January 13, 2015


State & Local Taxes in 2015


Iowa Tax Code Features

Progressive Features

• Graduated personal income tax structure

• Provides a 15 percent refundable Earned Income Tax Credit (EITC)

• Sales tax base excludes groceries

Regressive Features

• Provides an income tax deduction for federal income taxes paid

• Completely excludes certain types of capital gains income from taxa­tion

• Fails to provide a property tax “circuit breaker” credit for low-income non-elderly taxpayers

• Fails to use combined reporting as part of its corporate income tax

Tax Changes Enacted in 2013 & 2014

• Increased EITC to 15 percent of the federal credit

• Commerical and industrial property are taxed at 90 percent of their value

• New assessment cap for agricultural property

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, Iowa has the 27th most unfair state and local tax system in the country. States with regressive tax structures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Appendix B for state-by-state rankings and more details).

Click here for a PDF of this page