Iowa businesses will soon see a reduction in their unemployment insurance tax payments, a move intended to benefit residents who rely on unemployment aid during job loss.
The newly signed legislation halves the unemployment insurance tax paid by employers. For companies like US Erectors, a construction firm based in Pleasant Hill, this translates to a savings of $85,000 in 2026 alone.
Brad Churchill, a representative of US Erectors, said, “For companies like ours, these savings can be directly reinvested in our workforce through hiring, wage increases, new equipment purchases, and facility expansions.”
The bill, known as SF 607, was endorsed by Iowa Governor Kim Reynolds, who stated the tax cut would save businesses nearly $1 billion over the next five years. Reynolds justified the legislation by pointing out the state’s historically high tax rates on businesses.
“Although our population ranks 32nd nationally, our unemployment fund of nearly $2 billion ranks ninth in the country. But times have changed,” she explained.
Democratic Representative Dan Goss of Davenport attributed the large fund balance to recent reductions in the duration of unemployment benefits enacted by Republicans.
“Well, the fund will naturally grow when you cut benefits from 26 weeks to 16 weeks, right? So yes, more money accumulates because fewer benefits are being paid out,” Goss said.
Goss argued that the unemployment fund belongs to Iowa workers who have lost their jobs, and expressed concern that rising unemployment could soon deplete the fund.
“If we truly enter a recession, that fund won’t have enough resources to support the unemployed,” he warned.
He also criticized the tax cut as disproportionately benefiting large corporations, many of which laid off workers last year.
“Companies that have offshored Iowa jobs and laid off local employees should not be rewarded with tax breaks,” Goss added.
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