Updated 3/1/2022: Iowa Governor Kim Reynolds signed a new tax bill law on Tuesday, March 1 that will effect every Iowan. The Economic Alliance has worked with legislators and partnering organizations to influence this tax structure that promotes economic growth, simplification, fairness and innovation, preserves local control, and protects economic development incentives that have been successfully leveraged to grow our region’s economy and remain competitive. This bipartisan bill includes the following:
- Personal Income Tax: Phases in a flat tax rate of 3.9% by tax year 2026. Reduces the number of brackets and rates over the same years.
- Corporate Income Tax: Reduces corporate income tax rates to a single rate of 5.5% from the current 9.8% if the state’s net receipts are more than $700 million in the previous fiscal year.
- Retirement Income: Exempts all income defined as retirement income for taxpayers aged 55 years and older starting in tax year 2023.
- Capital Gains: Removes capital gains tax on the sale of stocks from employee stock ownership plans (ESOPs).
- Tax Credits: Preserves tax credit programs, but lowers refundability of several programs, including Research Activities Tax Credits and Redevelopment Tax Credits in order to increase state revenues and offset rate cuts.
- Local Taxes: Makes no changes to current local option sales tax.
More News from the Capitol Last week Governor Reynolds signed a bill which provides a 2.5% increase in per-pupil state aid, which is an estimated $159 million in new funding for the next budget year. House Republicans revealed their budget proposal for fiscal year 2023 last week that includes an increase of 1.83% from fiscal year 2022. Senate Republicans are proposing a 1% increase over last year’s budget, as Governor Reynolds’ began to introduce her budget bills as well. The Revenue Estimating Conference (REC) will meet on March 10th to provide the legislature with the most recent state revenue estimates. Negotiations on the budget will increase following the March REC meeting as leadership works to finalize the budget and adjourn for the year. Last Friday was the final date for Senate bills to be passed out of a Senate committee and House bills to be passed out of a House committee. Any bills that did not make it out of committee, excluding tax and budget bills, are no longer eligible for consideration. This deadline, referred to as the first funnel, prioritizes legislative actions for the remainder of the session. The next legislative deadline, or second funnel is March 18th, when bills will have to pass out of their originating chamber and committee in the opposite chamber to remain eligible. Tax and budget bills remain exempt from the second funnel.
The Economic Alliance advocates for economic growth policies on the local, state and federal levels. We collaborate with the business community and other stakeholders and partners to develop our yearly policy agendas, to create a consistent voice for the region. We are a non-partisan organization that does not endorse or donate to political candidates. We support First Amendment rights for all people and encourage elected officials, candidates and citizens to be civil in discussions and debates on policy issues and political opinions. We are committed to leading by example.
Questions about public policy? Feel free to contact Public Policy Strategist, Barbra Solberg at firstname.lastname@example.org.