This bill aims to eliminate the individual income tax in Iowa by creating the Taxpayer Relief Trust Fund and the Income Tax Elimination Fund (ITEF), along with the establishment of the Income Tax Elimination Board. The board will oversee the transition to a zero income tax rate, with meetings scheduled to review prior fiscal year actions starting July 1, 2027. The bill outlines significant financial transfers from the Taxpayer Relief Fund to the ITEF, including an initial transfer of $100 million on July 1, 2025, and a subsequent transfer of $2.6 billion on January 1, 2026. It also mandates that 5% of the remaining balance in the trust fund will be transferred to the ITEF annually beginning July 1, 2029.

Additionally, the bill introduces provisions for adjusting the individual income tax rate based on the financial performance of the ITEF and state revenue, with the Department of Revenue responsible for determining the new tax rate annually. Adjustments to the tax rate must meet specific conditions, including a minimum change of one-tenth of 1 percent and certain financial thresholds related to the ITEF. The bill also ensures that neither the Iowa Public Employees Retirement System (IPERS) nor board members will be personally liable for any losses incurred by the funds, provided there is no malicious misconduct. Furthermore, the director of revenue is required to publish new tax rates in the Iowa administrative bulletin and on the department's website, exempt from certain administrative code provisions.

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