Iowa Governor Terry Branstad signed what he said was the biggest tax cut in the state's history into law on Wednesday, saying it will spur growth in the state's economy.
The law is expected to provide at least $4 billion in property tax relief over a decade. In 10 years, both agricultural and residential property taxpayers will be saving about $500 million annually because of a reduction, to 3 percent from 4 percent, in the growth of property assessments.
The bill also includes nearly $90 million of annual cuts to income taxes, Branstad, a Republican, said in a statement.
"I am proud to say this tax cut passed with bi-partisan support," Branstad said in the statement. "This tax relief bill will put more money in the pockets of Iowa families and make it easier for Iowa businesses to invest and grow in our state."
As the fiscal health of states is improving and tax revenue is rising at the swiftest pace in two years, lawmakers are turning their attention to taxes.
According to a survey in May by the National Conference of State Legislatures, 35 states are taking up tax reform in their current legislative sessions, with proposals for tax reductions slightly outnumbering proposals for increases.
Iowa's new law cuts by 10 percent the taxable value on commercial and industrial property, and it creates $125 million of property tax credits targeted for small businesses.
Branstad told local media on Monday that the state would "very likely" be looking at further income tax cuts next year.
(Reporting by Hilary Russ; additional reporting by Lisa Lambert; Editing by Tiziana Barghini and Leslie Adler)