Iowa lawmakers working to eliminate state taxes on retirement income – KCCI Des Moines
Iowa House Republicans are laying out plans to make retirement income tax-free. Republican lawmaker Gary Mohr introduced HF 2026 last week. The bill would eliminate state taxes on all retirement income. Mohr says in 2021, Iowa’s largest pension plan paid out $282 million in benefits to Iowans living out-of state. “Roughly 12% of IPERS retiree benefits, money that was raised and invested in Iowa, is now going out of state to the retirees around the country and around the world,” Mohr explained. Chris Hagenow, vice president of Iowans for Tax Relief and former Republican state representative, believes Iowa’s tax code is driving the migration.” will move to one of eight or nine states that have no income tax at all or three other states that don’t tax retirement income simply to maximize their savings as they work off of either fixed income or whatever else they’ve earned through the course of their career,” Hagenow said.”These folks have contributed to their communities, their families, their churches all along and then, because of our tax code, there’s an incentive for them to leave Iowa once they reach their retirement age,” he added.But some have pushed back on that argument, including Democrat and state representative Dave Jacoby, saying that Iowa’s brutal winters are the reason behind the exodus of Iowa retirees. “When it’s supposed to be -35 degrees, is it money that keeps you here?” Jacoby asked. “Or is it heat and mountains and water ?”But Mohr said his goal is not to stop retirees from spending time in warmer weather but to stop the incentive for Iowans to change their state of residence.”When you’re retired your kids are all grown, you really have nothing keeping you here if you want to save money,” Mohr said. “I think that’s why a lot of people change their state of residence. That’s what I’m trying to stop.”Jacoby said “cutting seniors’ taxes” is a “bipartisan effort.” “I’m really interested in looking at the bill and working on it to make it happen,” he said. “I want to see it actually help people where they smile and say, ‘We saved money, we were able to fix windows at our house.’ ‘We saved some money, we actually vacationed in Florida but came back to Iowa.'”But he said there are still major questions that need to be answered. “One of the questions is cost and that’s important,” Jacoby said. “Another question is: are we using one time dollars from President Biden to keep the budget long enough to make this cut?”This bill includes just one of the proposals Gov. Kim Reynolds is pushing for in her larger tax plan. Reynolds’ tax cut proposal also includes a 4% flat personal income tax rate and a push to lower the top corporate tax rate to 5.5% over time.
DES MOINES, Iowa —
Iowa House Republicans are laying out plans to make retirement income tax-free. Republican lawmaker Gary Mohr introduced HF 2026 last week. The bill would eliminate state taxes on all retirement income.
Mohr says in 2021, Iowa’s largest pension plan paid out $282 million in benefits to Iowans living out-of state.
“Roughly 12% of IPERS retiree benefits, money that was raised and invested in Iowa, is now going out of state to the retirees around the country and around the world,” Mohr explained.
Chris Hagenow, vice president of Iowans for Tax Relief and former Republican state representative, believes Iowa’s tax code is driving the migration.
“[Iowans] will move to one of eight or nine states that have no income tax at all or three other states that don’t tax retirement income simply to maximize their savings as they work off of either fixed income or whatever else they’ve earned through the course of their career,” Hagenow said.
“These folks have contributed to their communities, their families, [and] their churches all along and then, because of our tax code, there’s an incentive for them to leave Iowa once they reach their retirement age,” he added.
But some have pushed back on that argument, including Democrat and state representative Dave Jacoby, saying that Iowa’s brutal winters are the reason behind the exodus of Iowa retirees.
“When it’s supposed to be -35 degrees, is it money that keeps you here?” Jacoby asked. “Or is it heat and mountains and water [elsewhere]?”
But Mohr said his goal is not to stop retirees from spending time in warmer weather but to stop the incentive for Iowans to change their state of residence.
“When you’re retired [and] your kids are all grown, you really have nothing keeping you here if you want to save money,” Mohr said. “I think that’s why a lot of people change their state of residence. That’s what I’m trying to stop.”
Jacoby said “cutting seniors’ taxes” is a “bipartisan effort.”
“I’m really interested in looking at the bill and working on it to make it happen,” he said. “I want to see it actually help people where they smile and say, ‘We saved money, we were able to fix windows at our house.’ ‘We saved some money, we actually vacationed in Florida but came back to Iowa.'”
But he said there are still major questions that need to be answered.
“One of the questions is cost and that’s important,” Jacoby said. “Another question is: are we using one time dollars from President Biden to keep the budget long enough to make this cut?”
This bill includes just one of the proposals Gov. Kim Reynolds is pushing for in her larger tax plan. Reynolds’ tax cut proposal also includes a 4% flat personal income tax rate and a push to lower the top corporate tax rate to 5.5% over time.
