The first bill the Iowa Legislature will send to the governor this year will align the Iowa and federal tax codes, a move that will reduce the amount of taxes Iowans pay to the state.
Although Republican Gov. Terry Branstad will thoroughly review the legislation, his spokesman said the governor supports the intent of Senate File 106 “and will likely support it.”
SF 106 is the Iowa response to federal tax changes and quick action is needed to avoid delays in filing and refunds, she said. By matching federal tax provisions, it is easier for Iowans to prepare their taxes and for the Iowa Department of Revenue to process returns.
The Iowa House approved the measure 97-0 Wednesday. The Senate approved it 48-0 Monday.
Although the changes have a positive impact on the Revenue Estimating Conference’s revenue projections of $16.5 million in the current fiscal year and nearly $62.4 million in fiscal 2014, the net impact on the state treasury is a revenue decrease.
The impact of SF 106, according to the Legislative Services Agency, is a projected reduction in net general fund revenue of $24.8 million this year, $35.5 million in fiscal 2014, $13.2 million in 2015, $8.6 million in 2016 and $9 million in 2017.
Also, passage of the bill early in the session – as opposed to May or June -- will save the state approximately $400,000 for processing amended tax returns, according to the state Department of Revenue.
With the passage of the federal American Taxpayer Relief Act on Jan. 1, most taxpayers avoided increases in their income tax rates and the loss of expanded tax credits, said Senate President Pam Jochum, D-Dubuque. By passing Senate File 106, the Legislature will enable Iowa taxpayers to take advantage of beneficial tax policy extensions that will help families, farmers, and small businesses when filing their state income taxes, she noted.
The bill would: