Gov. Kim Reynolds says property taxes, not income taxes, will be focus in 2026

Yahoo

23-05-2025

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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