Governor, Senate and House Republicans all Unveil Significant Tax Cuts & Reform Package - A Comparison
January 27, 2022
The three bills have a number of similarities and a few key differences.
Governor’s Bill: SSB 3044
- ABI Position: Support
- Reduce personal income taxes over four years to 4.0%
- Eliminate the tax on retirement income in 2023
- Remove the tax on capital gains upon the sale of stock related to employee stock ownership plans (ESOPs)
- Additionally, it would leave untaxed the income on the cash rent of farmland held by retired farmers and phase the corporate tax rate in Iowa to 5.5% percent from the current 9.8% as annual receipts to the Iowa General Fund exceed $700 million annually.
House Bill: HSB 626
- ABI Position: Undecided
- Would do all of the same things as the Governor but would not include the reduction to corporate income taxes.
Senate Bill: SSB 3074
- ABI Position: Support
- Mirrors the Governor’s tax treatment of ESOP capital gains, retirement income and retired farmer cash rent income.
- Individual income taxes would reduce to a flat rate of 3.6% over five years.
- The Senate bill limits the refundability of certain business tax credits such as the Research and Activities Credit to 50% of value, eliminates the sales tax exemption for computers and peripherals, plus other adjustments while lowering the corporate income tax rate 20% from 9.8% to 7.8%.
- Revenue from the Taxpayer Relief Fund is directed to buy down the new 3.6% individual income rate in the out years with a goal of total elimination.
- In addition to these general tax provisions the Senate plan would also eliminate the one cent local option sales tax and replace it with a one cent sales tax.
- This would allow for the funding of the Iowa Water and Land Legacy program that funds clean water initiatives and outdoor attractions while remaining tax neutral for Iowans in 98 of 99 counties.