Estimated State Tax Receipts Increase
The three-member state Revenue Estimating Conference estimated today that FY 2018 tax receipts will grow $33 million more than projected in December. This increase is mostly because of the federal Tax Cuts and Jobs Act and the ability of Iowa taxpayers to deduct federal tax payments from their state income taxes. Conference member Dave Roederer said the economy is, “Continuing to grow. It’s just not growing at a rapid pace, but at least it is stable.”
The projected increase would erase some of the current year’s budget shortfall projected in December, though actual revenue will continue to be collected through June 30, 2018, meaning additional revenue variations could yet occur. While a deappropriation bill will still need to be passed by the Iowa Legislature, the House and Senate have not yet agreed on what the final dollar amount of budget cuts will be.
The REC also increased FY 2019 estimated revenue to over $7.7 billion. This is an increase of approximately $200 million from December’s projection and, much like 2018’s updated estimate, attributes much of that increase to federal tax law changes. The legislature is required to use the lower of the December and March estimates when crafting 2019’s budget so by law they will be limited to 99% of the $7.5 billion estimated in December. This estimate is the ceiling for spending, not the floor. Even with increasing revenue, it would be prudent to not spend the maximum allowed and slow the rate of any spending increases.
As expected, there was no action taken on the two tax reform plans being considered by the Iowa Legislature.Last week the Iowa Senate passed a plan that would lower individual and corporate income tax rates and provide $1 billion a year in tax relief once fully phased in. Governor Reynolds’ plan, which would provide $1.7 billion in tax relief over the next five years, was advanced through a House Ways and Means subcommittee last week as well. Rep. Peter Cownie, who chaired the subcommittee, indicated there would not be further action on tax reform in the House until after March 16.
Iowans for Tax Relief is supportive of both tax reform plans. Both proposals will let Iowans keep more of their money in their own bank accounts.
After federal tax law changes, many Iowans have more money in their paychecks due to less money withheld from their paycheck. However, is the amount correct?
To help determine the correct amount withheld to avoid an unforeseen tax bill next year or to maximize your take-home pay, use one of the following withholding calculators.
Internal Revenue Service calculator
Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.
Visit our website for a complete list of legislation ITR is tracking during this legislative session.
