Earlier this year, Governor Kim Reynolds and the Iowa Legislature passed the largest tax relief measure in the state’s history. The historic tax reform will replace the progressive income tax with a flat 3.90 percent rate by 2026. Iowa’s corporate tax rate will also gradually phase down until it reaches a flat 5.50 percent. Starting next year, the reform will repeal all state taxes on retirement income.
This year may be one of the most historic for states lowering income tax rates across the nation. So far, at least six other states have joined Iowa in passing tax cuts, while many more have tax reform legislation under consideration. The graph above illustrates the new rates that will be delivered to individual taxpayers in their respective states. The […]
For several years we have praised North Carolina for its historic tax reform. The Tarheel State is the gold standard for prudent state tax policy that pairs conservative budgeting with shrinking tax rates. Governor Kim Reynolds and Iowa’s legislature have followed a similar path to deliver pro-growth tax reform by balancing restrained spending growth with income tax cuts. Years of prudent budgeting enabled the passage of historic tax reform this year, which will create a flat 3.9 percent income tax rate by 2026.
Reports that the Iowa Legislature eliminated the retirement income tax so that there would be enough people around to call the Bingo numbers have proven to be false. Okay, while that thought may have never actually crossed anyone’s mind, our elected officials were certainly thinking about how to keep retirees in our state when they eliminated Iowa’s tax on retirement […]
When major legislation is passed -and make no mistake, Iowa’s tax reform package is as major as it gets- it’s natural for one to wonder, “What does this mean for me?” We will answer that question for at least a few of the aspects of House File 2317. While these explanations are not meant to be exhaustive, nor do they […]
Yesterday the Iowa legislature passed a historic tax reform measure. Going into the 2022 legislative session Governor Kim Reynolds and the Republican-led legislature made tax reform a priority. The tax relief bill passed by both chambers phases in a 3.9 percent flat rate for individual income tax by 2026, a major reduction from today’s top marginal rate of 8.53 percent. […]
Tax rates matter. Whether it is allowing individuals to keep more of their hard-earned income or creating a more competitive economic climate, tax rates have a significant impact on a state. States are in economic competition with each other for both businesses and people. It is important for Iowa not to become complacent as numerous states are looking at reducing […]
From a taxpayer perspective, the 2022 legislative session is off to a good start. Governor Kim Reynolds, in her Condition of the State address, outlined a pro-growth tax reform plan that calls for a flat 4 percent income tax by 2026. House Republicans have also introduced a tax reform plan that calls for a flat 4 percent tax rate by […]
By John Hendrickson, Policy Director for ITR Foundation, and Jonathan Williams, Executive Vice President for policy and Chief Economist at the American Legislative Exchange Council. Governor Kim Reynolds and free-market legislators are working to make Iowa a pro-growth leader. Tax reform is a priority for 2022 – and rightly so. Even after successful tax reforms in recent years, more […]
“Today’s legislation ushers in a new era of growth and opportunity in Iowa,” said Governor Kim Reynolds when signing the 2021 tax reform bill into law. “But we are not done yet. Next year, I’ll be proposing additional income tax cuts as we continue to make Iowa the most attractive place in America to open a business, raise a family, and start a career,” stated Governor Reynolds. Iowa was one of 15 states that passed tax reform bills in 2021, continuing the work to improve Iowa’s tax climate that began in 2018. As Governor Reynolds has said, however, that work will need to continue.
