Governor Reynolds enacts tax cuts and mental health funding changes

Governor Reynolds enacts tax cuts and mental health funding changes

SF 619 drops tax rate from 8.53% to 6.5%  Reduces the number of tax brackets from 9 to 4 Eliminates Federal Deductibility Phases out the mental health levy over 2 years, saving property taxpayers over $100 million Phases out state inheritance tax over 4 years, saving taxpayers nearly $100 million   Expands eligibility for the Beginning Farmers Tax Credit   Food Bank sales tax exemption   “In Iowa we are cutting taxes and helping Iowans keep more of their hard earned money. Not only does this legislation reduce income and property taxes, it completely phases out the state’s inheritance tax,” said Gov. Reynolds. “With this legislation, we also provide steady and reliable funding for our state’s mental health system while making significant investments in housing, workforce, and child care.”  

RELATED: STATE OF MENTAL HEALTH: more Iowans struggling, youth mental health worsening, state reevaluating funding system (kwwl.com) Democrats have criticized the move to remove the state’s backfill to fund mental health services. State Representative Timi Brown-Powers of Waterloo says the point of the backfill was to help with property tax relief.

Dedicated, sustainable mental health funding from Iowa’s General Fund Includes a growth factor that allocates new money as revenue increases  Increases eligibility for the Child Care Tax Credits from families making $45k – $90k   Increases workforce housing tax credits to $40 million for FY22 ($35 million for years following)   Extends Brownfield/Grayfield and increases funding from $10 million to $15 million  Develops a Manufacturing 4.0 strategic roadmap for the future of manufacturing in the state of Iowa  “Removing this backfill will result in over $150 million less every year to make up for lost tax revenue designed to keep property taxes low. While the original bill from 2013 led to an increase in property taxes for homeowners and farmers, the state breaking its promise will again raise property taxes on homeowners and farmers,” Brown-Powers wrote in a recent newsletter.

Her office notes the following changes for Iowa’s mental health system: Prior to this, Iowa had been the only state to fund mental health services through a local property tax levy. Reynolds laid out changes to the state’s mental health system in her 2021 Condition of the State address in January.

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