Iowa House Bill HF2028

Iowa 2025-2026 Regular Session

• Introduced: 1/13/26
• Refer: 1/13/26

Caption

A bill for an act relating to establishing a reciprocal tax agreement study by the department of revenue, and including effective date provisions.(See HF 2746.)

Impact

If the study indicates that a reciprocal tax agreement is feasible and mutually beneficial, the findings will lead to the drafting of a formal agreement to be submitted for legislative approval by 2027. Currently, Iowa has a similar arrangement with the state of Illinois, allowing for the exclusion of out-of-state earnings from local taxation for residents. Implementing a reciprocal agreement with Wisconsin could simplify financial processes for many workers and enhance cooperation between the two states.

Summary

House File 2028 is a bill introduced to establish a study on the feasibility of a reciprocal tax agreement between the states of Iowa and Wisconsin. The intention behind this bill is to address the significant number of residents in both states who are employed across the state lines, thereby facilitating a smoother tax obligation for those individuals. By directing the Iowa Department of Revenue to investigate this concept, the bill aims to potentially alleviate the double taxation of wages earned by residents working in the opposite state.

Contention

While proponents highlight the advantages of reduced tax burdens and improved economic interactions between the two states, there could be contention regarding how such an agreement would be structured and its implications for state revenue. Concerns may stem from potential impacts on the funding of local programs and services dependent on income tax, especially if significant numbers of workers cross state lines. Stakeholder discussions may arise surrounding how this agreement could affect different demographic groups and the balancing of tax revenue between Iowa and Wisconsin.