The State Capitol.

Early Friday evening, Governor Kim Reynolds announced details of the tax plan she and her fellow Republicans in the legislature have agreed upon.

With no fanfare or advance warning, the framework of the plan that has been subject of intense, closed-door discussions for weeks was revealed in an email. According to the governor’s announcement, the tax cut is worth nearly $400 million next year. Income taxes for individuals and corporations are to be cut.

The average tax reduction? In the range of 10 percent, according to the governor, and she indicates Republicans in the statehouse have agreed to phase out the deduction for federal taxes paid. It’s something that makes Iowa’s income tax rates look higher than they are when compared to other states.

Reynolds indicated the agreement calls for “triggers” that will prevent the tax cuts from going into effect if the economy dips and state tax revenue slips.

“This is a historic day for the state of Iowa,” Senate Republican Leader Jack Whitver of Ankeny told Radio Iowa this evening. “This plan is the most significant tax reduction and the most significant tax reform bill in Iowa history.”

Democrats are denouncing the plan as a “tax giveaway” to wealthy Iowans “and special interests” that will lead to more state budget cuts in the future. Iowa Democratic Party chairman Troy Price said Republicans are “sinking all our tax dollars in to these budget-busting free-for-alls for Reynolds’ campaign donors.”

Read the governor’s full release below, along with written statements from Reynolds, Whitver and House Speaker Linda Upmeyer of Clear Lake.

Gov. Reynolds, House & Senate leadership announce historic tax relief agreement
(DES MOINES) – Gov. Kim Reynolds and Iowa House and Senate leadership announced an agreement on the largest tax relief and reform package in state history.
Right now, Iowa has the fourth highest individual income tax rate in the country and the highest corporate tax rate in the county. Iowa is ranked 40th in business tax climate by the nonpartisan Tax Foundation. U.S. News and World Report, while ranking Iowa first overall, ranked Iowa’s business environment 46th.  If nothing is done to reform the tax code, Iowans’ state taxes will increase as a result of federal tax reform because of federal deductibility.
This historic tax reform package:
• Prioritizes Iowa’s hardworking, middle class families
• Reduces rates and eliminates federal deductibility, making Iowa’s tax code more competitive and transparent
• Dramatically simplifies Iowa’s overly complicated tax code
• Ensures fairness for Main Street businesses in the modern economy
• Protects budget sustainability in future years
Hardworking Iowa families and small business owners will receive $398 million in income tax relief in 2019. The tax plan immediately provides an average tax reduction of nearly 10 percent and continues to provide tax relief beyond 2019. When fully implemented as soon as 2023, the plan will reduce the number of individual income brackets to four, with a top rate of 6.5 percent. The top corporate rate will be lowered to 9.8 percent.
At full implementation, how will this benefit everyday Iowans?
• A single taxpayer with no children making $25,000 will see a 22.3% tax reduction
• A single taxpayer with one child making $48,000 will see a 25.8% tax reduction
• A couple with two children making $75,000 will see a 25.7% tax reduction
This agreement dramatically simplifies Iowa tax law by eventually eliminating federal deductibility, reducing the number of individual income tax brackets, automatically coupling with most federal tax laws and providing a comprehensive review of tax credits.
The tax plan utilizes a trigger to protect budget sustainability in future years, ensures full repayment of the Cash Reserve Fund this year and does not reduce the property tax backfill. It maintains large ending balances in both Fiscal Year 2019 and Fiscal Year 2020, according to estimates from the REC, and protects key budget commitments made to education, health care and public safety. It also modernizes the sales tax code to treat online businesses the same as Main Street businesses. 
The agreement also provides relief to farmers and small business owners by increasing the Section 179 and Qualified Business Income (QBI) deductions:

Section 179 Deduction  
  $70,000 in 2018 (individual only)
  $100,000 in 2019
  $1 million in 2020 and beyond
QBI Deduction
  25% in 2019 and 2020
  50% in 2021
  75% in 2022
  100% in 2023 and beyond (if triggered)

“The 2018 legislative session was one of accomplishments aimed at unleashing opportunities for all Iowans,” Gov. Kim Reynolds said. “This historic state-level tax reform – coupled with tax reform at the federal level – will bring significant relief to working-class Iowans in a fiscally responsible fashion that will allow the state to meet its budget responsibilities in the future. These tax cuts are meaningful to Iowans making tough decisions about what they can and cannot afford. I commend the Iowa House and Senate for sharing in my priority of putting Iowans first.”
“This historic tax reform plan puts a focus on hard-working, middle class Iowans, allowing them to keep more of their own money,” House Speaker Linda Upmeyer, (R) Clear Lake, said.  “This plan strikes a balance between providing Iowa families and small business owners with significant tax relief while also protecting budget sustainability for future years.  This will ensure that we are able to continue making investments in key priorities like education, health care, and public safety.”
“With some of the highest tax rates in America, our state was long overdue for reform,” Senate Majority Leader Jack Whitver, (R) Ankeny, said. “With this tax reform package, Iowans will keep more of the money they earn, employers will have incentives to create new career opportunities and the tax climate for job creators will be more competitive with other states. Making Iowa’s tax code simpler, fairer and less costly has been a principle goal of our caucus during this General Assembly, and I was proud of the role Senate Republicans played in reaching this goal.”