Pat Grassley

A key legislator is making a proposal that could dramatically change the system that currently awards state tax credits to businesses and individuals.

“The more questions you ask, the more you learn about these tax credits. The state should really know what we’re on the hook for every year when it comes to these tax credits,” says State Representative Pat Grassley, chairman of the House Appropriations Committee.

He’s suggesting a limit or “cap” on the amount of state tax credits awarded each year.

“This bill hopefully will start that conversation of let’s start prioritizing which ones are working and which ones aren’t working and I think that’s a good first step,” Grassley says.

Last year, the state awarded $427 million in tax credits. Grassley’s bill would limit that to $400 million next year, then down to $370 million in 2021.

“Now there’s tax credits in this bill that people like, that people don’t like, that people don’t have an opinion on,” Grassley said,” and ones that both parties have voted for.”

Grassley’s bill would also end to the practice of having the state issue refunds when the value of the tax credit exceeds what taxes are owed. The three major state tax credits are for low-income Iowans, for businesses that do research and for historic preservation projects.