1 day Ago By Maya Marchel Hoff [email protected]
Iowa House Democrats highlighted their plans to end state taxes on tips and overtime pay as the session’s second legislative deadline approaches at the state Capitol this week. During a press conference Monday morning in downtown Des Moines, multiple House Democrats spoke on why these tax exemptions are needed for working-class Iowans. Iowa House Democrats speak during a press conference in downtown Des Moines to draw attention to proposed legislation that would lift taxes on cash tips and overtime pay March 31, 2025.
“We want to make sure that money goes back to their pockets so they can focus on what we all consider the American Dream, the Iowa dream, raising their families, owning a home and owning reliable transportation to get to and from work,” said Democratic Rep. Eric Gjerde, of Cedar Rapids. Catherine Pollard, a student at Drake University, works around 50 hours a week in jobs at a restaurant and as Democratic Rep.
Aime Wichtendahl’s legislative clerk. She said lifting the taxes on her tips from the restaurant would help her develop stronger financial security. “The people within the service industry are hardworking and dedicated, many of whom are working on top of an already a very busy schedule, such as myself, especially in an industry that fluctuates as much as a service industry does,” Pollard said.
Under House File 293 , all earned income from cash tips would be exempt from Iowa’s 3.8% flat income tax rate. Iowa’s minimum wage is set at the federal minimum 0f $7.
25 an hour. For tipped workers who make more than $30 in tips per month, the minimum wage is $4.35 an hour.
Nationally, roughly 4 million workers, or less than 3% of the U.S workforce, regularly earn tips through their jobs, according to the Budget Lab at Yale University. Proposals to lift taxes on tips have garnered bipartisan support, with both 2024 presidential candidates, now President Donald Trump and former Vice President Kamala Harris, backing the proposal on the campaign trail last year.
But the proposal has caused concern among nonpartisan economists who say a federal tax exemption for cash tips could have negative impacts on the federal budget and broader economy. According to the Committee for a Responsible Federal Budget, lifting the federal tax on cash tips would reduce federal revenues by $150 to $250 billion over the next decade. Democrats' legislation, introduced in February, has not received a subcommittee assignment and likely won’t move forward as Republicans hold supermajorities in both chambers and control the legislative agenda.
However, the issues may still move forward, as House Republicans also introduced an identical bill, House File 268 , which advanced out of subcommittee in February. One of bill’s sponsors, Republican Rep. David Young of Van Meter, said lawmakers will have a more pronounced discussion on the legislation near the end of this year’s session.
“We believe that folks out there working hard in service industries, especially, deserve to keep more of what they make,” Young told the Quad-City Times. “We want to be helpful, and we welcome anybody in supporting that idea.” Democrats also highlighted their proposed legislation, House File 360 , to exempt overtime pay from state income taxes.
“What all this legislation is going to do is provide a break to working people,” Democratic Rep. Sami Scheetz, of Cedar Rapids, said during the press conference. “If we're constantly going to pass tax bills that give giveaways to rich people and wealthy corporations, again, it's time that working people got a break too.
” Republican Rep. Michael Sexton of Rockwell City introduced an identical bill, House File 110 , which he says has a stronger chance of being picked up in the House than in the Senate. Sexton, whose district has ethanol plants and a large number of construction jobs, said lifting taxes on overtime pay was a top issue he’s heard about from his constituents.
“There's such a shortage of employees in rural Iowa, and just all of them said ...
‘If there's one thing you could do for us, it would be get rid of that tax on overtime, because when we get our overtime check, almost all of it gets taken away in taxes,’” Sexton said. “It's a real disincentive to help out your company.” If you’re like nearly two-thirds of Americans you’re likely worried about tax season and scammers filing a fraudulent return in your name.
Now, tax experts are weighing in on how to prevent getting scammed. Veuer’s Tony Spitz has the details. With time until Tax Day running short, Range explains how to submit a six-month federal filing extension in four simple steps, followed by advice on state tax extensions and navigating the tax-filing implications of complex financial situations.
Step 1: Prepare Form 4868 Form 4868 is the "Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
" This form extends your filing deadline to Oct. 15, 2025. Step 2: Calculate Your Estimated Tax Liability You must pay any taxes owed by April 15, 2025, to avoid penalties and interest.
Get your full checklist here . You can learn more about how equity is taxed here . Step 3: File Your Extension Request Choose one of these filing methods: The extension must be submitted by April 15, 2025.
Step 4: Pay Your Estimated Tax Even with an extension, payment is due April 15, 2025. Payment options include: Step 1: Determine Your State Requirements State extension requirements vary: Step 2: File State-Specific Extension Forms (If Required) Common state-specific forms include: Step 3: Calculate and Pay Estimated State Taxes For your resident state: For nonresident states: Multistate Considerations If you have income across multiple states: Real Estate Investments For properties owned across multiple states: For a full guide on the tax advantages of real estate, read more here . Stock Options and RSUs Following these steps will help ensure you properly extend your tax filing deadline while avoiding unnecessary penalties and interest charges.
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