Iowa GOP lawmakers want to eliminate tax on retirement income | Iowa News
By DAVID PITT, Associated Press
DES MOINES, Iowa (AP) — Republicans in the Iowa House on Monday proposed eliminating taxes on retirement income, a move that would cost the state about $2 billion in revenue over the first six years. .
The proposal is part of efforts to encourage retirees to stay in Iowa rather than move to other states, said Rep. Gary Mohr, chairman of the House Appropriations Committee.
“There are a lot of people in Iowa who leave Iowa when they retire, especially where I live, and frankly, I’d like to stop that emigration as soon as possible,” said Mohr, of Bettendorf. .
Mohr said data from the Iowa Public Employees Retirement System shows Florida and Texas — the two states with no income tax — are the top destinations for Iowa retirees in the system.
Nebraska, Illinois and Missouri are also among the top states for attracting Iowa retirees, Mohr said, but it’s unclear what role taxes play in those decisions.
Illinois does not tax pensions but has relatively high property and sales taxes. Missouri offers tax breaks for retirement income subject to income limits and Nebraska taxes retirement income.
State revenue experts have estimated that eliminating retiree benefits from income tax would cost the state about $2 billion over the first six years.
Mohr said Iowa “could afford it right now and that’s why I decided it was a priority for me.”
Iowa Gov. Kim Reynolds has a similar proposal, though it would start next year. Mohr’s bill would begin this year.
Democratic leaders have said they fear the Republican-proposed income tax cut package will help Iowa’s wealthiest residents far more than low-income residents, though Reynolds has said his plan would retain some deductions to help lower income levels.
The Republican governor also proposed tax rate cuts over the next four years, which would result in a 4% flat tax by 2026. The plan would cut state revenue by about $1.58 billion. dollars by 2026.
House Republicans also plan to introduce a broader income tax proposal this week.
Senate Democratic Leader Zach Wahls said last week that people on fixed incomes told him they were more concerned about rising property taxes, which he said should be more of a priority for lawmakers. .
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