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The major issue item this week was the release of the Senate tax relief proposal. During the first week of session Senate leaders spoke of the priority of tax relief. The governor released her bill last week after dedicating a portion of her Condition of the State speech to the topic, and this week the Senate released its plan to tackle Iowa’s high tax rates and the overpayment of taxes by Iowans.

The tax relief package contains a number of sections, but the highlight of the bill is a major reduction in the income tax Iowans pay. The top income tax rate in Iowa, 8.53 percent, currently applies for earnings over roughly $78,000, a level much lower than other states. Since the top rate starts so low, many middle-income Iowans are paying some of the highest tax rates in the country. When this tax bill is fully implemented Iowa will have a flat 3.6 percent tax rate. Our state tax rate will be the 4th lowest income tax rate in the country instead of the 8th highest as it is today.

Iowa also has a corporate tax rate of almost 10 percent. Again, one of the highest in the country. One of the consequences of a rate that high is the necessity for a series of credits and exemptions to attract investment to get around that punitive rate. Certain industries or companies now pay a lower effective rate or even nothing at all, but other companies not favored by the tax code have to pay the high rate. This bill starts to unwind that problem by reducing those carve outs in exchange for a lower, fairer rate.

The bill also fully eliminates all taxes on retirement income, it expands military pay exemption to full-time National Guard members and provides farmers a first-time pension exemption by exempting income from either cash rent or farm crop shares. There are many states, including Illinois, that do not tax pension income. These policies will keep retired Iowans from fleeing to states without a pension tax.

Significant, permanent income tax relief makes sure Iowans keep more of what they earn. It helps them weather the historically high inflation caused by reckless policies in Washington, D.C., and it makes Iowa a beacon of growth and opportunity.


In 2018 the first of a series of major tax relief packages moved through the state. It took decades for Iowa to become one of the highest taxed states in the country and it will take time to make Iowa one

of the lowest taxed states. It starts with conservative, sustainable budgets and ends with major, transformative tax relief. The proposal released by this week delivers on the promise to provide bold tax relief to Iowans and take the next steps towards ultimately eliminating the income tax in Iowa. This bill will have a generational impact on this state and bring even stronger growth in the future.

Please join me with my good friends Rep. John Forbes, and Rep. Eddie Andrews at our upcoming forums sponsored by the Great Urbandale Chamber of Commerce on the following dates:

-Saturday, January 29th, 10:30am.-12pm. VIRTUAL via Zoom

-Saturday, February 26th, 10:30am-12pm. Urbandale Chamber Office

-Saturday, March 26th, 10:30 am.-12pm. Urbandale Chamber Office

-Saturday, April 30th, 10:30 am.-12pm. Urbandale Chamber office

Urbandale Chamber Office is located at 2830 100th Street Suite #110 Urbandale, seats will be limited, virtual attendance option as well. Please click on the below link to RSVP the Urbandale Chamber forums:


Author: Brad Zaun

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  1. Please explain your claim that Iowa will have the 4th lowest income tax rate when the bill is fully implemented at 3.6%. There are 9 states that do not have a tax on income.


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