Iowa Gov. Kim Reynolds highlighted her plan to accelerate cuts to the state’s income tax system during last night’s (Tuesday) Condition of the State address at the Iowa Capitol. In 2018, Iowa had the sixth-highest income tax rate in the nation at 8.98 percent. Republicans approved two tax cuts since then, but Reynolds says the state’s coffers remain full, despite predictions by opponents it would leave state government unable to meet spending commitments.
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Reynolds says such a surplus is a clear sign of room for further tax cuts.
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Iowa’s income tax rate is slated to drop to a flat 3.9 percent starting in 2026. She proposes an accelerated schedule, which would retroactively change the current tax year’s rate to 3.65 percent, followed by a drop to 3.5 percent in 2025.
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Prior to Tuesday’s Condition of the State address, Reynolds had indicated her long-term goal was the elimination of income taxes entirely in Iowa, but she did not outline her plan to get there in her speech. The 2024 Iowa Condition of the Judiciary from Chief Justice Susan Christiansen was held this morning (Wednesday), and the 2024 Iowa Condition of the Guard address is slated for Thursday morning.