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SF 2383 - Decreases Income Tax Rates - Iowa Key Vote

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Title: Decreases Income Tax Rates

Vote Smart's Synopsis:

Vote to pass a bill that decreases the rate of individual and corporate income taxes.

Highlights:

  • Requires Iowa’s tax code to be coupled with federal tax changes regarding the expansion of the Earned Income Tax Credit (EITC) and teaching expense deductions for the 2018 tax year (Secs. 1-3).

  • Requires Iowa’s tax code to be fully coupled with federal tax changes beginning in the 2019 tax year (Sec. 2).

  • Specifies that instead of using the state standard deduction, the federal standard deduction or itemized deductions will be factored into Iowa’s tax code by using federal taxable income as the base (Sec. 10).

  • Repeals the Iowa alternative minimum tax (AMT) beginning in the 2019 tax year (Sec.  70).

  • Specifies that tax rates will be indexed by inflation beginning in the 2022 tax year (Secs. 8 and 16).

  • Establishes the following individual tax brackets and rates for the 2019 tax year (Sec. 11):

    • Income up to $6,000: 5%

    • Income between $6,000 and $15,000: 5.25%

    • Income between $15,000 and $30,000: 5.5%

    • Income between $30,000 and $75,000: 6%; and

    • Income of $75,000 or more: 6.6%

  • Reduces the highest bracket by .1% over the 3 years following 2019, meaning that in 2022, an income of $75,000 or more will have a rate of 6.3% (Sec. 11).

  • Establishes a deduction for businesses that pay interest on a qualified education loan incurred by an employee (Sec. 22).

  • Increases the exemption for retirement and pension income (Sec. 23).

 

  • Reduces corporate tax rates in 2019 and 2020 (Sec. 38):

    • Income up to $25,000: 6%;

    • Income between $25,000 and $100,000: 8%; and

    • Income between $100,000 and $250,000: 10% in 2019 and 8% in 2020.

  • Repeals the Historic Preservation tax credit and Accelerated Career Education (260G) program in 2025 (Sec. 87).

  • Prohibits the Research Activities Credit (RAC) for agricultural production, commercial and residential repair, and installation of mechanical, electrical, or security systems (Sec. 66).

  • Prohibits the solar energy system tax credit for installations after July 1, 2018 (Sec. 87).

  • Repeals the tuition and textbook tax credit beginning in 2022 (Sec. 74).

  • Repeals or phases out the following deductions when calculating Iowa taxable income (Secs. 6, 23, 25, 36, and 77):

    • Organ donation;

    • Employment of individuals with a disability or former prisoners;

    • Income earned by non-residents for utility work during an emergency or disaster;

    • Compensation for exposure to hazardous chemicals during active military duty; and

    • Restitution for being victimized during World War II.

Committee Sponsors

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