One year ago, ITR encouraged lawmakers to “think big and don’t back down” and “it was time to seize the opportunity to create a better and brighter future for Iowa.”
Did it happen?
Yes, it did. Simply put, this year has been the most pro-taxpayer legislative session in recent history. Reforms passed this year will make Iowa a better, stronger, and more conservative state for future generations.
Clearly, Iowans were overpaying on their taxes!
Fiscal Years 2021 and 2022 each had a billion-dollar surplus. This substantial overcollection of tax dollars necessitated a significant reform to the Iowa tax code.
Governor Reynolds and the legislature worked to pass the most significant tax relief legislation in state history. When fully implemented, the reform will:
- Create a 3.9% flat individual income tax rate
- Eliminate state income taxes on retirement income in 2023
- Set a path to reduce the corporate income tax from 9.8% to 5.5%
- Phase-out special tax incentives in the corporate tax code
Individual income tax rates will be reduced as follows:
- 6.0 percent (2023)
- 5.7 percent (2024)
- 4.82 percent (2025)
- 3.9 percent (2026)
An immediate impact.
A few weeks ago, Iowa’s Revenue Estimating Conference predicted the state will extract 1.9% fewer dollars from taxpayers in Fiscal Year 2023. Governor Reynolds released a statement saying:
“December’s REC projections confirm that we are achieving our goal of correcting the state’s overcollection of taxpayer dollars and returning it to hardworking Iowans. The historic tax cuts I signed into law earlier this year will begin to take effect in a few weeks, and as planned and expected, the projections show a slight dip in the state’s revenue. However, our state’s budget remains robust, and we continue to invest in key priorities to benefit all Iowans.”
Your checking and savings account.
You, your neighbors, and every other Iowan will have a lower tax bill and keep more money in their bank account. One estimate states that once fully implemented, the average Iowa family will save around $1,600 yearly from this tax reform.
Allowing Iowans to keep more money is vitally important to family budgets. Inflation is real, and it’s impacting Christmas in addition to our everyday lives. Fiscal discipline, less spending, and lower taxes will fix this problem.
We’re doing that in Iowa, and it’s working in Iowa. Despite all of the headwinds that come from the misadventures of Congress, things are good in Iowa, and we are heading in the right direction.