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Two plans to cut income taxes advance at the Iowa statehouse – KCCI Des Moines

The Iowa Senate Ways and Means Committee advanced Gov. Kim Reynolds’ bill Thursday that would lower the state’s income tax rate. Her proposal would accelerate the tax cuts she signed into law in 2022. Senate Review Bill 3038 would reduce Iowa’s current personal income tax rate of 5.7% to 3.65% in 2024. The reduction will take effect retroactively. The income tax rate is scheduled to fall again to 3.5% in 2025, and Senate Republicans are still working on their own tax reform plan. Republican state Sen. Dan Dawson said the plan would still cut income taxes, but would also work to eliminate Iowa’s income tax entirely. Senate Consideration Bill 3141 would reduce the income tax rate to 3.775% in 2026. Tax rates will be reduced again. It would also use a portion of the $3.5 billion currently in the Taxpayer Relief Fund to create the Iowa Taxpayer Relief Trust, which would eventually be used to eliminate Iowa’s income tax. Dawson said he would also like to push SSB 3141 through the committee so that the bipartisan Legislature releases fiscal memos on both plans so Iowans and lawmakers understand the costs of both plans. . Democrats and Senate Minority Leader Pam Jochum criticized both plans. “I don’t like either. Again, replacing our current very fair tax system, which supports schools and public safety, with a sales tax to fund those services… It’s going to hit the working class even harder than anyone else, certainly the working poor,” Jochum said. Dawson said Senate Republicans are not proposing raising sales or property taxes to fund state government. “We’re just taking the money we have, growing it, and using the proceeds to buy interest rates,” Dawson said. “Iowans are not going to experience any major tax changes anyway.”

The Iowa Senate Ways and Means Committee advanced Gov. Kim Reynolds’ bill Thursday that would lower the state’s income tax rate. Her proposal would accelerate and expand the tax cuts signed into law in 2022.

Senate Research Bill 3038 This would reduce Iowa’s current personal income tax rate of 5.7% to 3.65% in 2024. This reduction will take effect retroactively. In 2025, the income tax rate will drop again to 3.5%.

Senate Republicans are still working on their own tax reform bill. Republican state Sen. Dan Dawson said the plan would still reduce income taxes, but would also eliminate Iowa’s income tax entirely.

Senate Research Bill 3141 In 2026, the income tax rate will be reduced to 3.775%, and in 2027, the tax rate will be reduced again to 3.65%. It also plans to use a portion of the $3.5 billion currently in the Taxpayer Relief Fund to establish the Iowa Taxpayer Relief Trust. It would eventually be used to eliminate Iowa’s income tax.

Dawson said he would also like to push SSB 3141 through the committee so that the bipartisan Legislature releases fiscal memos on both plans so Iowans and lawmakers understand the costs of both plans. .

Democrats and Senate Minority Leader Pam Jochum criticized both plans.

“I don’t like either. Again, replacing our current very fair tax system, which supports schools and public safety, with a sales tax to fund those services… It’s going to hit the working class even harder than anyone else, certainly the working poor,” Jochum said. “That’s not the way to fund state government, and I’m never going to change that mind.”

Dawson said Senate Republicans are not proposing raising sales or property taxes to raise money for state government.

“We’re just taking the money we have, growing it, and using the proceeds to buy interest rates,” Dawson said. “Iowans are not going to experience any major tax changes anyway.”

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