The Iowa Legislature has passed a bill that revamps the state?s income tax system.
The Iowa House and Senate on Thursday gave approval to House File 2317. The bill lowers the state?s income tax rate to 3.9%, lower than the 4% Governor Reynolds called for during her 2022 Condition of the State Address. State GOP leaders called the legislation the largest tax cut in Iowa history. In January, Governor Reynolds said the tax cuts would occur gradually over the next four years.
?So that we protect priorities like education and public safety. But in the first year alone, taxpayers will save almost $500 million, and by 2026, when the bill is fully implemented, an average Iowa family will pay over $1300 less in taxes.?
Reynolds also said her sweeping tax bill would bring an end to taxes on retirement income.
?Under my plan, the tax repeal on retirement income won?t be limited to bank accounts. For farmers whose savings is as much the black dirt under their boots as the money in the bank, this bill will eliminate the tax on cash rent payments they receive when they retire from farming. And for employees who receive stock in their company for years of hard work, the bill will eliminate the tax on the sale of those shares.?
The bill approved Thursday creates a single income tax bracket for all Iowans, reduces some corporate tax exemptions, and lowers the corporate tax rate. The legislation now heads to the governor?s desk where she is expected to sign it soon.
