from my office it's certainly true that less taxes = more hiring power. Though I guess there's a certain point where some businesses owners decide they've earned that yacht and stop hiring, who knows. Not there yet!
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Old 02-10-2010, 09:23 PM
 
11,289 posts, read 23,025,880 times
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^ well now you're talking business income taxes, not personal income taxes.
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