As we turn the calendar to 2023, Iowa retirees may notice a positive change in how their retirement income is taxed. While each situation is different (and each detail needs to be reviewed by a tax professional), we have tried to lay out the high points we believe are essential in planning that will impact many in our community:
– 3.9% Flat Income Tax – in 2023, there will be four brackets from 4.4% to 6.0%. The top bracket will be removed each year after that until a flat tax rate of 3.9% is achieved in 2026.
- According to governor.iowa.gov, this will result in tax savings for 98% of Iowa taxpayers with $10K or more of taxable income
– Repeal of State Taxes on Retirement Income – starting in 2023
- Immediately in 2023, Iowans 55 or older will no longer owe tax on their IRA distributions, pensions, and annuities
– Farmer Income Exemption
- Iowa Farmers 55 and older who have farmed for at least 10 years can select to either be exempt from cash rent or crop shares every year income is earned or take a lifetime election to exclude the net capital gains from the sale of farmland
There are also additional points of interest for those who have assets in ESOP plans as well as some corporate tax reform, but those are not as applicable to the general public, so we will not go into detail here.
Overall, this should be a positive change and reduced tax for workers and retirees alike.
If you have more questions or would like to discuss your personal situation, please reach out. We would welcome the chance to speak with you!
For more details on the items above, click here.
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