Tax Reform

Governor Reynolds signing property tax bill

When entering office, Governor Reynolds made cutting taxes for all Iowans a priority. Under her leadership, Iowa has undergone bold and historic tax reform, becoming the #1 state for most reduced personal income taxes in the nation.

Thanks to these tax cuts, Iowans are projected to save over $25 Billion over the next 10 years. In the 2026 Tax Season, the average family of 4 paid $7,500 less in taxes due to state and federal tax cuts.

Governor Reynolds delivers 2025 Condition of the State

 

Governor Reynolds signing the UI reform bill
Tax Reform
YearAccomplishment
2018

Enacted the largest reduction in state income tax to date at that time, saving Iowa families an average of $1,000:

  • Reduced the top tax bracket from 8.53% to 6.5%

  • Lowered the corporate tax rate from 12% to 9.8%

  • Removed federal deductibility

  • Reduced the number of tax brackets from 9 to 4

2021

Passed legislation to eliminate inheritance taxes.

2022

The second of Gov. Reynolds’ major tax reforms:

  • Lowered the individual income tax rate for all Iowans to a flat 3.9% rate by 2026

  • Eliminated income tax on all retirement income starting in 2023

  • Overhauled Iowa's corporate tax structure.

Gov. Reynolds named the #1 Most Fiscally Responsible Governor by the Cato Institute.

2024 Fast-tracked the planned 3.9% flat income tax rate by 2026 to a 3.8% rate by 2025. Once again named by the Cato Institute the #1 Most Fiscally Responsible Governor. 
2025

Enacted major reforms to the Unemployment Insurance Tax system, saving businesses a projected $1 Billion over 5 years:

  • Decreased the unemployment insurance taxable wage base by 50%

  • Simplified the unemployment tax tables

  • Decreased the maximum tax rate from 9% to 5.4%

Iowa was also named the #1 state for most reduced personal incomes taxes since 2000 (via visual capitalist).

2026Passed historic property tax legislation, estimated to save Iowans...