House Speaker Pat Grassley says the agreement Republicans have reached to dramatically cut the personal income tax rate to 3.9% by 2026 includes a backstop if the economy dips. If state tax collections fall below expectations, money in the state’s Taxpayer Relief Fund would be used to fill state budget holes.

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Republican lawmakers passed tax cut packages in 2018 and 2021. Grassley said taking an initial vote on the House GOP’s 2022 version eight days ago has provided momentum to this year’s tax cutting effort.

“Before the session we said we were going to provide real tax relief for Iowans, we have an overcollection of their money and we’re going to get it back in their hands as quickly as possible,” Grassley told reporters. “I think we’re showing that doing that in February, we were serious about it and we’ve followed through on those commitments.”

The plan Republicans intend to vote upon today includes a corporate income tax rate reduction, but it’s not automatic. If total corporate income tax payments exceed $700 million, the corporate tax rate would be reduced down.

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“From the House’s perspective, we feel very confident,” Grassley said. “Not only are we right there where we wanted to be on the income and retirement pieces, we’ve also taken the holistic approach to looking at that corporate piece that we felt very strongly about.”

The plan erases state taxes on retirement income. It also includes a tax break for retired farmers. 

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