Iowa Governor Signs Bill Accelerating Move to New Flat Tax Rate

May 1, 2024, 9:02 PM UTC

Gov. Kim Reynolds (R) signed legislation Wednesday that accelerates the personal income tax revamp initiated in 2022, transitioning the state from a tiered tax rate structure to a flat rate sooner than first planned.

SF 2442 will institute a state income tax rate of 3.8% starting next year, a reduction set to take effect earlier than the previously scheduled 3.9% rate in 2026. The new law also adjusts the investment threshold for businesses to qualify for the targeted jobs withholding credit, increasing it from $500,000 to $1 million, and allows financial institutions with investment subsidiaries to elect to include the ...

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