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Gov. Kim Reynolds: 'The best is yet to come' on Iowa tax policy • Iowa Capital Dispatch [1]
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Date: 2024-12-05
Gov. Kim Reynolds told Iowans to expect more tax cuts in the future as she accepted an award Thursday from the Iowa Taxpayers Association.
Reynolds spoke at the organization’s annual symposium as she accepted the Linda S. Weindruch Award, given to people who have taken actions that “have resulted in a positive impact on the business tax climate in Iowa,” according to the ITA website.
In her speech, Reynolds spoke about the tax laws passed since 2017, saying that recent recognition Iowa has received as a leader on conservative tax policy came after years of work to reform a complex system.
“Iowa’s journey to tax competitiveness, it wasn’t a matter of a few modest tweaks,” Reynolds said. “It was a complete, top-to-bottom transformation that couldn’t have happened without an outstanding team of legislators, advocates, business leaders and others that were behind me.”
Most recently, the governor signed a law in May that sped up previous income tax cuts, decreasing the state’s individual income tax to a 3.8% flat tax rate beginning in 2025. The law built off of tax cuts made in 2022 to lower Iowa’s individual income tax rate to a 3.9% single rate by 2026. Additionally, the 2022 law will lower the state’s corporate tax rate to 5.5% gradually, bringing the rate down each year Iowa has more than $700 million in net corporate income tax receipts.
She praised the state for going from a “complex, unwieldy” tax code when she took office in 2018, with a top income tax rate of 8.98%, to a system with “no more complexity and there’s no more gimmicks.”
In addition to the income tax changes, Reynolds said other changes to Iowa tax law on issues like eliminating retirement income taxes and property tax cuts have also helped simplify the system. Tax cuts in the past six years will result in $24 billion less paid by Iowans in taxes over the next 10 years, she said.
She also said tax laws passed during President-elect Donald Trump’s first term in office helped Iowa successfully implement changes on the state level.
“So what was it that ultimately helped Iowa crack the code? The short answer is the 2017 tax bill signed into law by President Trump,” the governor said. “By lowering taxes for working families and doubling the standard deduction, it created a powerful argument for finally shedding federal deductibility.”
Though Reynolds and Republican state lawmakers have said that tax cuts implemented in recent years have helped people across the state, Democrats and some advocates disagree. During discussions on the latest round of income tax cuts earlier in 2024, critics said a flat income tax rate will disproportionately benefit high-income Iowans to the detriment of lower- and middle-class families. Others expressed concerns about how a loss in state revenue due to the tax cuts could impact funding for state priorities like the K-12 public school system and social services during economic downturns.
Though Reynolds did not share any specific tax policy goals for the 2025 session, Republican state senators have said they plan to introduce legislation on property taxes in the upcoming year, a follow-up to the 2023 property tax cuts that capped levy rates for cities and counties.
As Republicans are poised to take trifecta control in both Washington, D.C., and at the Iowa Statehouse, Reynolds said to expect more tax policy proposals to come.
“If our story shows anything, it’s just how much taxpayers have to gain when their leaders of fighting for them, both at the state and the national level,” Reynolds said. “So in Iowa and beyond, I’m here to tell you the best is yet to come.”
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