Currently, Iowa is losing its senior population to other States because of Iowa’s income tax on pensions. Washington based Kiplinger Company noted that Iowa ranks as the 5th worst state to retire in. Each time a retiree moves out of the State they take their wealth, assets, contacts, and knowledge base with them and the State loses!
Iowans who retire are currently paying double tax on pension income. A retired person paid income tax on the money when it was earned through wages and then pays tax on it again as it gets drawn down through their pensions. We have a group of legislators developing a bill that would phase-out the taxation of pension, annuities, and individual retirement account income over a five year period; eliminating this double tax issue.
The phase-out would occur in 20% increments over the 2017 through 2020 tax years with 100% exempt in tax year 2021 and beyond.
It’s time for the State to keep our most valuable asset; the seniors of this State. I will be pushing for this bill to become law.
When the bill is fully enacted, the bill is estimated to reduce State revenues by $214 million; and reduce the tax liability of 11% of Iowa’s population.