Hunter
05/15/25
Iowa businesses will see a cut in unemployment tax, according to a bill passed by the Legislature this week.
The Des Moines Register reports the cut would amount to over a billion dollars over five years. The bill would cut in half the amount of wages on which businesses pay unemployment taxes, as well as lower the maximum unemployment tax rate from 7% to 5.4% and reduce the number of tax tables.
Governor Kim Reynolds said in a statement that the state’s unemployment trust fund is at an all-time high, while the duration of unemployment claims is at a record low of around nine weeks. She said the bill is intended to stop needlessly punishing Iowa businesses, adding that the state is “clearly over-collecting.”
Iowa Democrats say the surplus is a result of cutting the maximum number of weeks Iowans can receive benefits from 26 weeks to 16. They proposed amendments to restore the 26 week threshold and increase it to 39 weeks in the case of a plant closure, but Republicans voted the amendments down.
The bill suggests employers should use the tax savings to pay for employee salaries or benefits or to supplement seasonal layoff benefits. House Democrats proposed an amendment to make that mandatory, but it too was voted down.