This November, Iowans will be asked to vote on a simple constitutional amendment that would make it more difficult for the legislature to increase income taxes. Specifically, the amendment would require a two-thirds majority vote of both houses of the legislature to increase income tax rates.
Such an amendment would provide Iowa taxpayers permanent protection, while giving politicians an allowance instead of a blank check for spending. This important taxpayer protection would be vital to Iowa’s business climate.
Increasingly, the economic competition among states for both businesses and people is becoming fiercer. Tax rates matter, because they influence where people live, work, and invest. States compete for talent and opportunity, and the past few years have seen a wave of historic tax reforms among the states.
Gov. Kim Reynolds and the Iowa Legislature have transformed Iowa’s tax code, making it both fairer and more competitive. This change capped years of progress that began when Iowa’s top individual income tax rate hovered near 9% and its corporate rate – then 12%, the highest in the country – discouraged investment and growth.
The Tax Foundation once ranked Iowa as having one of the worst state business tax climates in the nation. But Iowa has climbed an impressive 27 spots in just six years (from 44th to 17th) as highlighted in the Tax Foundation’s 2026 State Tax Competitiveness Index. This remarkable improvement reflects the success of years of conservative budgeting and bold tax reform.
The state now has a 3.8% flat individual income tax, while the corporate income tax rate has fallen to 7.1% and is on a path to a flat 5.5%. Altogether, Iowa has reduced its individual income tax rate by nearly 60% and its corporate rate by nearly 41%, a reduction that will reach 54% when the 5.5% rate is fully implemented.
Establishing a higher threshold to pass an income tax rate increase would help preserve Iowa’s new, lower rates by requiring the legislature to more carefully prioritize spending before turning to families and businesses for more tax revenue. That added protection is why the supermajority amendment is so important for commerce in Iowa.
Further, this amendment would provide greater certainty within Iowa’s tax code. Whether businesses pay income taxes through the individual rate (sole proprietorships, LLCs, S-corporations) or the corporate rate, they benefit from knowing that tax rates will remain stable and predictable. Higher rates can discourage investment and economic growth, while the prospect of frequent tax increases makes it more difficult for businesses to plan for the future.
Finally, Iowa should consider the path taken by other states. Washington offers a cautionary example: voters repeatedly approved supermajority requirements for tax increases, only to see those protections overturned or circumvented, and the state has since moved toward higher taxes and greater spending. A recent survey found that nearly one in four Washington businesses is considering leaving the state, with 72% identifying the tax climate as a burden. Iowa can find similar warnings closer to home in Minnesota and Illinois, where high taxes and spending have contributed to fiscal challenges and taxpayer outmigration. Iowa’s recent tax reforms have made the state more competitive; the experience of other states demonstrates how quickly those gains can be reversed.
A supermajority amendment is not a radical idea. Sixteen states already require a supermajority vote to raise certain taxes, either in statute or in their constitutions. For Iowa, protecting the tax reforms and competitive gains achieved in recent years is a natural next step. A supermajority requirement would help keep rates low, provide businesses with greater certainty to invest and grow, and guard against reversing course toward the higher taxes and spending seen in other states. Together, these protections provide a more stable foundation for economic growth.