In this paper, the effect of income inequality (Gini coefficient) on environmental quality (carbon dioxid [CO2] emissions per capita) in the provinces of Iran (2005–2016) was studied. The generalized method of moments (GMM) was used for data analysis. The results indicated that the impact of income inequality on CO2 emissions per capita is a function of the level of economic development (real gross domestic product [GDP] per capita). At low-income levels, rising inequality increases CO2 emissions per capita. However, after the threshold, raising income inequality reduces CO2 emissions per capita. The U-shaped relationship between real GDP per capita and CO2 emissions per capita has also been confirmed. Per capita energy consumption and population density are the factors that increase CO2 emissions per capita, while increasing urbanization is the factor that reduces CO2 emissions per capita.
