DES MOINES, Iowa – Iowa Senate Republicans unveiled their income tax relief package on Wednesday.
“Prior to 2018, Iowa spent years building a complicated tax code full of credits and exemptions because of individual and corporate tax rates among the highest in the country,” Iowa Senate Majority Leader Jack Whitver, R-Ankeny, said. “Today, the Iowa Senate introduced a bill to dramatically cut taxes in Iowa. This bill is complimentary to the governor’s bill and includes many of the same concepts and goals.”
Whitver said that the legislation would make Iowa’s individual income tax rate the 4th lowest in the country. The state’s income tax rate is currently the 8th highest. He said the bill would save the average taxpayer $1590 annually. The bill eliminates taxes on retirement income and reforms the corporate income tax rate making it “flatter and fairer.”
Whitver said their bill “sets the stage” for eventually eliminating Iowa’s individual income tax.
The highlights of the bill include:
- Establishes a flat 3.6 percent individual income tax rate, reduced from the state’s current top rate of 8.53 percent.
- Cuts the top corporate rate to 7.8 percent by 2028, reduced from the current 9.8 percent rate by reforming credits and exemptions.
- Fully eliminates all taxes on retirement income
- Expands military pay exemption to National Guard members
- Provides farmers a first-time pension exemption by exempting income from either cash rent or farm crop shares
- Restructures the Taxpayer Relief Fund by turning it into the Income Tax Elimination Fund, directing the fund to be used to automatically reduce future individual income tax rates and ultimately eliminate the personal income tax in Iowa
State Senator Dan Dawson, R-Council Bluffs, says his intention is to set tax policy that “reflects the goals of the Iowa Senate Republican caucus: rewarding hard work, attracting businesses to Iowa, and making Iowa more competitive with neighboring states.
“Our proposal that we are releasing today not only delivers on that goal, it modernizes our tax code for the 21st century economy, dramatically cuts rates for Iowans and their families, and takes the next steps necessary on the path to completely eliminating the income tax in Iowa,” he stated.
Read the legislation that will be filed this week and be considered by the Iowa Senate Ways and Means Committee:senate tax reform