Electronic structures of iron(II) and iron(III) porphyrins are studied with density functional theory (DFT) using the GGA exchange functional OPTX in combination with the correlation functional PBE (OPBE) and with the correlation functional Perdew (OPerdew) together with a triple zeta-type basis set. These functionals, known for accurately predicting the spin ground state of iron complexes, are evaluated against other functionals for their performance in calculating relative energies for the various electronic states of both the iron porphyrins. The calculated energy orderings are triplet < quintet < singlet for the iron(II) porphyrin and quartet < sextet < doublet for the iron(III) porphyrin cation. Complexation by a thiolate ion (SH-) changes the preferred ground state for both species to high spin. This thiolate complex is used as a mimic for the cytochrome P450s active site to model the first step of the catalytic cycle of this enzyme. This first step is believed to concern the removal of an axial oxygen donating ligand from the hexacoordinated aqua-thiolate-porphyrin-iron(III) resting state. The DFT results suggest that this is not a free water molecule, because of its repulsive nature, but that it has instead hydroxy anion character. These calculations are in line with the experimentally observed change in the spin state from low to high spin upon this removal of the axial hydroxo ligand by binding of the substrate in the heme pocket of cytochrome P450.