Iowa Governor Kim Reynolds is looking to revamp the state’s income tax system.
Reynolds delivered her fourth Condition of the State Address Tuesday evening from the Iowa House Floor. Income taxes were the top priority of her address, an issue that will be at the forefront of the 2022 Iowa Legislative Session.
“Tonight, I will introduce a comprehensive bill that significantly cuts taxes for all Iowans,” said Reynolds. “First, it eliminates our complex system of multiple tax brackets and sets one tax rate of four percent, flat and fair.”
The governor received a standing ovation upon announcing her proposed tax bill. Reynolds says the tax cuts will occur gradually over the next four years.
“So that we protect priorities like education and public safety. But in the first year alone, taxpayers will save almost $500 million, and by 2026, when the bill is fully implemented, an average Iowa family will pay over $1300 less in taxes.”
Reynolds also said her sweeping tax bill would bring an end to taxes on retirement income.
“Under my plan, the tax repeal on retirement income won’t be limited to bank accounts. For farmers whose savings is as much the black dirt under their boots as the money in the bank, this bill will eliminate the tax on cash rent payments they receive when they retire from farming. And for employees who receive stock in their company for years of hard work, the bill will eliminate the tax on the sale of those shares.”
Reports say 10 other states have a flat tax rate, and that Iowa’s income tax is currently the 16th highest in the country.