PROFESSIONAL LEGAL SERVICES SINCE 1927

On Tuesday, March 1st, 2022, Governor Kim Reynolds signed House File 2317 into law—a $1.9 billion tax cut which includes reductions to state income tax, state retirement income tax, and more. In this article we explain what changes to expect in the future.

Income Tax

Iowa currently has multiple income tax brackets, but starting in 2023 the new law will begin phasing in a flat 3.9% personal income tax and will be completely phased in by 2026. These changes will take effect over four years, and depending on your income, the changes might not impact you for several years. Here is what you can expect:

Retirement Income

Unlike the changes to state income tax, the state tax on retirement income will be completely removed starting in 2023. The bill defines retirement income as “the total amount received from a governmental or other pension or retirement pay plan, including defined benefit or defined contribution plans, annuities, individual retirement accounts, plans maintained or contributed to by an employer, or maintained or contributed to by a self-employed person as an employer, and deferred compensation plans or any earnings attributable to the deferred compensation plans.”

Other Changes

The bill also provides a tax break to certain farmers (if they are 55 or older, have farmed for 10 years, and are retired) and owners of employee-owned stock plans. Additionally, corporations may receive a 5.5% flat tax if the state receives more than $700 million per year in corporate income taxes.

If you have questions about how these changes could impact your future, it is important to meet with an attorney and a CPA to develop a comprehensive plan. The attorneys at Simpson, Jensen, Abels, Fisher & Bouslog, P.C. are experienced in handling complex tax planning issues. Contact us at (515) 288-5000 to discuss your issue with our firm.


Simpson Jensen Abels Fischer & Bouslog Law P.C. blogs, legal updates, and other content are for educational and informational purposes only. This is not legal advice and it does not create an attorney/client relationship between and Simpson Jensen Abels Fischer & Bouslog Law P.C. and readers. Readers should consult an attorney to understand how this content relates to their personal situation and circumstances. You should not use Simpson Jensen Abels Fischer & Bouslog Law P.C. blogs or content as a substitute for legal advice from a licensed attorney.

Sources: