Iowa

Iowa Exempts Poor Families From the Income Tax

 

Iowa's 1999 income tax threshold — the income level at which families begin paying income tax:	Ranking among 42 states with income taxes
For two-parent families of four: $17,300.	22nd highest
For single-parent families of three: $17,300.	14th highest
Iowa's 1999 income tax on working-poor and near-poor families:
No tax on families with incomes at the poverty line ($17,028 for family of four, $13,290 for family of three).
No tax on families of three or four with full-time minimum-wage earnings ($10,712).
For families of four with incomes at 125% of the poverty line ($21,285): $412.	12th highest
No tax on families of three with incomes at 125% of the poverty line ($16,613).
Iowa exempts families with below-poverty earnings from the income tax. Because Iowa's tax threshold for families of four was increased during the 1990s, the threshold has risen above the poverty line. (See chart.) In 1991, a family of four owed tax when its income exceeded 65 percent of the poverty line. Iowa's tax threshold is now 2 percent above the poverty line.