Schneider Statehouse Report: Senate Republicans Introduce Income Tax Relief

By Sen. Charles Schneider

Iowa taxpayers are plagued with headaches every year as they prepare their state income tax returns, thanks to our complex tax system. Iowa has nine marginal tax brackets, ranging from 0.36 percent (the lowest Iowa tax bracket) to 8.98 percent (the highest Iowa tax bracket).

This last week, I co-sponsored a bill that creates a new, simplified option taxpayers can use to calculate their income tax liability. The new option flattens the Iowa income tax brackets, eliminates federal deductibility, and replaces itemized deductions with a higher standard deduction.

Compared to current law, the proposed plan provides an overall 5 percent reduction in income tax liability in the first year of enactment, an overall 10 percent reduction in liability in the second year, and an overall 15 percent reduction in liability in the third year and beyond.

Taxpayers would be able to compute their taxes under the current method and the new simplified method, and then pay the lower amount. This ensures that no taxpayer will see their income tax burden increase. On average, taxpayers will receive a tax reduction of $360 in tax year 2014 and $516 in tax year 2015. In practical terms, that can be enough for a car payment, school clothes, or utility payments. This would help ease the burden of a tight family budget. 

Comprehensive tax reform that is fair and responsible will help us continue to create jobs and grow the economy. This income tax relief plan is a step in the right direction.

(Sen. Charles Schneider, R-West Des Moines, represents District 22 in the Iowa Senate. The district includes Waukee, Clive, Windsor Heights and part of West Des Moines. Contact him at Charles.Schneider@legis.iowa.gov or 515-281-3371.)