U.S. Markets closed

Iowa Senate OKs tax break for low-income families

DES MOINES, Iowa (AP) -- The Iowa Senate has approved a measure that would give a larger income tax break to low-income residents.

Lawmakers passed the measure 35-15 Wednesday. It would raise the state credit from 7 percent to 20 percent of a taxpayer's federal earned income tax credit, so Iowa households that make under $45,000 a year would get about a $250 tax break.

If passed, funding the state tax credit increase would cost about $55 million this year.

Democrat Sen. Joe Bolkcom of Iowa City, the bill sponsor, says this is one of the best ways to reduce poverty in the state. He says the bill would help 210,000 families in Iowa.

"These aren't the richest families in the state they are the poorest. Those facts alone should be enough to convince everyone to vote for this legislation," he said. "These households are also home to almost 40 percent of all our kids ... if you care about the future prosperity of Iowa, and I think everybody here does, you should be interested in moving Iowa children out of poverty."

Republican Sen. Randy Feenstra of Hull says the proposed credit is too high and unrealistic. He proposed an amendment to offer a smaller tax break to more taxpayers, but it failed to garner enough support.

Bolkcom hopes the Republican-controlled House will approve the bill but it may have little chance of becoming law. Gov. Terry Branstad has vetoed similar legislation in past years.