Most Iowans likely haven’t started filling out their tax forms yet, but they might be more eager to do so this year.
Stacy Engle, a spokeswoman for the Internal Revenue Service, says projections point to higher refunds ahead, thanks to increased standard deductions under the so-called Big Beautiful Bill that passed Congress last July.
“When that change happened, most people did not make any changes to their withholding, and most employers did not adjust the withholding for the change,” Engle says. “That is going to increase the amount of standard deduction people get, which will increase the amount of overpayment they made based on withholding.”
It could be the biggest tax refund season in U.S. history, with Treasury Secretary Scott Bessent projecting refunds averaging between $1,000 and $2,000.
Iowa’s small businesses and farmers will also see tax changes, as Engle says the standard mileage rate is rising for cars, vans, and panel trucks — including electric and hybrid vehicles.
“Anyone that’s in business as a small business, self-employed contractor or a farmer will get the increased mileage rate,” Engle says, “and it went up 2.5 cents, the highest mileage rate that’s been on record of 72.5 cents per mile.”
Engle notes this change won’t affect the 2025 tax return, as it kicks in for the 2026 tax year, giving businesses and farmers time to plan ahead.
She says another change allows workers who earned overtime above time-and-a-half to deduct the extra half-rate — up to $12,500.
“Until the end of this year, most employers have been doing withholding based on what you make rather than excluding the $12,500 in your overtime,” she says, “so that’s going to hopefully increase the amount someone would owe in tax or increase their refund.”
For more information on the changes, visit IRS.gov.