Senator Dan Dawson, chair of the Iowa Senate Ways & Means Committee, speaking before the Iowa Taxpayers Association (ITA) stated that his tax policy goal for the 2022 legislature is to create a “21st century model” that will create the best tax climate in the nation. “We have the opportunity to do a tax reform moonshot here in Iowa,” stated […]
The Revenue Estimating Conference (REC), which is tasked with estimating revenue for the State of Iowa, met last week and continued to project healthy revenues for both Fiscal Years 2022 and 2023. “Six and a half months from now, there’s going to be a pretty significant ending balance and so I think the General Assembly and the governor are in […]
The Tax Foundation has released the 2022 State Business Tax Climate Index today and for the second year in a row, Iowa has moved up two spots. Out of all 50 states, Iowa is now ranked 38 after landing at 42 in 2020’s rankings. As a result of the comprehensive tax reform law in 2018 and other recent reforms, Iowa’s […]
Did you know the state of Iowa has a fund called the Taxpayer Relief Fund? It’s true, that’s the actual name. While we are fans of almost everything with “tax relief” in its name, that’s not even the best part. Right now, that Fund has a balance of $1.1 billion. But it gets better: by the end of the […]
Governor Kim Reynolds and the legislature will have an opportunity to enact significant tax reform in 2022. Iowa’s fiscal house is in strong condition with a $1.24 billion surplus and the recent Revenue Estimating Conference (REC) projections show strong revenue growth for Fiscal Years 2022 and 2023. This is a historic opportunity to lower Iowa’s high income tax rates and […]
Keeping your economy open, conservative spending, and lowering tax rates. This is the economic formula that is building a solid fiscal foundation for Iowa. It is also the formula that 53.7 percent of Iowans support. A majority of Iowans, 59 percent, also support continued tax relief. This is the direct opposite of the tax and spend “shifting sand” agenda that […]
By Jonathan Williams and Lee Schalk | ALEC In our Nation’s Capital, there are unprecedented attempts are underway to remake America, with countless dangerous policy ideas being discussed. Unfortunately, many have not learned from the mistakes of the Affordable Care Act (ACA), where infamously, Speaker Nancy Pelosi told members of Congress they have to pass the bill to know what’s […]
“Today’s legislation ushers in a new era of growth and opportunity in Iowa,” said Governor Kim Reynolds when signing the 2021 tax reform bill passed by the legislature. “But we are not done yet. Next year, I’ll be proposing additional income tax cuts as we continue to make Iowa the most attractive place in America to open a business, raise […]
This year Iowa’s top corporate tax rate decreased from 12 percent, the highest in the nation, to 9.8 percent. Even at 9.8 percent, Iowa’s corporate tax rate is high. Many states have or are in the process of gradually lowering their corporate income tax rates. Nebraska recently passed legislation to reduce their corporate tax from 7.81 percent to 6.84 percent. […]
Governor Kim Reynolds is growing Iowa’s economy by making the tax code more competitive and ensuring that hardworking taxpayers get to keep more of their money. During her Condition of the State address, the Governor stated that not only do we “need to continue the conversation about cutting taxes,” but she also called for the repeal “of the unnecessary triggers […]
Toyota Financial Services recently announced that as a result of consolidating customer service centers, the Cedar Rapids facility will close and cut 600 jobs, due in part to the private sector employing 5% fewer people than a year ago. The consolidation of customer service centers is a loss for Iowa and a win for other states, such as Texas. Businesses […]
Tax rates matter, and they play a significant role in how competitive a state economy is in relation to other states. Higher tax rates penalize hard-working individuals, families, and businesses and deter economic growth, making a state less competitive. To make Iowa more economically competitive, Governor Kim Reynolds has made tax reform a priority. Taxes on income, which include both […]
Reforming a state tax code in order to provide relief, economic growth, and create a more competitive economic climate is straightforward in terms of economics, but difficult in the world of politics. A major reason for this difficulty is tax rate reductions are in direct conflict with numerous policy interests that demand new or additional spending. Iowa, alongside the vast […]
In 2018, Governor Kim Reynolds and the Iowa legislature passed a comprehensive tax reform measure that lowers both the individual and corporate income tax rates as well as broadens the sales tax base. Although the 2018 reform was historic, Iowa will still have high income tax rates. Iowa’s top individual income tax rate will be 6.5 percent and the […]
The Tax Foundation ranks Iowa as one of the top ten worst states for business climate. Iowa’s high tax rates not only discourage economic growth, but they make our state less competitive. South Dakota has no state income tax and Iowa is losing ground to our neighbor because they have a more competitive tax climate. It will be difficult for […]