Gov. Kim Reynolds and Lt. Gov. Adam Gregg have announced Iowa’s most significant tax reform package in decades. The package includes immediate relief for middle class workers, and lower taxes for small business owners, farmers, families and teachers across Iowa, as reported by the Office of the Governor of Iowa.
“My plan combines meaningful tax relief while protecting our budget priorities,” Gov. Reynolds said in a press release. “We’ve prioritized tax relief for middle class taxpayers, small business owners, teachers and working families across the state. We’re long past due for real tax reform that simplifies and updates our system while allowing Iowans to keep more of their hard-earned money in their communities.”
Some of the most prominent changes in the package are lower rates, lower taxes for the middle class, greater tax savings for teachers, lower taxes for small businesses, the protection of the state budget priorities, the protection of main street businesses, and a simplified tax code.
Highlights include an increased standard deduction in 2019 from $2,070 to $4,000 for single filers and $5,090 to $8,000 for married filers. According to the press release, there will be an additional standard deduction of $1,500 for the elderly and blind in 2019.
Small business owners will see real tax reform with a 25 percent deduction of the new federal Qualified Business Income Deduction from their Iowa taxable income, and an immediate increase in the section 179 expensing from $25,000 to $100,000.
The tax reform will help simplify the tax code by eliminating the alternative minimum tax, and the federal deductibility will be phased out.
“We’re really encouraged by what we’ve seen so far, and this is a great first step. Taxes are a big concern for small businesses. We’re looking forward to working with the administration and legislative leaders to pass tax reform that allows entrepreneurs to keep more of the money they earn so they can reinvest it and grow their businesses and create jobs,” NFIB Iowa State Director Matt Everson was quoted as saying by the governor’s office.