Gov. Kim Reynolds says property taxes, not income taxes, will be focus in 2026
Gov. Kim Reynolds appeared May 23, 2025 on "Iowa Press." (Screenshot from Iowa PBS video)
Gov. Kim Reynolds said Friday that eliminating Iowa's income tax may not be on the table before she leaves office — but that she plans to focus on reducing property taxes in the 2026 legislative session.
In her public statement following the adjournment of the 2025 legislative session, Reynolds did not bring up income taxes as a goal for 2026. Instead, she highlighted her plans to work on 'reducing Iowans' property tax burden' next year.
During an interview on 'Iowa Press,' moderator Kay Henderson of Radio Iowa asked Reynolds if she had abandoned the goal to end Iowa's income tax or planned to move on cutting both income and property taxes in 2026. Reynolds said, 'that would be aggressive.'
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'I want to create a foundation that when I do leave, the next Republican governor that sits in that chair will be able to continue to reduce the individual income tax rate,' Reynolds said. 'But I do need to focus on property taxes. That is what we hear about all the time.'
Reynolds announced in April she will not seek reelection in the 2026 general election. During her tenure as governor, Reynolds has put a major focus on cutting taxes, particularly focusing on Iowa's income taxes. Iowa's individual income tax rate fell to a flat 3.8% rate in January following a law the governor signed in 2024 that sped up 2022 cuts to individual and corporate income taxes.
While Reynolds has celebrated these reductions, she has also said in previous years that she wanted to go further and completely eliminate the state's income tax. At a Cato Institute forum in 2023, Reynolds said her goal was to 'get to zero individual income tax rate by the end of this second term.'
The governor said in 2025, legislators had 'asked to take the lead' on property taxes, but that she planned to be more involved in this work and finding a solution to reduce property tax costs through discussions with local governments and other stakeholders over the summer.
Republican legislative leaders, Sen. Dan Dawson, R-Council Bluffs and Rep. Bobby Kaufmann, R-Wilton, the Ways and Means Committee chairs in the Senate and House, had introduced a bill in 2025 to eliminate Iowa's 'rollback' system for calculating property taxes and instead move to a 'revenue-restricted' system that would limit most property tax levy rates to 2% growth each year. The proposal, which went through multiple iterations but failed to come to a floor vote, also included other measures intended to lower property taxes like a shift of $426 million in K-12 funding from property taxes to the state.
Reynolds said she did not believe that shifting funding to the state necessarily would be the correct solution, as 'it's still taxpayer dollars' that would come from state taxes instead of local property taxes to back this K-12 funding. She said her focus on putting together a package to cut property taxes would involve looking at 'how we deliver services to our citizens.'
She said it's not feasible for Iowa communities to have 'level of government that we have and expect the property taxes to go lower.' She said her discussions will involve ways Iowa can streamline government to cut costs, but will also likely involve changes to how Iowa local governments have operated in the past 40 years.
'It's disruptive, but that means people are going to probably be a little uncomfortable, and we'll have the conversation,' Reynolds said. 'And I'm not going to wait until January to have it. We're going to have it all summer as we're working on it.'
Most of the governor's priorities, which she laid out during her Condition of the State address in January, were met before the 2025 session ended earlier this month. Measures like restricting cellphone use in classrooms, increasing medical residency slots and making changes to Iowa's rural health care system and backfilling some natural disaster aid for Iowa areas impacted by 2024 extreme weather all passed this session.
When asked by moderators about the proposed elimination of the Federal Emergency Management Agency (FEMA), the federal agency that played a large role in Iowa's recovery efforts after the 2024 natural disasters, Reynolds said there still needs to 'be a partnership' with the federal government but that she sees areas for improvement in FEMA's response system.
'I'm telling you, it takes way too long, it's way too bureaucratic,' Reynolds said. 'You know, we've got people on the ground that can act quickly. We were able to stand up some really unique programs because they gave us the flexibility to do that. That's what states do, that's what we could do. So I think it really is something we need to take a look at.'
Some of Reynolds' proposals, like measures on child care infrastructure and energy programs, did not make it to her desk.
The child care bill included a provision to shift funding from the existing Early Childhood Iowa (ECI) and federal Child Care and Development Fund Wrap Around Child Care funds to a new $16 million grant pilot program for preschool providers and child care centers. The focus would be on providing full-day care for children.
Though the legislation did not pass this session, Reynolds moved forward Tuesday to establish a Continuum of Care grant with the Iowa Department of Health and Human Services releasing an initial Request for Proposal for the grant. The governor also extended the child care assistance pilot program, allowing child care workers to receive child care assistance for their own children.
One bill that Reynolds has not weighed in on is House File 639, the legislation proposing multiple changes related to the use of eminent domain in carbon sequestration pipeline projects. The bill passed the Senate following heated debate during the last week of session. Republican leaders in the House, including House Speaker Pat Grassley, have said they believe Reynolds will sign the bill into law despite opposition from the ethanol industry and some high-profile Republicans.
June 14 is the deadline for Reynolds to sign bills from the 2025 session into law; if she does not sign or veto a bill by this deadline, it is considered a 'pocket veto' and not enacted. The governor said on 'Iowa Press' she is meeting with stakeholders to discuss the legislation, but is still in the process of researching and considering the impacts of the bill with her policy team and with advocates both for and against the measure.
'Almost every meeting has led to some additional research on my team, I have legal counsel looking at it,' Reynolds said. 'So it's been a really good process, and we're going to continue that through at least the next week. So I want to make sure that I have given individual stakeholders the opportunity to weigh in, so that I can, again, make make the best, informed decision that I can based on information I've heard.'
