Iowa Considers Sales Tax Bump to Fund 10% Income Tax Cut

Iowans could pay a penny more sales tax on the dollar in return for an income tax rate cut and more funding for environmental protection under a plan laid out by Gov. Kim Reynolds (R-Iowa) on Tuesday.

Iowa’s statewide sales and use tax would shift to 7% from 6% under Reynolds’ Invest in Iowa Act, unveiled during her annual address to the Legislature. The increase, which would begin in 2021, would bump the final sales tax rate to 8% in Iowa communities that also levy a 1% local option sales tax.

• About $540 million would be generated through the tax ...