WASHINGTON — Governor Kim Reynolds has set a goal of getting rid of the state income tax by the end of 2026, but Reynolds decided not to push for an interim step this year.
“We would have probably taken a look at it this year, bringing it down just a little bit more, but I wanted to kind of take a look, just watch what was happening with the environment, with inflation and recession,” Reynolds said. “We would have, I think, been OK, but I just focused on education reform this year and then really taking a look at government and how we provide services to Iowans.”
Reynolds and the rest of the nation’s governors met in Washington, D.C. this weekend and the governor made her comments at a forum sponsored by the Cato Institute, a libertarian think tank. Reynolds, who is chair of the Republican Governors Association, said 15 of her fellow Republican governors are proposing tax reductions in their states this year.
“The great thing about Republican governors is we’re very competitive,” Reynolds said, “…which means I’m going to have to continue to cut taxes for Iowans.”
Reynolds has signed three tax cut packages since taking office in mid-2017. The one she signed a year ago has ended state taxes on retirement income and will reduce Iowa’s individual income tax to a single rate of three-point-nine percent in 2026.
“But it’s not just cutting taxes and I think we’ve had some states that have had some difficulty with that,” Reynolds said. “They cut taxes, but they didn’t keep state spending in check and therefore ran into some issues down the line.”
The state budget plan Reynolds presented the legislature in January would spend just 82% of the tax revenue the state is projected to collect in the next fiscal year.
House Democratic Leader Jennifer Konfrst says the governor is in Washington, D.C. doing “a victory lap” for enacting policies that benefit corporations and wealthy Iowans.