(UPDATED) – (Radio Iowa) – 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 points to Iowa’s population — which ranks 32nd among the states — while Iowa’s Unemployment Trust Fund is the ninth largest in the country. “But not anymore,” Reynolds said. “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 says that nine percent 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 falls below 900 million dollars.

Estimates indicate the lower tax rates Reynolds has approved will save businesses 975 million dollars in taxes over the next five years. Democrats say laid off workers are footing the bill for this 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.