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Budget and tax issues loom as lawmakers look to adjourn
Iowa lawmakers are negotiating tax policy and next year’s budget in an effort to shut down the 2021 session in the coming weeks. The Legislature’s scheduled end is Friday, April 30, but it appears unlikely lawmakers will complete their work by then, pushing the 2021 session into overtime.
 
In a sure sign adjournment is getting closer, committees on both sides are advancing appropriations bills. Agreement between House and Senate GOP leaders on overall spending has so far been elusive, but key lawmakers are working behind the scenes to find agreement in particular budget areas.
 
Tax issues also remain unresolved. Senate Republicans are advancing legislation that would fully implement income tax cuts passed in 2018, but it is unclear at this point what a final tax package will include.
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View the Iowa Legislative Bill Tracker

Iowa House, Senate tax debate heats up
With just weeks to go in the legislative session, the Iowa House and Senate are advancing competing tax relief proposals, a difference that could complicate plans for adjournment this year.

SF576, which passed the Senate 46-0, phases in the elimination of the inheritance tax. The state’s nonpartisan Legislative Services Agency predicts the repeal would reduce revenue by nearly $18 million in FY2022. The legislation would apply to deaths occurring on or after Jan. 1, 2021.
 
The bill also would remove “triggers” put in place in order for broad state income tax cuts passed in 2018 to go into effect. Those triggers ensure the state’s tax collections rise enough to offset tax cuts.
 
If the triggers are removed, the LSA predicts the tax cuts would reduce income tax liability by roughly $297 million in FY2023.
 
The House also has a bill eliminating the inheritance tax, HF841. It’s unclear at this point what a final tax package will look like before lawmakers adjourn for the year in the coming weeks. House Speaker Pat Grassley has made public statements that the House will take a cautious approach to removing the triggers.