DES MOINES, Iowa (KGAN) — It's been three years since the Iowa state income tax rate dropped to 3.9%.
Lawmakers are now proposing an even bigger drop and eventually getting rid of it. State Senator Dan Dawson of Council Bluffs is leading the charge.
If passed, Iowans would pay a 2.5% flat rate by 2028 and, based on state revenue, it would keep dropping until it's eliminated.
Democrats want to make sure the tax breaks benefit the middle class. Dawson says his plan will give money back to all Iowans.
"People on the upper end have very clever ways of sheltering their income where they don't pay income tax. People on the lower end, you know, obviously don't pay income taxes as well. It always seems like middle-class Iowans carry the burden.
Republicans say Iowa's nearly $2 billion budget surplus makes slashing taxes sustainable, but Democrats say lawmakers need to look at the long-term impacts.
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