Today, Senate Republicans unveiled their income tax relief package to the delight of taxpayers all across the state.
“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,” said Senate Majority Leader Jack Whitver, R-Ankeny. “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.”
“When fully implemented, this bill will make Iowa’s individual income tax rate the 4th lowest in the country instead of the 8th highest as it is today. It will save the average taxpayer $1,590 annually. It eliminates retirement taxes, and reforms the corporate code making it flatter and fairer. Finally, this bill sets the stage for the eventual elimination of the individual income tax in Iowa.”
The highlights of the bill include:
- Establishes a flat 3.6% individual income tax rate, reduced from the 8.53% today
- Cuts the corporate rate to a flat 7.8%, reduced from 9.8% today 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
“As the chair of the Senate Ways and Means Committee, I have the intention of setting a tax policy that reflects the goals of the Senate Republican caucus – rewarding hard work, attracting businesses to Iowa, and making our state more competitive with those around us,” said Senator Dawson, R-Council Bluffs. “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.”
The bill will be filed this week. The Senate Ways and Means Committee will quickly begin consideration of this policy.