Iowa Tax

For Iowa residents, you specify the employee's exemptions.

Deltek Modification Date - 12/14/18

Enter the following field information for residents of Iowa on the Withholding grid on the Payroll tab of the Employees hub:

Field	Description
Status	Iowa’s tax calculations do not use the Status field.
Exemptions	Enter the total number of exemptions claimed by the employee on the Iowa Employee’s Withholding Exemption Certificate, Form IA-W-4, #44-019. This figure includes: Personal exemptions for self and spouse not claimed on other Form IA-W-4. Additional exemptions for age and blindness. Exemptions for dependents. If the employee did not submit Form IA-W4, use the number the number of exemptions claimed by the employee for federal income tax purposes on Form W-4.
Other Exemptions	Iowa’s tax calculations do not use the Other Exemptions field.

Supplemental Wages

For bonus payroll runs, the Iowa state tax is calculated at 6%.

Automatically Calculated Variables

DPS automatically computes the following variables, which are used in determining the net income tax.

Standard Deduction

The Standard Deduction is applied to all employees. The amount of the deduction depends on the number of exemptions claimed in the first Exemptions field, as follows:

Number of Exemptions	Deduction
0 or 1	$1,690
2 or more	$4,160

Federal Income Tax Deduction

The Federal Income Tax Deduction (F.I.T.) is a variable deduction equal to the employee’s annual federal income tax as calculated by DPS.

Credit

The Credit is based on the number of exemptions entered in the first Exemptions field. The employee is entitled to $40 for each exemption.

Number of Exemptions	Amount of Credit
0	$0
1	$40
2	$80
more than 2	$40 for each exemption

How DPS Calculates Tax

To calculate an employee's Iowa State tax, DPS does the following:

1. Multiplies the employee's gross pay per pay period by the number of pay periods in a year to determine annualized gross wages.
2. Subtracts the employee's Standard Deduction, Federal Income Tax Deduction (equal to the employee’s federal tax payment), and any 401(k) and 125/Cafeteria plan contributions from the employee's annualized gross wages to determine taxable income.
3. Calculates the computed tax by applying Tax Calculation Method 1 to the taxable income.
4. Subtracts a Credit, if applicable, from the computed tax to determine the net income tax.
5. Divides the net income tax by the number of pay periods in a year to determine the amount to be withheld for the pay period. DPS then rounds the withheld amount to the nearest dollar.