Modernizing Iowa’s Tax Code

Well-publicized leadership changes in the Iowa Senate created a busy week at the Capitol. Iowans for Tax Relief congratulates Senator Whitver (Majority Leader), Senator Schneider (Senate President), Senator Sinclair (Majority Whip), and Senator Chapman (Assistant Majority Leader) on their new leadership positions.

This was the final week for bills previously approved by one chamber to pass out of the other, informally known as a funnel week. Bills failing to do so cannot be considered for the rest of the session. Budget, tax policy, and oversight bills are exempt from this deadline, though, and understandably took a back seat this week.

The Iowa Senate has already passed their tax reform plan, the Iowa Working Families Tax Relief Act and the Iowa House advanced Governor Reynolds’ tax reform plan through sub-committee two weeks ago. Based on the many discussions ITR has had at the Capitol this week, we believe the House will resume work on tax reform in earnest next week.

Modernizing Iowa’s Tax Code

Iowa has a sales tax code based on an economy that doesn’t exist anymore.  With the click of a mouse or swipe on a smartphone, an increasing number of people purchase goods online, often allowing consumers to avoid paying sales tax.

Both tax reform plans being considered by the Iowa Legislature this year update Iowa’s sales tax to include online purchases, to varying degrees.

  • This is not a new tax for many of these items. Most internet-based transactions are already technically subject to sales tax through what is known as a use tax, which the consumer is required to remit directly to the state themselves.
  • Modernizing our sales tax will stop the erosion of our tax base.
  • Modernization will level the playing field for all retailers by not subjecting main street retailers to a different set of rules than internet businesses.

We support modernizing the Iowa tax code as a part of broad income tax reform.  As proposed within both plans being considered, preserving our sales tax base will allow income tax rates to be reduced.

Americans for Tax Reform reports numerous Iowa businesses have given bonuses, increased wages, or expanded operations because of the Tax Cuts and Jobs Act passed by Congress late last year. Visit to see the list.

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers.  Email to share your opinion. We welcome your input.

Visit our website for a complete list of legislation ITR is tracking during this legislative session.

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