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Bill

HF 988

A bill for an act creating a catastrophic savings account and modifying individual income taxes for account holders and including applicability provisions.

2025-2026 Regular Session

Iowa creates tax-incentivized catastrophic savings accounts allowing residents to set aside funds for major unexpected expenses with income tax benefits for participants.

Subcommittee: Dawson, Bisignano, and Rowley.
#disasters #emergencymanagement #incometaxes #savings
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WeVote Research Nonpartisan
Bill Summary · HF 988

Legislative bill overview

HF 988 establishes a new catastrophic savings account (CSA) program in Iowa and provides income tax modifications for account holders. The bill creates a dedicated savings mechanism for residents to set aside funds for catastrophic expenses while offering associated tax benefits to incentivize participation.

Why is this important

Catastrophic savings accounts could help Iowa residents build financial resilience against major unexpected costs like medical emergencies, home damage, or job loss without relying solely on debt or government assistance. The tax incentives make this a fiscal policy tool that aims to encourage personal savings while potentially reducing demand on social safety net programs.

Potential points of contention

  • Tax revenue impact: Income tax modifications could reduce state tax collection, requiring offsetting measures or budget adjustments that weren't detailed in available information
  • Account accessibility and fairness: Questions remain about whether account eligibility, contribution limits, and withdrawal rules create equitable access across income levels or primarily benefit higher earners
  • Definition of "catastrophic": Without clear legislative language available, disputes may arise over what qualifies as a catastrophic expense and whether oversight mechanisms are adequate

Compiled from official sources — confirm details with the bill’s official record.

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