The Iowa Legislature is trying to get ahead of the federal tax reform for next fiscal year, by adjusting the state tax structure.

District 47 Representative Chip Baltimore says the House passed its tax reform bill last week. He states that the House wanted to help middle to lower income families save money on their taxes, because the federal government’s tax cuts would put more burden on the individual states. Baltimore points out some of the key components to the bill is doubling the standard deduction to exempt some Iowans from state income tax more of their incomes and lowering all tax brackets by a certain percentage.

“The most common middle income tax brackets are going to be reduced by about ten-percent. The upper tax bracket is going to be reduced by 0.01-percent. So it’s very, very tiny at the top-which is what we think it should be-but the bulk of the percentage of savings in the tax rates are going to be at the middle and lower levels.”

Another area of interest with the bill is increasing the amount of deductions for equipment for businesses and farmers. Baltimore says they increased the amount someone can deduct their equipment from $25,000 to $100,000. Baltimore notes the bill also charges a state sales tax to companies from out of state that sell items to Iowans over the internet.

“We are leaking, literally, tens-, if not, hundreds-of-millions of dollars a year in loss sales tax by these companies from out of state that don’t collect and remit sales tax.”

Baltimore says if the tax reform bill is signed, some of it would be phased in for the next fiscal year in 2019 and the other portions would start in the 2020 fiscal year.