GOP Lawmakers Propose $1 Billion Worth Of Income Tax Cuts

Des Moines, Iowa — Republican legislators plan to cut Iowans’ income taxes by a billion dollars next year.

Cuts approved two years ago would have implemented a flat rate of just under four percent in 2026. The new GOP plan goes lower, to 3.8 percent and it would take effect a year earlier — in 2025. Senator Dan Dawson, a Republican from Council Bluffs, is chairman of the Senate Ways and Means Committee that develops tax policy.

Republican Representative Bobby Kaufmann of Wilton is chairman of the Ways and Means Committee in the Iowa House.

The plan also tweaks property tax limits the legislature enacted last year, letting some cities and counties a bit more property tax revenue. The bill has already cleared a Senate subcommittee this (Thursday) morning. Lobbyists for developers, banks and business groups are praising the legislation. Brad Hartkopt is with the Iowa Association of Business and Industry.

Mike Owen of Common Good Iowa says tax cuts should instead be targeted to Iowa’s working poor.

Republicans say this latest round of tax cuts are possible because their state budget plan for next year doesn’t spend all of the available tax revenue and there will be a withdrawal from the Taxpayer Relief Fund. It’s where unspent taxes from previous years have been deposited. Representative Kaufmann says that Taxpayer Relief Fund will have more than two billion dollars left in it after next year’s withdrawal.

Senator Dawson suggests there may not need to be a withdrawal from the Taxpayer Relief Fund if the economy grows, which will lead to more tax revenue for the state.

Dawson has proposed investing the nearly four billion dollars in the Taxpayer Relief Fund and using the profits to ratchet down the income tax rate over time, but that’s not included in this bill making its way through the legislature this week. There are some other policies in the bill. It lets county boards of supervisors decide whether to keep or disband county compensation boards. Kaufmann says the boards have contributed to the explosion in property tax growth.

The bill also repeals an 1848 law that has required Lee County to maintain TWO county courthouses.