Grassley Praises Signing of Bill to Shield Taxpayers from AMT, Offer Tax Relief for Iowa Disaster Recovery, Continue Tax Incentives for Wind Energy, Tax Relief for College Tuition

WASHINGTON – Sen. Chuck Grassley of Iowa today praised final passage and the signing
into law of legislation he co-authored to shield millions of taxpayers from the Alternative Minimum
Tax this year, provide tax relief for Midwestern disaster recovery, extend tax incentives for wind
energy and other renewable sources, and extend tax relief for families and teachers.

“This legislation was a no-brainer,” Grassley said. “The AMT relief prevents 24 million
families from facing an average tax increase of at least $2,000 each. We’re extending tax benefits
for middle-income taxpayers, including deductions for out-of-pocket expenses for teachers, sales
tax, and college tuition. Millions of taxpaying families would have faced an unexpected tax increase
without our action. Businesses need continued job-creating incentives, like the research and
development tax credit. Congress is sending a clear signal in support of alternative energy and
conservation. And the Midwest needs help with disaster recovery, the sooner, the better.”

The House of Representatives today gave final approval to a bipartisan tax package that
Grassley helped to write as ranking member of the Committee on Finance, which writes tax policy
in the Senate. Passed as part of the financial rescue package, the legislation was signed into law by
the President this afternoon. Highlights include:

AMT relief. The AMT provision ensures that 24 million families do not see a tax increase
because of the AMT in 2008. The tax was intended to prevent the wealthy from using deductions
to slash their tax bill. But because it is not indexed for inflation, it has threatened a larger number
of taxpayers each year. In Iowa, 131,000 filers – mostly families with children – would pay the AMT
if the AMT patch were not done for this year, a tax hit on average of more than $2,000 per family.
The legislation also includes relief for taxpayers hit unfairly under the AMT for exercising incentive
stock options.

Individual tax relief. The legislation also renews for two years popular individual tax relief
such as a deduction for teachers who pay for classroom supplies out of their own pockets and a
deduction for the cost of college tuition. In Iowa, 35,238 teachers get the out-of-pocket expenses
deduction (this is filers, so two teacher-family joint filers count as one); 48,895 Iowa families and
students get the college tuition deduction. The tuition deduction was created in 2001 tax legislation
Grassley sponsored as chairman of the tax-writing committee.

Renewable energy. The legislation extends tax incentives for wind energy, biodiesel and
other clean energy sources that are critical to helping consumers and building the nation’s energy
independence. The legislation also includes a tax incentive for oil refineries to encourage more
refining and lead to lower gas prices. Grassley authored the Wind Energy Incentives Act of 1993,
which established the first-ever wind energy production tax credit, and has worked ever since to
continue the tax credit without interruption to foster the ever-growing wind energy industry.

The legislation as enacted is a special victory for the wind energy production tax credit. The
House of Representatives twice passed an extension of this tax credit but watered down the credit
in doing so. Grassley refused to let that happen in the Senate legislation. As a result, the wind
energy production tax credit has been extended at its full level, which makes sense for Iowa. The
federal tax credit has helped the state better withstand the downturn in the economy by helping to
create hundreds of good-paying manufacturing jobs across Iowa, in small-towns such as Newton,
Ft. Madison, Keokuk and West Branch. Iowa leads the nation in wind energy potential, and is fourth
in the country in installed wind capacity. More than five percent of Iowa’s electricity comes from
wind energy.

Disaster relief. The legislation includes a $4.6 billion disaster tax relief package exclusively
to help Iowa and nine other Midwestern states recover and rebuild from the spring 2008 floods and
tornadoes. The bill includes another $3.5 billion for general disaster tax relief for other disasters
nationwide, including those in Iowa. The tax relief is in addition to and separate from disaster
recovery funds provided through the appropriations process.

The tax provisions for the Midwest are modeled on what Congress passed for Hurricane
Katrina victims three years ago. Grassley kept the pressure on congressional leaders all summer to
take similar action for natural disaster victims in Iowa and throughout the Midwest. In 2005, while
Grassley was chairman of the tax-writing committee in the Senate, a major individual tax relief
package was signed into law within three weeks of the Katrina disaster. A few months later,
Congress followed up with an infrastructure and business relief tax package.

Among other provisions, the legislation lets disaster victims with damage to their primary
residence tap their assets and access cash by withdrawing money from retirement plans without tax
penalties; suspends limits on tax incentives for charitable contributions, strengthening local and
other fundraising drives collecting money to help small businesses and families recover; creates taxcredit
bond authority to help local governments rebuild infrastructure; increases the amount of taxexempt
bond authority to help businesses receive below-market interest rate financing; removes
limitations on deducting casualty losses due to natural disaster; and reduces the 2008 tax burden for
small and mid-d businesses by substantially increasing the 2008 deductions for the depreciation
and expensing of business property.

A detailed summary of the entire tax package can be found in the printer-friendly version of this release.

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