Iowa governor wants to end state taxes on retirement income; bill in the works

Published: Jan. 17, 2022 at 3:25 PM CST
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DES MOINES, Iowa (KTIV) - In her Condition of the State Address, Iowa Gov. Kim Reynolds announced a plan for retirement income to be excluded from the state’s income tax, starting next year.

Iowa House Republicans did not wait long before getting the ball rolling on the bill. House File 2026 introduced last Thursday is backed by 56 of the state representatives, all Republicans. One of the bill sponsors relays how the billion-dollar surplus is fueling the retirement tax cut plan.

“We have a billion dollars in surplus, so with that surplus, we can afford to sustainable and in a commonsense way give tax relief for Iowans and in this case older Iowans who are on retirement incomes,” said Rep. Mike Bousselot (R-Ankeny)

On the other side of the aisle, Democratic legislative leaders say income tax cuts in general for Iowans could result in higher property taxes.

“Republicans like to talk about lowering income tax rates, but then we see property tax go up. But even if someone winds up paying significantly less in income tax, there is a very real chance they are going to wind up paying all that back and maybe then some on the property tax,” said Sen. Zach Wahls (D-Coralville)

With Gov. Reynolds making tax cuts the centerpiece of her Condition of the State, with a large backing in the House for the bill, it could be one of the first pieces of legislation to hit the floor soon for debate.

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