The continuing downward march of Iowa State income tax became a reality at the end of last week as lawmakers in the House and Senate agreed to a 3.9% flat tax by tax year 2026.
The Bill attracted votes from some Democrats as well as all the Republicans in both Houses and Governor Reynolds is expected to sign it soon.
In addition to a flat tax rate of 3.9%, retirement income would be taken out of State tax completely and there are changes to the corporate tax structure too.
Corporate tax rates drop from 9.8% to 5.5%, but there is a security blanket here. The drop here would only occur when the State reaches $700M of revenue. “It makes sure it maintains the state at $700 million worth of revenue, so you’re not going to see any drastic dips when it comes to revenue,” House Speaker Pat Grassley said. “You maintain that level.”
This victory for Governor Kim Reynolds comes just before she hits the national stage to deliver the Republican response to the President's State of the Union speech tomorrow.
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