The bill aims to eliminate the individual income tax in Iowa by establishing the Taxpayer Relief Trust Fund and the Income Tax Elimination Fund (ITEF), along with the creation of the Income Tax Elimination Board. This board will oversee the gradual reduction of the individual income tax rate to zero, with annual meetings starting July 1, 2027. Key provisions include significant fund transfers from the Taxpayer Relief Fund to both the ITEF and the Trust Fund, beginning with a $100 million transfer on July 1, 2025, and a larger $2.6 billion transfer on January 1, 2026. The Trust Fund will be managed by the Iowa Public Employees Retirement System (IPERS) and will include all collected moneys, interest, and investment income.

Additionally, the bill introduces specific criteria for adjusting the individual income tax rate based on the state's financial performance, with the Department of Revenue responsible for determining the new rate annually. Adjustments can only occur under certain conditions, such as maintaining a balance in the ITEF of less than $450 million and ensuring sufficient funds are available for transfer to the general fund. The legislation also outlines the liability protections for IPERS and board members regarding investment losses, and mandates a publication process for any new tax rates, exempt from certain administrative code provisions. Overall, the bill establishes a structured approach to eliminate the individual income tax while ensuring responsible fund management.

Statutes affected:
Introduced: 2.46, 8.54, 97E.4, 97E.3, 12B.10C, 97B.1, 12C.7, 422.5B, 422.36, 422.5