Iowa 2023-2024 Regular Session

Iowa Senate Bill SSB3141

Introduced
2/1/24  
Introduced
2/1/24  

Caption

A bill for an act relating to state taxation by modifying future individual income tax rates, creating processes for reducing the individual income tax rate to zero, reducing future contingent corporate income tax rates, making appropriations, and including effective date, applicability, and retroactive applicability provisions.

Impact

The implementation timeline for the bill suggests that there will be reduced flat income tax rates starting from January 1, 2026. Initially, the flat income tax rate will decrease from 3.90% to 3.775%, and subsequently further reduced to 3.65% for tax years beginning on January 1, 2027. This gradual reduction aims to position the state towards a potential zero-income tax scenario, contingent on the availability of appropriate revenues and fund transfers. Additionally, it modifies the corporate income tax minimum rate making it more flexible and reflective of state revenues, impacting businesses operating within Iowa.

Summary

Senate Study Bill 3141 proposes significant changes to the state taxation system by implementing processes aimed at reducing individual income tax rates to zero over time. The bill establishes both the Taxpayer Relief Trust Fund and the Income Tax Elimination Fund to facilitate these reductions. The approach includes transferring specific amounts from the Taxpayer Relief Fund to support the Income Tax Elimination Fund to ensure that funds are available for future tax rate adjustments. This emphasizes a strategic long-term plan to alleviate income tax burdens on residents of Iowa.

Contention

While the bill aims to create economic growth through tax incentives, there are potential points of contention. Critics may express concern regarding the sustainability of state revenues if personal and corporate income taxes are drastically reduced or eliminated. Additionally, the legislative discussions surrounding this bill could highlight divisions between those who support significant tax cuts as a means to bolster economic activity and those who argue for maintaining robust revenue for public services. The fiscal implications and administrative capacities to effectively manage these changes will likely be central to debates surrounding the bill.

Companion Bills

IA HSB720

Related A bill for an act relating to state taxation by modifying future individual income tax rates, creating processes for reducing the individual income tax rate to zero, reducing future contingent corporate income tax rates, making appropriations, and including effective date, applicability, and retroactive applicability provisions.

Previously Filed As

IA HSB720

A bill for an act relating to state taxation by modifying future individual income tax rates, creating processes for reducing the individual income tax rate to zero, reducing future contingent corporate income tax rates, making appropriations, and including effective date, applicability, and retroactive applicability provisions.

IA SF2398

A bill for an act relating to state taxation by modifying alternate and individual income tax rates, and including effective date and retroactive applicability provisions.(Formerly SSB 3038.)

IA SF552

A bill for an act relating to individual and corporate income taxes, the insurance premium tax, and including the contingent repeal of the individual income tax, and including retroactive applicability and effective date provisions.(Formerly SSB 1126.)

IA SSB1126

A bill for an act relating to individual and corporate income taxes, the insurance premium tax, and including the contingent repeal of the individual income tax, and including effective date provisions.(See SF 552.)

IA HSB543

A bill for an act relating to state taxation and appropriations by combining special purpose funds, modifying individual income tax rates, placing assessment limitations for property tax purposes on commercial child care facilities, and modifying unemployment benefits, and including effective date and retroactive applicability provisions.

IA SSB3038

A bill for an act relating to state taxation and appropriations by combining special purpose funds, modifying individual income tax rates, placing assessment limitations for property tax purposes on commercial child care facilities, and modifying unemployment benefits, and including effective date and retroactive applicability provisions.(See SF 2398.)

IA HF496

A bill for an act modifying the individual and alternate income tax rates, and including applicability provisions.

IA SSB1239

A bill for an act relating to the elimination of the individual income tax and alternate income tax by creating the taxpayer relief trust fund and income tax elimination board and fund, and making appropriations.

IA HF566

A bill for an act modifying individual income tax rates and providing tax credits for certain married persons filing a joint return, and including effective date and retroactive applicability provisions.

IA HSB306

A bill for an act modifying the research activities tax credit available against the individual and corporate income taxes, and including effective date and retroactive applicability provisions.

Similar Bills

IA HSB720

A bill for an act relating to state taxation by modifying future individual income tax rates, creating processes for reducing the individual income tax rate to zero, reducing future contingent corporate income tax rates, making appropriations, and including effective date, applicability, and retroactive applicability provisions.

CA AB3008

Public postsecondary education: exemption from paying nonresident tuition.

CA AB3255

Postsecondary education: omnibus bill.

IA HSB543

A bill for an act relating to state taxation and appropriations by combining special purpose funds, modifying individual income tax rates, placing assessment limitations for property tax purposes on commercial child care facilities, and modifying unemployment benefits, and including effective date and retroactive applicability provisions.

IA SSB3038

A bill for an act relating to state taxation and appropriations by combining special purpose funds, modifying individual income tax rates, placing assessment limitations for property tax purposes on commercial child care facilities, and modifying unemployment benefits, and including effective date and retroactive applicability provisions.(See SF 2398.)

CA AB2973

Postsecondary education: omnibus bill.

CA SB77

Higher education trailer bill.

CA SB383

Postsecondary education: omnibus bill.