"We are not done yet. Next year we’ll be back and I’ll be proposing to cut our personal income taxes even further." - Governor Kim Reynolds
Last fall, Iowans voted for a conservative government. However, even with conservative control of the executive and legislative branches, tax reform was never guaranteed.
It takes more than just winning elections to enact the changes we deserve.
ITR and taxpayer voices like yours stoked the fire and helped make tax reform a reality this year.
Now, because of the tax reform bill Governor Reynolds signed into law yesterday, Iowans will keep more dollars in their bank accounts.
The landmark tax reform:
- Cuts the top individual income tax rate from 8.53% to 6.5%
- Reduces the number of tax brackets from nine to four
- Phases out Iowa's inheritance tax over four years
- Exempts Paycheck Protection Plan dollars from state income tax
- Reduces property taxes by phasing out the mental health levy over two years and funding mental health services through the state's budget
- Phases out the state's "backfill" paid to cities, counties, and school districts
This is a significant bill and was a heavy lift for legislators. Senate Majority Leader Jack Whitver said the governor's signature on SF 619 "represents the culmination of years of work by Senate Republicans as we continue to keep our promise to Iowans to reduce their tax burden."
ITR member Ken Smith speaking at the tax reform bill signing on June 16, 2021.
ITR member Ken Smith was invited to speak at the bill signing. Ken told the governor and those in attendance, "For those of us who are living on fixed incomes it (SF 619) helps to relieve the property tax burden on us... With this kind of positive tax legislation helping, Iowa is the place where I choose to retire."
"Today's legislation ushers in a new era of growth and opportunity in Iowa," said Governor Reynolds. "But we are not done yet. Next year, I'll be proposing additional income tax cuts as we continue to make Iowa the most attractive place in America to open a business, raise a family, and start a career."
A Quad-City Times article shared more of the governor's plan for the future:
"We’re going to spend the interim (between this year’s legislative session and next year’s) looking at it," Reynolds said. "States across the country are continuing to bring (their income tax) down. And if we’re going to remain competitive, we’re going to have to continue to take a look at that."
Then noting the trend of her fellow governors cutting taxes around the country, Reynolds continued, "Taxpayers win when you’ve got governors that are competing to create an environment that not only helps Iowans and Iowa families keep more of their money, but also creates an environment where businesses want to invest and grow, hire Iowans and really drive the quality of life that we want all Iowans to be able to enjoy."
The governor is correct; this year's tax reform simplifies Iowa's tax system and creates a clean starting point for real tax reform.
Iowa should not get complacent. Our state has a long way to go if it really wants to attract investment, jobs, and opportunities.
ITR Vice President Chris Hagenow said, "Maintaining the status quo or taking only this step is not good enough. Other states will continue to improve their economic competitiveness. If Iowa doesn't move forward, we will fall behind."
Nine states – including Iowa's neighbor South Dakota – do not have an income tax, and thirty-three more states – including neighbors Illinois, Kansas, Missouri, Nebraska, and Wisconsin – have top marginal individual income tax rates lower than Iowa's.
This progress can only continue if the right legislators are in office. ITR PAC works to elect candidates who share this vision, but we can't do it alone. We need your help.
Donate to ITR PAC so we can keep improving Iowa’s tax climate.