DES MOINES — Republican leaders in the Iowa House and Senate say it’s likely lawmakers will move up the date the Iowa personal income tax drops to just one flat rate, but there’s no agreement on the governor’s call to eliminate the income tax.
House Speaker Pat Grassley notes the state income tax rate is currently scheduled to drop to 3.9% for the 2026 tax year. “We’ve got about $3 billion in our Taxpayer Relief Fund,” Grassley says. “That needs to be back in the hands of Iowans as soon as possible and so I think that’s what you’re going to see a lot of conversation around in the upcoming months.”
Grassley says House Republicans believe tax cuts should be sustainable and let the state meet its budget obligations without raising a different tax to make up for lost revenue. “Quite frankly I don’t think we should be raising taxes to cut taxes,” Grassley says.
Senate Majority Leader Jack Whitver says Senate Republicans want to cut taxes as much as possible as quickly as possible. “I think everyone kind of agrees we want to get the cuts that we put in place…expedited and then the conversation will be: ‘What do we do next?’ Whitver says. “Do we cut it a little bit and then come back next year? Do we cut it a lot? Do we phase it out over time? Do we put some formula in place to phase it out?”
The 2024 Iowa legislative session begins Monday. Governor Reynolds has said she wants to eliminate the state income tax by January of 2027. She’ll outline her legislative agenda during the annual Condition of the State address next Tuesday.