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SSB 1239

A bill for an act relating to the elimination of the individual income tax and alternate income tax by creating the taxpayer relief trust fund and income tax elimination board and fund, and making appropriations.

2025-2026 Regular Session

Iowa bill creates mechanism to eliminate individual income tax and establish replacement funding through taxpayer relief trust fund and oversight board.

Subcommittee: Dawson, Schultz, and Townsend.
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WeVote Research Nonpartisan
Bill Summary · SSB 1239

Legislative bill overview

SSB 1239 proposes to eliminate Iowa's individual income tax by establishing a "taxpayer relief trust fund" and an "income tax elimination board" to manage the transition. The bill would phase out income tax revenue while creating new funding mechanisms to replace lost state revenue.

Why is this important

Individual income tax represents a substantial portion of Iowa's state budget revenue. Eliminating it would significantly reshape state finances and require either identifying alternative revenue sources, reducing spending, or both. This directly affects funding for education, infrastructure, healthcare, and social services that Iowans depend on.

Potential points of contention

  • Revenue replacement: The bill doesn't clearly specify how the state would replace the income tax revenue currently funding core services, potentially creating budget shortfalls
  • Regressive impact: Eliminating income tax while relying on other funding sources (sales tax, property tax) typically shifts the burden toward lower-income Iowans who spend more of their income on taxed goods
  • Implementation timeline: Rapid tax elimination could create fiscal instability, while gradual elimination extends uncertainty for budget planning

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

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