A bill that will lower Iowa’s state income tax to a flat 3.9 percent has been passed by the Iowa House and now heads to Gov. Kim Reynolds’ desk to be signed into law. The tax overhaul bill reduces the individual income tax for all Iowans incrementally over the next several years and also lowers the corporate tax rate to 5.5 percent over time if state revenues from corporations surpass $700,000. In the short term, it eliminates taxation on retirement income for Iowans, which will go into effect for the next tax year. According to Reynolds, Iowa had the sixth highest individual income tax rate in the nation at 8.98 percent when she took office, and she identified tax reform as one of her key priorities. She says, “There’s never been a better time in Iowa for bold, sustainable tax reform. This bill rewards work, takes care of our farmers and supports retirees, all while protecting key state priorities. Iowans will reinvest these dollars in our economy, communities will prosper, and families will rest a little easier. Once again, we’re putting our faith in Iowans, and they won’t let us down.” There had been some slight differences between the House and Senate versions of the bill, but the two chambers were able to come to an agreement last (Thursday) night. Once the changes are fully implemented, Iowa will have the fourth lowest tax rate in the nation.
