State tax collections are continuing to grow significantly, but tax cuts that take effect soon will likely alter that trend. Net state tax revenue is up 6.7% over the past five months, but the top state income tax rates for individuals and corporations will be reduced January 1.

“Retirement income will become exempt from income tax,” Jeff Robinson, a fiscal analyst for the Legislative Services Agency, said in an online report. “In addition, the state’s inheritance tax will be further reduced.”

In October, a panel of experts predicted those cuts will lead to a 2.7% reduction in total state tax collections. The Revenue Estimating Conference meets again Wednesday to review the latest data and settle on a new prediction. The panel’s total tax estimate will be used as a starting point for state budget decisions.

Radio Iowa