Iowa lawmakers approved a flat tax and rebate bill 53-46 on Wednesday.
The Des Moines Register reports the bill combines two of House Republicans top legislative priorities.
Originally, the bill only provided for the creation of an optional flat income tax. Tax filers would have the option to pay a 4.5 percent rate on their income instead of the graduated system of rates.
According to a Department of Revenue analysis, the option would lower taxes for more than 490,000 Iowa filers with an average savings of $800. The option would also decrease state revenue by about $400 million.
Republican lawmakers also had the bill amended to include a new tax-credit program. Under this program, more than $700 million in surplus state revenue would be refunded to taxpayers.
Democrats oppose the Republican bill saying it affects a small portion of Iowa tax payer and creates more benefits for high-income earners.
Go to The Des Moines Register’s original article for more about the bill.