House and Senate Ways & Means Chairs Release Tax Reform

February 2, 2024

On Thursday, the leaders of both tax writing committees in the Legislature issued a joint press release announcing bills that will seek to make Iowa’s tax climate more competitive. 

The legislation would immediately:

  • Accelerate current income tax cuts for Tax Years 2024-2026
  • Lower the individual rate to 3.65% in TY 2027

From there, a Taxpayer Relief Trust and Income Tax Elimination Fund will be created that eliminates the individual tax rate by buying down the rate over time. 

Corporate net receipts over $700 million each fiscal year are used to buy down the corporate tax rate. Iowa's top rate for TY 2024 is 7.1%. Current law allows that to be bought down to a flat 5.5%. That rate would drop to 4.9% under the bill.

Chairmen Dan Dawson and Bobby Kauffman introduced a second bill proposing a constitutional amendment, stipulating that a two-thirds majority in both chambers would be required to increase income tax rates. Additionally, this amendment would solidify the implementation of a flat tax. The legislation would need to pass two consecutive legislatures and would then be placed on the ballot for Iowans to vote.

Read more from The Des Moines Register.

Governor Reynolds has also introduced significant tax legislation that would accelerate income tax cuts, provide property tax relief for commercial childcare centers and reduce unemployment insurance taxes. You can read about her proposal in the Jan. 19 ABI newsletter

If you have any feedback on either proposal, please contact JD Davis or Brad Hartkopf.