Governor Kim Reynolds has signed a bill into law that reduces the taxes businesses pay into the state fund that pays out unemployment benefits.
“It’s a signature piece of legislation, one of my top priorities this session,” Reynolds said, “and a key part of our ongoing effort to make Iowa’s economy stronger, more competitive and built for the future.”
Reynolds pointed to Iowa’s population, which ranks 32nd among the states, and compared that to Iowa’s Unemployment Trust Fund, which is the ninth largest in the country. “But not anymore,” Reynolds said during an event earlier today. “Senate File 607 will cut the taxable wage base in half, it lowers the maximum tax rate to 5.4% –which was 9% before this.”
Reynolds said that 9% rate “needlessly punished” Iowa businesses because nearly two BILLION dollars is sitting in the Unemployment Trust Fund today. “This bill streamlines Iowa’s unemployment insurance tax system by bringing overdue reform to how we support our workforce and how we support the businesses that create jobs across our state,” Reynolds said, “while most importantly keeping the fund healthy and sustainable for the long term.”
Under state law, higher tax rates will be triggered if the Unemployment Trust Fund balanced falls below $900 million. Officials estimate the lower rates Reynolds has approved will save businesses $975 million in taxes over the next five years. “I truly do believe that it will make a difference in making us more competitive as a state,” Reynolds said, “and for employers across the state to give back to their community, their business or their employees.”
U.S. Erectors in Pleasant Hill hosted today’s bill signing ceremony. Reynolds indicated the company will save “about $85,000” in unemployment taxes in 2026 as a result of the new law. Brad Churchill, the company’s CEO, called it “meaningful” tax relief. “For companies like ours, those savings can be reinvested directly into our workforce through hiring, wage increases, purchasing of new equipment and expanding our facilities for growth,” he said.
Democrats say laid off workers are “footing the bill” for a corporate tax break since Republican lawmakers reduced the maximum time Iowans may receive unemployment benefits from 26 to 16 weeks. That change was made in 2022.