Des Moines, Iowa — House Republicans have introduced a bill to eliminate the state income tax on retirement income from pensions, IRAs and 401Ks.
Republican House Speaker Pat Grassley suggests it might prompt some older Iowans to think twice about relocating or living more than half the year in another state that doesn’t tax retirement income.
Grassley made his comments this weekend on “Iowa Press” on Iowa PBS. Social Security benefits are not taxed in Iowa. This House GOP plan — to expand that exemption to all retirement income — would go into effort for the 2022 tax year. That’s a year earlier than Republican Governor Kim Reynolds has proposed. Senate Democratic Leader Zach Wahls says the idea doesn’t meet the goal of targeting tax relief to low and middle income Iowans.
The governor’s staff estimates the state would collect 400 million dollars less in taxes annually if income from pensions and other retirement accounts is no longer subject to the Iowa income tax.
