DES MOINES, Iowa – On Tuesday, the Iowa Senate passed Senate File 587 reforming the state’s mental health system and reducing property taxes. The bill passed 30-17.
“Tax relief continues to be a goal of the Senate Republicans,” Senate Majority Leader Jack Whitver, R-Ankeny, said. “I have said, as long as I am Majority Leader, tax relief will be part of the Senate agenda. Senate File 587 delivers on that promise. Not only does it provide real property tax relief, it also delivers increased funding to mental health services in Iowa.”
Over a period of several years, the bill moves mental health funding from local property taxes to state funding. It also eliminates property tax levies and phases out the backfill to local governments.
The bill also revisits Iowa’s 2018 tax reform law.
“Republicans are elected to enact bold reforms, and this is one of those reforms,” State Senator Dan Dawson, R-Council Bluffs, said. “It cuts property taxes for Iowans by over $100 million, dedicates sustainable and consistent funding for mental health, and removes the triggers put into place by the 2018 tax bill to ensure real tax relief for Iowans.”
Repealing the triggers further drops the income tax rates on January 1, 2023, with the top rate dropping from 8.53 percent to 6.5 percent. Eliminating the trigger will also reduce the number of tax brackets from nine to four and eliminate federal income tax deductibility if Iowa reached that revenue trigger. The trigger required Iowa to reach $8.3 billion in revenue by FY 2022, amounting to 4 percent growth each fiscal year. The state is not on track to meet that trigger in FY 2022. That bill also repealed Iowa’s inheritance tax and state qualified use inheritance tax.