On Tuesday night, NFIB, or the National Federation on Independent Business, is thanking Iowa lawmakers for signing tax reforms that will allow Iowa taxpayers and small business owners to keep more than $1 billion over the next eight years.
Senator Dan Dawson took the lead in the senate and worked with his fellow senators to get the bill across the finish line in the last days of session. Governor Kim Reynolds also played a big role in negotiations and ensuring the cuts were passed this year. Majority Leader Jack Whitver and Speaker Pat Grassley worked on the details to reach a deal that will save struggling small business owners money at a time when many desperately need it.
Here are 5 key small business tax elements:
1. Eliminates the 2018 tax triggers ensuring income tax rates will decrease on January 1, 2023. It will save taxpayers over $350 million dollars.
2. PPP Fix – conforms with federal law and exempts all 2019 tax filers from any taxes on forgivable PPP funds. It will give back small business 2019 tax filers back over $5 million dollars.
3. Phases out Iowa’s inheritance tax in 20% increments with the tax being fully eliminated on January 1, 202. It will save taxpayers nearly $100 million dollars once fully implemented.
4. Bonus depreciation – couples Iowa tax law with federal bonus depreciation for qualified equipment and other capital assets purchased on or after January 1, 2021. It will save taxpayers nearly $75 million dollars over a 5-year period.
5. Eliminates the Mental Health Levy over a two-year period in FY 2023 – saving property taxpayers over $100 million dollars.
“This move is a big step forward to lowering high taxes here in Iowa,” said Matt Everson, NFIB State Director in Iowa. “Iowa is one of the highest taxed states in the country, but it is also a great place to live and raise a family. While other states struggle to recover from the pandemic, Iowa is on the right path. Thanks to tax reforms like this, Iowa small business owners will be able to keep more of their hard-earned money which they can use to create jobs and employ more Iowans.”
