Your iMac has about 426 GB of 494 GB of storage in use, with approximately 32 GB reported as available by Disk Utility. This is worth investigating as part of the performance problem, but it does not establish that limited storage is causing the lag.
First, check > System Settings > General > Storage.
This provides macOS's breakdown of how the internal drive is being used.
Because there are two user accounts, storage used by files belonging to either account should be considered.
The 140 GB shown in your iCloud folder does not necessarily mean that all 140 GB is stored locally.
iCloud Drive can keep files in iCloud while macOS manages which files are also retained on the Mac.
Check Optimize Mac Storage under > System Settings > your name > iCloud > Drive.
Apple explains this here: Set up iCloud Drive.
If you want to free space, consider moving large personal files, particularly photos, videos, music, and other files you control, to an external SSD.
This can free internal storage without attempting to remove files that macOS manages as System Data.
Make sure important files are backed up before moving or deleting them.
Using Time Machine Backup Utility or some other from of backing up your personal files
After freeing some storage, use the Mac normally and observe whether the lag changes.
If it does not, investigate other possible causes rather than assuming that storage is responsible.
Activity Monitor can be used while the Mac is lagging to examine CPU usage, memory pressure, and disk activity.
Apple provides information here: View CPU activity in Activity Monitor on Mac.
Apple's guidance for managing Mac storage is available here: Manage storage space on Mac.