EARNED INCOME TAX CREDIT (EITC)

Rate (Fully-Refundable): 15% of the federal credit¹

Eligibility Requirements: All Iowa taxpayers who qualify for the federal credit are automatically eligible.

Latest Legislative Action:

• Iowa is one of three states which offers funding for outreach services that promote awareness of the EITC and provide tax preparation services. In 2015, SF 505 appropriated $293,517 for the continuation of two grants to local non-profits conducting these outreach activities.
• During the 2015 legislative session, two proposals to increase the state EITC were introduced but stalled in committee. HF 465 and HF 345 would have increased the rate to 16.5% and 18% of the federal credit, respectively.

• In 2013, a tax cut package increased the state EITC from 7% to 14% for tax year 2013 and again to its current level of 15% for tax year 2014.

Notes:

• Married taxpayers electing to file separate returns or filing separately on a combined return must pro-rate their Iowa EITC to each spouse based on the share of each spouse’s income to the couple’s combined total income.²

CHILD TAX CREDIT (CTC)

Iowa does not currently offer a state-level CTC.

CHILD AND DEPENDENT CARE TAX CREDIT (CDCTC)

Rate (Fully-Refundable): Ranges from 75%-30% of federal CDCTC, based on income. See Iowa’s Child and Dependent Care Tax Credit information page for details.

Eligibility:  All Iowa taxpayers with incomes below $90,000 with qualifying child care expenses are eligible.³

Latest Legislative Action:

• In 2021, Iowa legislators passed sweeping tax legislation that significantly expanded eligibility for the state child care tax credit, raising the income limit from $45,000 to $90,000. 
• In 2014, Gov. Terry Branstad signed into law an act that improved the state’s Child and Dependent Care Credit by allowing the taxpayer to claim the full amount of the state credit without regard to whether or not the federal credit was limited by the taxpayer’s federal tax liability.