A glance at new state tax plan - KWWL - Eastern Iowa Breaking News, Weather, Closings

A glance at new state tax plan

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DES MOINES (AP) -- Here are details of a proposed revision of Iowa's income tax system:

STANDARD

The standard deduction for single tax filers would be increased to $2,710, and married filers would see the deduction increased to $5,420. It's roughly a $1,000 increase in both categories.

COLLEGE

A refundable $100 Iowa college student credit is created. About 69,000 Iowa college students would benefit from that step.

BENEFITS

For tax year 2010, 60.39 percent of the state's tax filers would see a reduction in income taxes, while 12.71 percent would see no change. That means 73.1 percent would see a reduction or no increase while just over 26 percent of the state's tax filers would see an increase.

COSTS

The initial package was revenue-neutral, but that is not the case with the latest plan. It would cost $20.2 million this year and $34.9 million next year, which backers billed as a $55.1 million tax cut.

IMPACT

Individual tax situations vary, but Revenue Department officials have prepared averages. On average, those making more than $250,000 a year would pay an additional $977.88 in income taxes. Those making less than $20,000 a year would pay $40.42 less in taxes. Those making $20,000-$30,000 would pay $69.87 less, while those making $30,000-$40,000 would pay $69.84 less.

OVERALL PLAN

The basic thrust of the bill remains unchanged. It repeals the ability to deduct federal taxes when calculating state tax liability and uses the $600 million that would generate to lower tax rates. The top rate would drop from 8.98 percent to 6.98 percent, and the other rates would be reduced by just over 20 percent.

TIMING

The measure is scheduled to be debated next week in the House, with the Senate taking it up if the House approves. Backers say they have the votes to approve the measure.

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