Federal Spotlight: Federal Tax Reform Passed

This week the U.S. House and Senate approved the most sweeping reforms to the tax code in over 30 years. The Senate passed the Tax Cuts and Jobs Act by a vote of 51-48 on early Wednesday morning. The House voted in favor of the measure 224-201 on Wednesday afternoon. (Since the bill was passed under reconciliation rules, the Tax Cuts and Jobs Act title had to be struck. The official bill title is much longer.) Reforming the tax code has been among the highest priorities of Congressional Republicans and the Trump administration for 2017. The bill lowers taxes for businesses and many individuals and simplifies the code by reducing deductions and streamlining the process. President Trump is expected to sign the bill in the next few weeks. You can read the entire text of the bill here and highlights of the major portions of the bill here and here.

Passage of tax reform at the federal level is especially important for the state of Iowa, because Gov. Reynolds and legislative leadership have indicated that state-level tax reform is a top priority for the 2018 legislative session. Any changes at the federal level could have a significant impact on what happens here, because Iowa is one of a handful of states that allows for federal deductibility. This means that since federal income tax rates will be going down, taxpayers will be able to deduct less on their state taxes. This could lead to a boost in Iowa’s general fund, which would allow for a more robust tax reform package to potentially pass. Stay tuned for more on this issue as we move through the legislative session. 

Read more:

• U.S. Chamber of Commerce: Statement by President and CEO Tom Donahue
• CNN: House sends sweeping GOP tax bill to Trump's desk
• Washington Times: House passes $1.5 trillion tax bill – again
• New York Times: House Gives Final Approval to Sweeping Tax Overhaul
• Washington Post: Sweeping tax overhaul clears Congress
• Bloomberg: Congress Sends Trump Tax-Cut Bill in First GOP Legislative Win