Q&A: Tax Season Delivers Historic Tax Refunds

Q&A: Tax Season Delivers Historic Tax Refunds

With U.S. Sen. Chuck Grassley

Q: How is the Working Families Tax Cuts Act helping families make ends meet?

A: The tax law delivered a welcome boost to family budgets this tax season. According to the IRS, the average tax refund is up 11% compared to last year. Estimates show the average tax cut for Iowans is more than $3,000, equating to an extra $250 a month. That's a financial lift families can use to buy groceries, pay for child care, put gas in the car and invest in home repairs. President Trump's signature on July 4th enacted the landmark law, stopping the largest tax increase in U.S. history. Without it, Uncle Sam would have taken a bigger bite out of Americans' paychecks. For example, marginal tax rates would have returned to the seven brackets prior to the Tax Cuts and Jobs Act of 2017 and cut the popular standard deduction nearly in half. The Working Families Tax Cuts Act permanently lowers the marginal rates (between 10% to 37%) and makes the standard deduction $15,750 for individuals/$31,500 for married couples filing jointly permanent and indexed to inflation going forward.

What's more, the Working Families Tax Cuts Act cut taxes on tips, overtime, senior income and expanded benefits for families with kids. The average tax cut for filers benefitting from at least one of these signature tax cuts is over $800. Here's how the tax cuts are helping families make ends meet:

• More than 25 million taxpayers claimed savings from the no tax on overtime provision. That's a well-deserved pay boost for hardworking first responders, nurses and factory workers who put in extra hours on the job.
• More than six million Americans benefited from the no tax on tips, with an average deduction exceeding $7,100. That puts cash back in the pockets of tipped workers, including hair stylists, restaurant workers and other service industry employees. At my county meetings, I got the message from employers that keeping Uncle Sam's hands out of the tip jar helps with worker recruitment and retention.
• More than 30 million taxpayers claimed the enhanced deduction for seniors earning less than $75,000/$150,000 for couples. On average, seniors this tax season benefited from an average deduction of more than $7,500.
• Parents opened more than five million Trump Accounts for their kids, giving the next generation a head start towards financial security.
• More than 34 million Americans benefited from the enhanced Child Tax Credit that was permanently doubled, helping cash-strapped households provide for their families.

More money in the pockets of Iowa families makes life more affordable and also helps generate economic activity and job creation in local communities across our state.

Q: What did Iowans share about the tax law during your recent county meetings?

A: In April, I held 25 county meetings across eastern and central Iowa and met with high school students, educators, health care professionals, factory workers, farmers and local bankers. The cost of living is top of mind for people, including farmers who are weathering a rough patch in the farm economy with high input costs and low commodity prices. Farmers and factory leaders shared how the new tax law provides much-needed certainty to finance their operations, including the 100% immediate expensing for new equipment; deferral of capital gains tax on farmer-to-farmer land transfers; and making permanent Section 199A, the small business deduction that allows eligible taxpayers to deduct up to 20% of qualified business income from their federal taxes. These tax benefits help farms and businesses stay afloat during downturns in the economy, make investments to expand their operations and boost wages for workers. I heard sighs of relief from farmers about the enhanced estate tax exemption. This provision removes an overwhelming burden weighing on the hearts and minds of farmers across our state. The Working Families Tax Cuts Act doubled and made permanent the so-called death tax exemption, helping to ensure their kids and grandkids won't have to sell off their land or other farm assets to pay Uncle Sam.

I also heard from Iowans at local hospitals who explained how they're using the Rural Health Transformation Fund that's part of the historic tax law to invest and improve health care services to local residents. The fund is the largest federal investment in rural health care history. As Iowa's senator, I'll continue working to strengthen access to rural health care and appreciate the updates and concerns I hear from health care providers across our state.

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