WASHINGTON — As gas prices and inflation bound into record territory, Iowa U-S Senator Chuck Grassley is co-sponsoring a bill he says will provide relief and protections for our savings accounts.

Grassley, a Republican, says the Middle-Class Savings and Investment Act would help lower- and middle-income Americans save as inflation outpaces any interest they might earn through targeted tax relief.  “We need more incentive to save,” Grassley says. “If people save, they aren’t spending the money. That reduces the amount of money chasing too few goods. The other thing is, this inflation is making a miserable impact upon people’s savings.”

Grassley says many people are watching their savings erode while facing taxes on gains that may not be keeping pace with inflation. That creates what he calls “a perverse incentive to spend now”  instead of saving, which further fuels inflation.   “We’ve had savers’ incentives going way back to 2001 and 2003 when I was chairman of the Finance Committee,” Grassley says, “so inflation is those limits when you can save and not pay tax on it, or get a credit for saving a certain amount.”

Grassley says the legislation will ensure that those who are hurting the most from inflation aren’t further burdened by taxes.  “Those dollar figures that were set 20 years ago are hurt by inflation, so we’re raising them so more people can take advantage of it,” Grassley says. “My middle income savings bill will help families through tax relief, as well as helping them save more for the future.”

Grassley says key elements of the bill include: Excluding a reasonable amount of interest income from being subject to tax ($600 for married couples, $300 for individuals); more than doubling the size of the zero percent (lowest) tax bracket for long-term capital gains and qualified dividends; eliminating the marriage penalty which subjects some income to an additional 3.8 percent tax, and indexing its income threshold to inflation; increasing the maximum “savers credit” anyone can get for contributing to qualified retirement accounts and expanding the availability of that credit to more taxpayers.