Relating to state taxes by eliminating the individual income tax, increasing the sales and use tax rates, making conforming changes, and including effective date and applicability provisions

This bill relates to state taxes by repealing the individual income tax and increasing the state sales and use tax rates. Division I repeals the individual income tax and makes numerous conforming changes to the Code to remove references to the individual income tax and to update or move provisions of the individual income tax that are also applicable by reference to the corporate income tax and the franchise tax.2, because income surtax revenues will no longer be generated without the state individual income tax. 19A, because those programs rely on income tax amounts withheld from employee wages by employers.16 for submission to the legislative services agency to implement the repeal of the individual income tax. The division takes effect January 1, 2023, and applies to tax years beginning on or after that date. Division II increases the state sales and use tax rate to percent from percent.31.4118 percent of the revenues to ensure that SAVE receives approximately the same amounts of sales tax revenue as it did prior to the sales tax rate increase provided in the division. The division takes effect January 1, 2023. Division III strikes future contingent individual income tax changes in 2018 Iowa Acts, chapter 1161, and 2019 Iowa Acts, chapter 162 due to the repeal of the individual income tax in the bill. Currently, the future individual income tax changes are set to begin in tax year 2023 or in a later tax year, contingent upon the satisfaction of certain net general fund revenue amount and growth targets. The division takes effect January 1, 2023, and applies to tax years beginning on or after that date. Division IV requires the director of the department of revenue to prepare draft legislation for submission to the legislative services agency, as necessary, to implement the repeal of the individual income tax. The division takes effect July 1, 2021.