New Laws Taking Effect in 2025

IOWA – 2025 has begun, leading several new laws to take effect in Iowa. One of the biggest laws that has taken effect is a significant reduction in state individual income tax, from 5.7% to 3.8%. This comes as part of a nationwide Republican push towards flat income tax, where the rich and poor alike pay the same tax rate, as opposed to progressive tax rates generally preferred by Democrats, where different income brackets are charged different tax rates. State Republicans have promoted this as a way to provide economic relief for Iowans, while Democrats have warned of reduced state revenues and possible cuts to funding for education or government assistance. The Nonpartisan Legislative Services Agency estimates the measure will lower revenue by $1.3 billion over six years, although GOP lawmakers have noted that Iowa currently has a $2 billion budget surplus, $961 million in its reserve accounts and $3.75 billion in the Taxpayer Relief Fund.

Other changes going into effect this year include:

• Allowing citizens to sue cities for firearm regulations that conflict with state laws.

• Increasing consumer data protections, to allow residents to confirm if their data is being collected, request copies, delete their data, and opt out of the sale of their data. This law also requires businesses to secure personal data and be transparent over how it is processed and whether it is shared or sold to third parties.

• Extending postpartum medicaid coverage from 60 days to 12 months, while also lowering the income eligibility threshold from 375% to 215% of the federal poverty line. This will reduce the number of Iowans receiving medicaid coverage after pregnancies, but also give longer support to those who do qualify. The new requirement is equivalent to about $43,900 for a single mother and $67,100 for a family of four. According to an analysis by the Legislative Services Agency, this will result in roughly 2,700 women receiving more months of coverage, but roughly 1,700 fewer mothers receiving coverage each month.

• A 40% excise tax on glass and metal pipes and on bongs, with a $1,500 annual permit fee to bong sellers. This new law also raises the minimum age to purchase pipes and bongs to 21, tightens restrictions on businesses, and adds new rules to track customers’ names and ages.

• Requiring drivers with licenses revoked for OWIs to install an ignition interlock, which prevents cars from being turned on when an installed breathalizer detects the driver is drunk.

• Preventing insurance companies from forcing stable patients to switch medications midyear for non-medical reasons, aimed at preventing the common practice of insurers ceasing covering an already approved medication and demanding patients begin taking a cheaper version.

• Increasing vehicle and registration and title fees by $10.