Iowa House Bill HF2746

Iowa 2025-2026 Regular Session

• Introduced: 3/30/26
• Engrossed: 4/6/26
• Refer: 4/7/26

Caption

A bill for an act relating to establishing a reciprocal tax agreement study by the department of revenue, and including effective date provisions.(Formerly HF 2028.)

Impact

Should the study indicate that a reciprocal tax agreement is feasible, the DOR would be required to submit a proposed agreement for legislative consideration before the regular session in 2027. This would create a scenario where wages earned by Iowa residents working in Wisconsin would only be taxed by Iowa, and vice versa for Wisconsin residents working in Iowa. Implementing such a tax agreement could significantly streamline the tax obligations for thousands of workers and enhance cooperation between the two states on tax matters.

Summary

House File 2746 is a legislative proposal aimed at exploring the feasibility of a reciprocal tax agreement between the state of Iowa and the state of Wisconsin. This bill acknowledges the significant number of residents from both states who commute for work, making it essential to consider tax arrangements that would prevent double taxation. The Department of Revenue (DOR) is instructed to conduct a study that examines the potential for a mutually beneficial agreement, aligning with existing state law requirements regarding interstate taxation agreements.

Contention

Despite its potential benefits, the bill may draw scrutiny from those concerned about the implications of reciprocal tax agreements on state revenues. Critics may argue that waiving tax rights could lead to losses in tax revenue, raising questions about the fairness of such agreements and how they might impact public services funded by state taxes. As with similar proposals, stakeholders will need to address these concerns to ensure that any agreement prioritizes the needs of both states while also maintaining equitable financial arrangements.