Iowa Gov. Kim Reynolds signed a bill to speed up income tax cuts into law on Wednesday afternoon. The law, Senate File 2442, will cut the state’s income tax to 3.8 percent for the 2025 tax year.
The state’s tax rate is already set to decrease to 3.9 percent by 2026 due to a 2022 Iowa law Reynolds signed, but after better-than-expected revenues in fiscal 2023, lawmakers and Reynolds moved forward with expedited cuts this year.
Tax cuts have been a priority for Reynolds since she stepped into her role in 2018, and Reynolds made them a priority for this session during her Condition of the State Address in January.
The 3.8 percent tax rate falls short of the governor’s original proposal of 3.65 percent for 2024, and 3.5 percent for 2025.
The bill would also allow counties to eliminate county compensation boards and would adjust the rates for property tax growth adjustments for cities and counties.
In a news release Wednesday, Reynolds said with the latest tax cuts signed into law, Iowans have received $23.5 billion in tax relief from the series of cuts and changes Reynolds has enacted during her tenure.
“Simply put, we’ve comprehensively transformed our tax code and dramatically increased our competitiveness within a few short years,” Reynolds said in a news release on Wednesday. “At the same time, conservative budgeting practices have kept us living within our means and allowed us to continue making historic investments in key priorities of Iowans.”
Reynolds also signed a bill, Senate File 574, into law on Wednesday, creating a tax credit program for research and manufacturing projects with more than $1 billion in investment in the program. Data centers and retail shops don’t qualify.
Reynolds signs Biomarker bill
Reynolds also signed a bill, House File 2668, that will require insurance companies to cover biomarker tests that can test for cancer and other diseases.
“Research and technology have helped save countless lives from cancer and this bill opens new opportunities for Iowans to receive the best care they can to win the battle against cancer,” Reynolds said in a news release on Wednesday. “I’ve seen firsthand what a difference biomarker testing can make. These necessary advancements will be available to patients across Iowa.”