Tax-free heat proposed in Iowa, possible Illinois tax credits
for blood donations and Texas smokers get tax help to quit
By Kay Bell • Bankrate.com

Because the federal income tax is the biggest and usually the first tax we see listed on our pay stubs, we naturally tend to focus on it.

But state government takes a bite out of our spending money, too. Bankrate.com will help you stay on top of what your localities are collecting -- income, sales, personal property or investment taxes, or often a combination of all.

Here's a look at some recent tax actions across the nation.

Iowa lawmakers mull tax-free heat
DES MOINES -- With the seasonal chill starting to be felt and fuel prices creeping up, Iowa House Republicans are proposing elimination of the state's sales tax on residential utility bills. But unless the state GOP can reach a deal with Iowa's Democratic governor, the plan may meet the same fate as efforts this summer to cut taxes on gasoline, which failed.

Supporters of the measure note that Iowa's 5 percent sales tax is not collected on food or medicine, items considered necessities. The same interpretation should apply, they argue, to heating fuel needed during Iowa winters.

Utility officials estimate natural gas costs will rise 50 percent this winter, increasing the average bill almost $200 more per household through the winter. Consumers, however, will not see any heating bill savings before the new year even if the politicians work out a tax-cut measure. Iowa's legislature has completed its 2000 legislative work and will not reconvene until January 2001.

Illinois lawmakers propose tax break for blood drives
SPRINGFIELD -- State Senator Wendell Jones plans to introduce a bill that will grant tax credits to Illinois corporations that sponsor one or more on-site blood drives in a year.

Jones said he hopes the tax incentive will help increase donations and ease the area shortage of blood available for transfusion. The bill will among the first pieces of legislation offered when the state legislature meets again in January, with plans to have it make it into law before the summer travel season begins.

"We're at the end of another summer and that means that area blood banks and hospitals are operating with short supplies of blood due to a major seasonal decline in blood donations," said Jones.

Jones noted that some area corporations already hold blood drives, but said he expects many more would join the effort if they became aware of the extent of the blood shortage and have incentives to give their employees time off to donate in company-sponsored drives.

According to a spokesman from LifeSource Blood Services in Glenview, Ill., the state's largest blood center, corporate blood drives are a major source of donations in the Chicago area. The organization needs about 1,500 donors daily to meet medical needs in metropolitan Chicago.

Stop-smoking gums like Nicorette, Nicoderm, Nicotin and Nicotrol are free from sales tax, the comptroller ruled, as are nicotine patches. The sales tax break, which took effect in April, exempts about 100,000 products from the state's 6.25 percent sales tax. State officials estimate taxpayers will save about $160 million annually.

The law notes that qualifying products "must be a drug or medicine intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease, illness, injury, or pain."

-- Posted Oct. 19, 2000