State of Iowa Tax Structure Changes
On March 1, 2022, Governor Kim Reynolds signed into law Iowa’s most significant tax reform bill in state history, establishing a flat individual income tax of 3.9% to be phased in over three years starting in 2023. This law, which had bipartisan support, will help Iowa businesses attract and retain workforce.
In addition, the elimination of income tax on all retirement income was signed into law effective in 2023.
State Corporate Income Tax Reform was also part of the upcoming tax changes in Iowa. Following the close of the state’s fiscal year (June 30), the Department of Revenue will determine the new top corporate income tax rate and apply it effective January 1 of the following tax year. New top rates will be determined each fiscal year that net corporate income tax receipts exceed $700 million, until a uniform 5.5% corporate income tax rate is achieved, at which time it would be capped. Iowa has a single factor corporate tax on sales only within the state.
- tax structure