Gov Kim Reynolds is selling her proposal for a new tax plan on Employee Stock Ownership Plans and phasing out state taxes on retirement income.
“This incentive rewards hard work and will help companies recruit and retain workers and keep them here in Iowa!” Reynolds posted on Twitter.
Reynolds’ new tax plan would eliminate capital gains on Employee Stock Ownership Plans.
The initiative states it would “allow one-lifetime election to exclude the net capital gains from one stock of one qualified corporate or employee stock ownership plan (ESOP) from state income tax.”
“It’s not a major change,” Reynolds said, The Gazette reported. “I want to get it right, so we’re looking at the language to make sure it does what the intent was to do (because), really what we’re trying to do is not tax retirement income.”
Employee stock ownership plan or ESOP is a retirement plan for closely held companies. A closely held company has more than 50% of the value of its outstanding stock owned by five or fewer individuals at any time during the last half of the tax year.
Employees who are part of an ESOP “have invested in the company, it’s been part of their employment, and we want to reward work, and not tax them once they retire,” Reynolds said, The Valley News reported.
