Update: Governor Branstad has vetoed this portion of the bill, so it looks like there will be no increase in the EIC for 2011. Click here for more information.
The Iowa Earned Income Credit has increased to 10% of the federal EIC for 2011, up from the previous rate of 7%. So, a taxpayer who qualified for a $1,500 federal EIC would receie a $150 state EIC for 2011. This change was part of the budget bill passed by the Iowa legislature last week. (But see the Update above.)
It also appears that taxpayers will no longer have to perform complicated recalculations to arrive at the Iowa EIC. Prior to 2010, such recalculations were required of many taxpayers. That was done away with for 2010 returns and appears that the bill that increases the EIC to 10% has left the recalculations out, as well.
Click here for a story from the Dinesen Tax Times archives about how the Iowa Earned Income Credit was calculated for 2009 and prior years.
(Original story published 7/5/11; the “Update” was added 7/28/11.)