Red vs. Blue Taxes: Iowa Ranks 12th Highest in Nation, New Data Shows

New data from WalletHub reveals that while blue states generally impose higher tax burdens on residents, Iowa stands out as a notable exception among Republican-leaning states. The Hawkeye State ranks 12th highest in the nation for total tax burden, a finding that challenges the simple narrative that conservative states are always low-tax havens.

WalletHub's annual analysis calculates each state's total tax burden as a percentage of a typical resident's income, combining property taxes, income taxes, and sales and excise taxes. The rankings offer a comprehensive look at how much residents actually pay across all major tax categories.

What the Tax Burden Rankings Show

According to the data, blue states average a rank of 16.0 for highest tax burden, while red states average 31.32. That means Democratic-leaning states generally impose heavier tax loads on their residents compared to their Republican counterparts.

Hawaii tops the list as the highest-taxed state with a total burden of 13.30% of resident income. At the other end, Alaska ranks 50th with just 4.92%.

However, the color-coded breakdown doesn't tell the whole story. New Hampshire, which voted Democrat in the 2024 presidential election, has the second lowest tax burden in the country at 5.38%. Delaware, also a blue state, ranks 46th with a 6.28% burden.

Iowa's Tax Ranking Raises Questions

For Iowans, the WalletHub data hits close to home. The state ranks 12th highest for total tax burden, placing it alongside Kansas (13th) and Indiana (14th) as Republican-voting states with relatively high tax loads.

This ranking comes as Iowa lawmakers have pursued tax reform in recent years, including legislation aimed at reducing income tax rates and simplifying the tax code. The data suggests there may still be work to do to improve Iowa's competitive position.

Cost of Living Considerations

Taxes play a significant role in cost of living, but they aren't the only factor. The Missouri Economic Research and Information Center (MERIC) tracks comparative cost of living across all 50 states each quarter, using the national average as the baseline index point.

Higher-tax states tend to carry higher overall living costs, but exceptions exist. Some states manage to balance moderate taxes with affordable housing, utilities, and other essentials.

Should You Move to a Lower-Tax State?

For Iowans considering relocation, the math requires careful thought. Moving costs range from roughly $2,500 to more than $18,000 depending on distance and household size, according to Stewart Moving & Storage. It could take several years to recoup that expense through lower taxes and reduced living costs.

Income level also matters significantly. A family earning $30,000 annually will likely see a similar tax burden in most states. But a household earning $300,000 faces dramatically different tax bills depending on whether they live in New York or Florida.

Beyond the Numbers: What Matters Most

Taxes and cost of living are important, but they aren't everything. Proximity to family, job opportunities, climate, amenities, and community values all factor into where people choose to call home.

For those seriously considering a move, experts suggest spending time in a new city before committing. A month-long trial run can reveal whether a location truly fits your lifestyle and priorities.

As Iowa continues to debate tax policy, the WalletHub data provides useful context. While the state has made progress on tax reform, the 12th highest ranking in the nation suggests more work lies ahead for lawmakers seeking to make Iowa more competitive.

This article was provided for informational purposes only and should not be construed as financial, legal, or tax advice.