Capitol Report - Week 8 2022
March 7, 2022
By: Casey Nickel, Dustin J. Miller, Brad C. Epperly
This week, Governor Reynolds signed two bills into law; House File 2317 and House File 2416. House File 2317 is the tax reform bill. House File 2416 is a Governor priority bill that allows only female athletes to compete in sports that are designated for females, regardless of how the student may identify. The law applies to both K-12 and collegiate levels.
Tax Bill Summary:
- Flat personal income tax rate of 3.9% by Tax Year 2026.
- Eliminate the tax on retirement income in Tax Year 2023.
- Remove the tax on capital gains upon the sale of stock related to employee stock ownership plans (ESOPs).
- Phases the corporate tax rate in Iowa to 5.5% percent from the current 9.8% as annual net receipts to the Iowa General Fund exceed $700 million annually.
- No elimination of the S-Corp Apportionment Tax Credit.
- No elimination of the computers and computer peripherals exemption for any taxpayer.
- Under the Research Activities Credit (RAC), supplies and computer use expenses are phased out as qualifying expenses as part of the credit calculation.
- Refundability for RAC is phased down to 50% in 5 years.
On Thursday, Governor Reynolds and the Iowa Economic Development Authority (IEDA) announced the awardees for the Manufacturing 4.0 Workforce Innovation grants and the Manufacturing 4.0 Technology Investment Program grants. The grants awarded a total of $22 million in funding to 83 different companies. IEDA is still accepting applications for the Manufacturing 4.0 Technology Investment program grants for smaller manufacturers (3-75 employees).
Negotiations over the Fiscal Year 2023 budget are expected to pick up this month. Both Senate and House leadership, as well as the Governor, have released their budget targets. The Revenue Estimating Conference will meet on March 10th to provide the most recent estimates for FY2022 and FY2023 and the first estimate for FY2024.
With the tax reform bill done and budget work underway, the legislature could adjourn earlier than planned this year as members of both chambers prepare to start campaigning for reelection following redistricting. The filing period for candidates for statewide and legislative races opened Monday, February 28th, and closes March 18th. The list of candidates can be found on the Secretary of State’s website.
Next Week: Should be filled with more subcommittees as legislators prepare for the second funnel deadline. March 18th is the final day for Senate bills to be passed out of a House committee and House bills to be passed out of a Senate committee. Appropriations and Ways and Means bills are exempt from the second funnel deadline.