To be fair, Nebraska’s policymakers have made good strides in tax policy in recent years, too. It’s just that Iowa has created an even better environment for opportunity in the Midwest.
The Nebraska-Iowa rivalry runs deep. Since 1891, Iowa has played Nebraska in football 54 times, with Iowa coming out on top in eight of the past ten contests. This year, the Huskers are considered the underdog on the gridiron, and unfortunately for their fans, they’re underdogs in tax policy, too.
For many years, both Iowa and Nebraska had rotten tax systems that imposed high rates on the income of working families and small businesses. As Iowans watch Friday’s football contest, they can cheer that their business competitiveness is maintaining its lead over Nebraska.
In 2022, Iowa saw hundreds of Nebraskans choosing to enter the transfer portal to take advantage of a lower tax burden on the east side of the Missouri River. More than half of Nebraska’s population — from blue collar workers to entrepreneurs — lives about a one-hour U-Haul drive from the end zone and the extra point of Iowa’s tax relief.
Having a strong coaching staff with a playbook to win is what has set Iowa apart from Nebraska the past few years. Governor Kim Reynolds and the legislature passed the most extensive tax-reform measure in the nation in 2022, allowing Iowa to move up the field of tax rankings to have one of the best systems in the country. In fact, Gov. Reynolds was just presented with the 2024 Distinguished Service Award by the nation’s leading independent tax research organization, the Tax Foundation, for her work on taxes.
Just a few short years ago, Iowa had a 9% income tax rate, the sixth highest in the country. In the last six years, Iowa has cut its income tax rate four times, and beginning in the new year, Iowans will pay a flat 3.8% income tax rate. In addition to rate cuts, income taxes on retirement income and the inheritance tax have been eliminated, projected in total to save Iowa taxpayers billions.
To be fair, Nebraska’s policymakers have made good strides in tax policy in recent years, too. It’s just that Iowa has created an even better environment for opportunity in the Midwest. The following map from the Tax Foundation shows Iowa ranking 20th nationwide, but all reforms haven’t been factored in yet. Once Iowa’s tax reform is fully implemented, its tax ranking should jump to 13th-best in the nation — one of the best in the Midwest, leaving many of the other Big Ten teams in the dust.
Maybe Nebraska’s Governor Pillen will make a call from Governor Reynolds’s playbook to overcome special interest obstruction and the economic fumbles of the federal government to deliver meaningful tax reform. If not, Iowa’s rivals will become Indiana and Michigan… both on the field and in the tax game.
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