Iowa lost an estimated $360 million in 2017 income tax revenue, a new report released by the Center on Budget and Policy Priorities (CBPP) found — and a large portion of those tax breaks is given to higher-income seniors, CBPP’s Elizabeth McNichol said. Nationally, the cost to those breaks is $27 billion a year and is expected to double by 2030. 

“States should reduce this expense by better targeting relief to seniors with low incomes,” McNichol wrote. 

In 2018, Iowa legislators who passed income-tax cuts attempted to include expanded pension income breaks but that measure failed to make the final bill, according to the Iowa Policy Project in Iowa City, which released a statement after the CBPP published the report. 

“We’ve known for a long time that Iowa’s income tax system is tilted against lower-income families and treats those at higher incomes more favorably. This report supports past [Iowa Fiscal Partnership] research showing how special breaks for retirement income compound that problem,” said Anne Discher, executive director of the Child and Family Policy Center, which partners with the IPP to form the Iowa Fiscal Partnership. 

The CBPP report noted that many breaks for seniors were established decades ago, when poverty among the elderly was more widespread. The share of seniors in poverty fell from 25% in 1970 to 9% recently.

Yet income inequality has risen, and black and Hispanic families without retirement plans are less likely to benefit from the available tax breaks, the CBPP report added. The full report is available online.