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The Department of Public Service also posts on their website. This would require utilities to additionally text or email customers. That's moving in Assembly committees and is sponsored by Assemblymember Zohran Mamdani, who is running for New York City mayor. The Senate also passed a bill allowing the commission to consider non-economic damages when penalizing utilities. Hinchey also shepherded through a measure to change the Public Service Commission by expanding it to eight members with another with consumer advocacy experience. An even number of commissioners raises the theoretical possibility of a tie vote. Her bill also bars utility employees from serving on the commission for two years. Hinchey also has a measure to require more reporting on planned capital expenditures by utilities, including specific details about projects. The rate case process includes substantial information about proposed utility capital spending, which is scrutinized by the DPS and other parties. 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'I am disappointed that a bill like this was introduced without consulting anyone involved in the dairy industry,' said Democratic Assemblymember Donna Lupardo, chair of the agriculture committee. 'These hard-working men and women are some of the best stewards of the land I know.' — Marie J. French ALL ELECTRIC EXEMPTION DEBATED: The 'reasonableness' of potential exemptions to New York's requirements barring fossil fuels in most new buildings is still being defined. The compromise on all-electric buildings, passed in 2023, required the Public Service Commission to decide how a utility could determine a building is exempt when 'electric service cannot be reasonably provided by the grid.' This caveat was key to getting utility buy-in and Assembly Democrats to sign off on the measure, but environmental advocates worried whether it would gut the effectiveness of the bill aimed at limiting the expansion of the gas system. Those worries are coming into sharper relief as advocates, utilities and others respond to the Department of Public Service's proposed exemption guidelines, which recommends an exemption if necessary grid upgrades are estimated to take more than 18 months longer than providing traditional gas and electric service. The law's mandate for buildings under seven stories is set to take effect at the beginning of next year. Environmental groups in comments filed Tuesday argue this 18-month exemption is too broad and not fully justified. The Environmental Defense Fund said the commission should instead consider the actual additional time beyond a customer's requested date of interconnection and require developers to use technology to reduce electricity demand that might drive longer timelines. 'Though it is important to allow utilities to maintain grid reliability, the Commission can adopt a reasonableness standard that is narrow in scope while ensuring stable grid capacity,' the group wrote in its comments. Gas-only utilities National Fuel, Corning and Liberty Utilities joined with the New York State Builders Association to say the state should also provide exemptions based on costs. If the cost of electric-only exceeds traditional gas and electric costs, then an exemption should be permitted, they argue. The utilities and builders cite concerns about the affordability and demand for housing. An 18-month delay is also too long, they argue. 'If timeline, cost and uncertainty of building in New York become too great, developers and builders may turn to other states where these issues are not present,' they warn. 'To help avoid these unintended but very real consequences, when determining reasonableness for purposes of the Grid Exemption the Commission should consider all relevant factors where full electrification could render a project infeasible, including cost burdens that would price homes out of the reach of New York households and timing concerns associated with the availability and installation of electric infrastructure and equipment.' The state's joint utilities — Con Edison, National Grid, Central Hudson and NYSEG/RG&E — support the 18-month criteria. They also ask that developers seeking an exemption bear all the costs of required studies. The joint utilities indicate a cost-based exemption would be difficult to implement given variation in costs across different utilities. It would also require evaluating costs of both types of hookups. 'Requiring new service requests to evaluate costs based on both all-electric connections and electric/fossil fuel connections would require more resources, extend project timelines, and increase costs,' the utilities wrote in their comments. There's no timeline for the commission to make a decision, although clarity will be needed before the end of the year. The state's building codes council has also not finalized the new requirements for the coming year. — Marie J. French PSE&G MOVES AHEAD — New Jersey's largest utility is rolling out billing changes aimed at protecting electric customers from worst-case scenarios caused by rising rates. PSE&G now won't shut off service to low-income and other qualified customers by extending existing winter shut-off protections to include summer months (now through the end of September). The company is also suspending reconnection fees. Both ideas were floated last month by Gov. Phil Murphy's office and don't require Board of Public Utilities approval. 'There is now widespread recognition that New Jersey needs more power generation to address the forecasted energy supply-demand imbalance,' PSE&G President Kim Hanemann said in a statement. 'PSE&G is not the cause of the 17 percent rise in electric rates, but we can support our customers by advancing critical solutions. These actions should help relieve a burden to families and communities just as the weather is getting warmer and electricity usage hits its peak. We encourage our customers to reach out to us if they are struggling to pay their bill so we can help them access the solutions available.' PSE&G and other utilities are still waiting for the BPU to take up a broader change that would cushion summer bill spikes by deferring parts of those bills and having customers pay them back throughout the year. The plan resembles existing 'level' billing options that customers can choose to get. All these measures are designed to help take the edge off the new rates that took effect Sunday and are expected to increase the average residential power bill by $25 per month — but more in the summer months for many customers. Republicans have blasted the deferred payment concept, first proposed by the BPU, as a political stunt to help Democrats when they face voters this fall. — Ry Rivard NYISO PUSHES GAS FOR RELIABILITY — POLITICO's Marie J. French: The state's grid operator has escalated its warnings that new renewables aren't coming online fast enough to meet growing energy demand, explicitly backing additional fossil fuel plants to keep the lights on. The New York Independent System Operator has for years warned about shrinking reliability margins — the cushion of available generation to keep ACs humming and factories running. With new economic development projects, data centers and other large loads hooking up to the grid, those warnings have taken on new urgency. 'We must consider all options for investing in the grid to provide for reliability and certainty at the most efficient cost,' wrote NYISO President and CEO Rich Dewey in the annual Power Trends report released Monday.
