As we take a look back at 2018, The Gazette newsroom assembled a list of our top stories of the year. Be sure to follow along as we count down to number 1!
Lawmakers concluded the 2018 legislative session in April by enacting the largest state income tax reduction in Iowa history.
When phased in over six years, the $2.86 billion tax cut — larger than the 10 percent across-the-board cut of 1998 — will provide relief “for every Iowan who works hard to earn a paycheck and deserves to keep more of it,” Gov. Kim Reynolds said about the bill, Senate File 2417, which she signed into law at an event at MobileDemand in Hiawatha.
Reynolds and fellow Republicans, who control the Iowa Senate and Iowa House, said the bill would provide immediate and significant tax relief to Main Street businesses as well as individuals. They called the plan sustainable and said it would generate sufficient revenue to fund state priorities.
Democrats, who did not cast a single vote in favor of the plan, called it a tax shift — lowering income taxes while increasing sales taxes.
The law requires Iowans to pay sales taxes for online shopping and digital purchases such as for electronic games and entertainment, travel sites and popular subscription services and for ride-hailing services like Uber and Lyft.
Sales tax collections are projected to increase by nearly $725 million over six years, presuming the state can capture the online revenue.
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Among the key provisions, federal deductibility — that is, deducting federal tax liability from state returns — will be eliminated for corporate income taxes by tax year 2021 and by 2023 for individual income taxes.
Also, the nine individual income brackets used for Iowa income taxes will be reduced to four.
As they look ahead to the 2019 session that starts in a few weeks, some Republican lawmakers are talking about accelerating the tax cuts.
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