Tax incentive evaluation ratings

Rating: Leading

Key points:

  • Iowa is leading other states because it has a well-designed plan to regularly evaluate tax incentives, experience producing quality evaluations that rigorously measure economic impact, and a process for informing policy choices.
  • The Department of Revenue’s studies include a wealth of information on each tax credit’s history, design, cost, and performance.
  • Holding more frequent hearings on the evaluations could help lawmakers determine how to use the findings to improve incentive policy.

Iowa evaluation law

Year enacted: 2010.a

Who evaluates: Department of Revenue.

Length of review cycle: Five years.

For more information on state ratings, please visit our interactive map.  

By law, the Iowa Legislature’s Tax Expenditure Committee reviews tax incentives on a five-year rotating basis.b These reviews are informed by studies from economists within the Department of Revenue—evaluations that have several notable strengths.c

Revenue’s studies include a wealth of information on each tax credit’s history, design, cost, and performance. Many of the reports also include comparisons between Iowa credits and similar programs elsewhere—with 50-state data on which states have equivalent programs. Several of the reports have also used innovative approaches to isolate the impact of incentives. For example, a 2015 study of the Beginning Farmer Tax Credit compared beneficiaries of the program to a control group of farmers who did not participate to help estimate to what extent the incentive was helping farmers succeed.d

To assist with the evaluations, Revenue convenes advisory panels, which often include a mix of agency officials, academics, and representatives from relevant industry associations. These panels have helped Revenue staff understand the programs, identify sources of data, and consider various perspectives on the incentives.e

These evaluations are produced for the Tax Expenditure Committee, which typically meets once a year in November or December to discuss the incentives that are up for review and to receive testimony from Revenue, executive branch agencies, and other interested parties.f On occasion, this process has led to efforts to improve Iowa’s tax credits. For example, in 2013, Revenue’s analysis showed that a recently adopted administrative rule was significantly restricting eligibility for the state’s Child and Dependent Care Tax Credit.g At a hearing, members of the committee discussed reversing the new rule.h In 2014, lawmakers enacted a bill to do just that.i

Despite this example, however, policy changes to incentives from the committee’s work have been rare. One reason is that for all their analytical rigor, Revenue’s studies do not typically include clear conclusions on how to improve incentive programs; like other state tax-collecting agencies around the country, Revenue’s staff does not typically make policy recommendations.

That is not an insurmountable obstacle, however. Other states have found that when lawmakers dig into the details of incentive programs, they can draw valuable conclusions about policy even when evaluations do not include specific recommendations. One option is for Iowa to follow the lead of states such as Oregon and North Dakota, where committees reviewing tax incentives have held frequent hearings to allow lawmakers to study these programs in much more detail.j


  1. Iowa Code § 2.48,
  2. Ibid.
  3. Iowa Department of Revenue, “Evaluation,” accessed Feb. 1, 2017,
  4. Iowa Department of Revenue, “Beginning Farmer Tax Credit Program” (December 2015), 35–40, 2015.pdf.
  5. Angela Gullickson and Amy Harris (senior fiscal and policy analyst and administrator and chief economist, respectively, Iowa Department of Revenue), interview with The Pew Charitable Trusts, June 7, 2016.
  6. Ibid.
  7. Iowa Department of Revenue, “Iowa’s Child and Dependent Care Tax Credit and Early Childhood Development Tax Credit” (December 2013), 8, 15–16, and%20ECD%20Tax%20Credits%20Evaluation%20Study_0.pdf.
  8. Iowa Legislative Services Agency, “Minutes” (Dec. 4, 2013), 7,
  9. Iowa S.F. 2337 (2014),
  10. North Dakota Legislative Branch, “Political Subdivision Taxation Committee,” updated Nov. 2, 2016,; Oregon Joint Committee on Tax Credits, “Overview,” accessed Feb. 1, 2017,
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