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Public Policy Update: 2025 Legislature Comes to an End

May 19, 2025 | Public Policy

State Policy Update

The Iowa legislature adjourned early Thursday morning, 13 days after their scheduled end, and after they approved an overall state budget of $9.452 billion for fiscal year 2026. In the final days of session, the House and Senate reached compromises, passing pharmacy benefit manager reform, eminent domain protections, and unemployment insurance tax reform. On the final day of session, they passed the Iowa Economic Development Authority (IEDA) bill that makes significant changes to Iowa’s tax credits and incentives available. Property tax reform and Governor Reynolds’ energy omnibus bill were discussed throughout the session but failed to advance this year. Many of the Governor’s priorities, such as hands-free driving, cell phone use limitations in K-12 schools, and rural healthcare access, were passed by both chambers. 

Each year, the Cedar Rapids Metro Economic Alliance puts forth public policy priorities after much consultation and input from our members. The 2025 session marked the seventh year we have joined forces with Greater Iowa City, Inc. to advocate as a region for pro-growth policies. Highlights from the budget bills and policies that align with our priorities include:  

  • Economic Development Budget: Allocates $12.9 million to Iowa Economic Development Authority (IEDA) for various programs, including business development, community assistance, and tourism marketing. Allocates $2 million for the Manufacturing 4.0 program, $760,000 for registered apprenticeship programs, $873,000 to the Iowa Finance Authority for rent subsidies and $550,000 for a housing renewal pilot program. Allocates $6.9 million to Iowa Workforce Development for workforce operations, including job training and reentry programs for offenders. Provides $1.05 million for tourism promotion and $1.77 million for the Iowa Arts Council. Status: Passed House 61-30 and Senate 34-14. Awaits Governor Action.
  • Education Budget: Provides over $50 million allocated for various programs, including career and technical education, early childhood services and student achievement programs. Provides$300,000 to expand work-based learning as a part of Future Ready Iowa, $6.3 million for STEM programs, nearly $24 million for the Last Dollar Scholarship program, $6.5 million for the Iowa Workforce Grant & Incentive program, and over $760,000 for administrative support and additional funding for universities, including the University of Iowa. Also provides funds for Iowa tuition grants for students attending private institutions and vocational-technical schools. Status: Passed House 59-32 and Senate 34-14. Awaits Governor Action.
  • Rebuild Iowa Infrastructure Fund (RIIF) Budget: Provides $8.2 million for the water quality initiative fund, $10 million for the renewable fuel infrastructure fund, $10 million for the community attraction and tourism fund, $10 million for the Destination Iowa fund, $750,000 for regional sports authority districts, $9.6 million for lake projects, $5 million for state park infrastructure improvements, and $1.5 million for water trails and low head dam safety grants, $2.5 million for recreational trails, $1.2 million for public transit infrastructure, and $2 million for the railroad revolving loan and grant fund. Status: Passed House 58-24 and Senate 43-0. Awaits Governor Action.
  • Legislation to overhaul Iowa’s property tax ​failed to cross the finish line this session. Legislators intend to revisit reform in 2026 with more input from stakeholders. Status: Remains eligible for consideration next session.
  • The Iowa Economic Development Authority’s (IEDA) tax credit reform bill passed both chambers on the last day or session. The bill calls for significant restructuring of tax credit incentives by consolidating and/or eliminating some existing incentive programs and creating new programs. Also includes an increase for Workforce Housing Tax Credits. Status: Passed House 84-3 and Senate 44-1. Awaits Governor action. Fiscal Note.
  • A bill to further reform Iowa’s unemployment insurance program passed both chambers. A priority of the Governor, the proposal will lower the maximum benefit tax rate to 5.4%, the lowest allowed by federal law, and cut the taxable wage base by half. It also reduces the number of tax tables. Status: Passed House 60-27 and Senate 32-16. Awaits Governor Action. both chambers. Fiscal Note.
  • The Governor’s Health Care System Reform bill passed both chambers. It aims to recruit and retain medical providers by creating a “hub-and-spoke” partnership funding model to enhance Iowa’s rural health system. Additionally, a health care professional incentive program is created to provide financial awards to eligible health care professionals working in underserved areas. Status: Passed House 95-1 and Senate 41-4. Awaits Governor Action.
  • The Iowa New Resident and Graduate Tax Credit Act introduces two tax credits: one for new residents who have recently taken full-time employment in Iowa and another for recent graduates from Iowa-based educational institutions. Each credit allows eligible individuals to reduce their income tax liability by 100% for up to four consecutive tax years. Status: Remains eligible for consideration next session.
  • The Career Education Enhancement Act aims to connect students with local career opportunities and enhance their readiness for the workforce. It mandates the Iowa Department of Education to create a list of industry-recognized credentials for high school students, which will be aligned with career and technical education service areas. Additionally, the bill modifies the curriculum for grades five through eight to include career planning and pathways. Status: Signed into law 5/6.
  • The Governor’s child care proposal did not move forward this session. The proposal would launch a $16 million program to provide three-year grants of up to $100,000 to preschool providers and child care providers to provide wraparound transportation services for working parents. Status: Remains eligible for consideration next session. Fiscal Note.
  • A housing bill to remove the current $7 million annual cap on the amount of Real Estate Transfer Tax funds that can be transferred to the Housing Trust Fund allowing for more attainable housing development did not move forward. Status: Remains eligible for consideration next session.
  • The Midwest Interstate Passenger Rail Compact did not move forward despite bipartisan support. It would lay the groundwork for Iowa to join other midwestern states in support of passenger rail travel. Status: Remains eligible for consideration next session.

The governor has 30 days to sign or veto bills once they are sent to her and additionally can line-item veto budget bills. Next year, the legislature will convene on January 12th for the second half of the 91st General Assembly. Legislation that failed to pass this year are eligible for consideration in 2026. While the 2025 Iowa legislative session is over, our advocacy work continues. Be on the lookout for ways to engage in our efforts and contribute to our 2026 legislative priorities. Thank you to our members for supporting our efforts.