The Greatest Income Tax Cut in U.S. History

Do Iowa’s recent series of tax reforms represent the greatest and most significant income tax cuts in our nation’s history?

Over 40 states have recently enacted some type of income tax reform, but what Iowa has accomplished is the most extensive of them all.

How we got here.

1934 – Iowa implemented the first income tax as a way to reduce property taxes.
1975 – 13 brackets with the highest rate set at 13 percent.
1987 – Nine brackets and rate cut to 9.98 percent.
1998 – Nine brackets and rate cut 10 percent to 8.98 percent.
2018 – Nine brackets and rate cut to 8.53 percent.
2023 – Four brackets with a 6.0 percent top rate. Federal deductibility eliminated.

The path forward.

2024 – Three brackets with a 5.7 percent top rate.
2025 – Two brackets with a 4.82 percent top rate.
2026 – One flat rate of 3.9 percent.

Iowa is the new tax reform leader.

Nine states do not have an income tax. Of the states that do, Iowa will have the fourth-lowest rate in 2026.

Legislation passed in Iowa over the last five years has delivered the deepest set of income tax cuts ever done in this country. It is the new “gold standard” that other states want to copy.

Iowa’s tax policy is making history, and it’s all been done above board, while being built on fiscal responsibility. A cleaver was not taken to the budget. Nothing has been cut. This has all been done out of the overpayment of income taxes.

As the state’s revenue increases every year, the growth of spending has been slowed. All the liberals can do is say, “You’re not spending enough!” And, of course, they never define what “enough” actually is.

There could be more cuts on the horizon.

Let’s keep going! Earlier this year, the Iowa Senate Republicans introduced a bill to cut rates even more before reaching 3.9 percent in 2026 while still tacking on additional cuts in years to come.

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