2021 Victory: Cutting Income Tax Rates

As part of the reform bill Governor Reynolds signed into law on June 16, 2021, Iowans will keep more dollars in their bank accounts.

The landmark tax reform:

  • Cuts the top individual income tax rate from 8.53% to 6.5%
  • Reduces the number of tax brackets from nine to four
  • Exempts Paycheck Protection Plan dollars from state income tax

"Today's legislation ushers in a new era of growth and opportunity in Iowa," said Governor Reynolds. "But we are not done yet. Next year, I'll be proposing additional income tax cuts as we continue to make Iowa the most attractive place in America to open a business, raise a family, and start a career."

Quad-City Times article shared more of the governor's plan for the future:

"We’re going to spend the interim (between this year’s legislative session and next year’s) looking at it," Reynolds said. "States across the country are continuing to bring (their income tax) down. And if we’re going to remain competitive, we’re going to have to continue to take a look at that."

Then noting the trend of her fellow governors cutting taxes around the country, Reynolds continued, "Taxpayers win when you’ve got governors that are competing to create an environment that not only helps Iowans and Iowa families keep more of their money, but also creates an environment where businesses want to invest and grow, hire Iowans and really drive the quality of life that we want all Iowans to be able to enjoy."

The governor is correct; this year's tax reform simplifies Iowa's tax system and creates a clean starting point for real tax reform.

Iowa should not get complacent. Our state has a long way to go if it really wants to attract investment, jobs, and opportunities. Maintaining the status quo or taking only this step is not good enough. Other states will continue to improve their economic competitiveness. If Iowa doesn't move forward, we will fall behind.

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