ABI Legislative Priorities Accomplished in 2024

It was another banner year at the Capitol for the business community as ABI successfully advanced legislation under the three priorities we had for the year including Workforce, Tax and Regulatory Reform. Governor Reynolds recently finished reviewing and signing legislation passed by the Legislature, which means it’s time to take a look at what key bills will become law.

Workforce

The governor put forward a comprehensive bill that makes changes to several programs aimed at training and upskilling Iowans. A few key features of SF 2411 relate to the establishment of a Workforce Opportunity Fund (WOF) and the transfer of funds from the Unemployment Compensation Reserve Fund (UCRF) and the ultimate elimination of the fund. The WOF is created and funded with $30 million from the UCRF. The fund, administered by Iowa Workforce Development, is to be designated for the purposes of training and infrastructure related to the growth and maintenance of the state’s workforce programs. While ABI certainly supports the goal of the fund, we initially had issues with the source of funding, as ABI has had a long-standing policy and belief that any unemployment insurance payroll taxes made by employers should be used for unemployment benefits only. At the direction of the ABI Board of Directors, ABI staff worked with the governor and her team to develop a compromise that would satisfy all parties. The final product included allocating $30 million from the UCRF to the WOF. The rest of the money in the UCRF ($120 million) is then transferred to the main Unemployment Insurance Trust Fund, which builds upon the solvency of the fund and ensures the money can only be used for unemployment benefits. Following the transfer, the UCRF is eliminated from the Iowa Code. This is a tremendous outcome for businesses.

Tax

Perhaps no other state in the country has undergone a more pro-growth transformation of their tax code in the last seven years than Iowa.

In 2018, Iowa had a progressive, clunky and complex tax code that was onerous for businesses and individuals. That year, we had top rates of 8.98% on the personal income side and 12.0% on the corporate income side. Over the last few years, policymakers have moved us in a pro-taxpayer direction by easing that burden. This year, Governor Reynolds signed a bill that will move Iowa to a flat individual income rate of 3.8% for Tax Year 2025. Given that we’re currently at 5.7% for Tax Year 2024, that’s a 33% reduction in the rate and an additional $1 billion in savings for taxpayers. We currently have a top corporate rate of 7.1%, but that is expected to hit a flat 5.5% in a few years. In addition to income tax reductions, policymakers have recently signed off on legislation that exempts retirement income from taxation, phases out the inheritance tax and begins to reform our property tax system.

Regulatory Reform

Within the governor’s executive branch rulemaking bill are provisions that address long-sought reforms to the way the Department of Natural Resources (DNR) handles air dispersion modeling. While the state must prove compliance with the Federal Clean Air Act, air dispersion modeling for minor sources, in most cases, is discretionary.

The legislation ensures that DNR doesn’t have to impose air dispersion modeling for minor sources or minor modifications of major stationary sources to prove they are in compliance with the Clean Air Act. This is a significant deal for those who are affected as the costs for making a single modification can be in the tens of thousands of dollars for industry.

ABI staff would like to thank all our members for their support and pro-business policymakers who prioritized the passage of legislation that will make Iowa even more competitive moving forward. ABI