Iowa Legislature Accelerates Move to Flat Individual Tax Rate

Iowans would pay a flat income tax rate of 3.8% starting next year under a bill lawmakers passed Friday.

The legislation, SF 2442, accelerates the change lawmakers made in 2022 to move from a graduated-rate system to a flat rate, which they planned to be 3.9% starting in 2026. The just-passed bill moves the rate to 3.8% starting in 2025. It also raises the investment required for businesses to qualify for the targeted jobs withholding credit from $500,000 to $1 million and allows financial institutions with investment subsidiaries to elect to include ...