Bill Text: IA HF191 | 2015-2016 | 86th General Assembly | Introduced

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Bill Title: A bill for an act providing an individual income tax credit equal to a percentage of the federal American opportunity tax credit and including retroactive applicability provisions.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Introduced - Dead) 2015-02-09 - Introduced, referred to Ways & Means. H.J. 282. [HF191 Detail]

Download: Iowa-2015-HF191-Introduced.html

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House File 191 - Introduced




                                 HOUSE FILE       
                                 BY  WESSEL=KROESCHELL

                                      A BILL FOR

  1 An Act providing an individual income tax credit equal to a
  2    percentage of the federal American opportunity tax credit
  3    and including retroactive applicability provisions.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  NEW SECTION.  422.10A  American opportunity tax
  1  2 credit.
  1  3    1.  The taxes imposed under this division, less the credits
  1  4 allowed under section 422.12, shall be reduced by an American
  1  5 opportunity tax credit equal to twenty=five percent of the
  1  6 federal American opportunity tax credit provided in section
  1  7 25A(i) of the Internal Revenue Code.  Any credit in excess of
  1  8 the tax liability is refundable.
  1  9    2.  Married taxpayers electing to file separate returns or
  1 10 filing separately on a combined return may avail themselves of
  1 11 the American opportunity tax credit by allocating the American
  1 12 opportunity tax credit to each spouse in the proportion that
  1 13 each spouse's respective net income bears to the total combined
  1 14 net income.  Taxpayers affected by the allocation provisions
  1 15 of section 422.8 shall be permitted a deduction for the credit
  1 16 only in the amount fairly and equitably allocable to Iowa under
  1 17 rules prescribed by the director.
  1 18    Sec. 2.  RETROACTIVE APPLICABILITY.  This Act applies
  1 19 retroactively to January 1, 2015, for tax years beginning on
  1 20 or after that date.
  1 21                           EXPLANATION
  1 22 The inclusion of this explanation does not constitute agreement with
  1 23 the explanation's substance by the members of the general assembly.
  1 24    This bill provides a state individual income tax credit
  1 25 equal to 25 percent of the federal American opportunity tax
  1 26 credit provided in section 25A(i) of the Internal Revenue
  1 27 Code (IRC).  In general, the federal American opportunity
  1 28 tax credit, which is a modified version of the federal hope
  1 29 scholarship tax credit described in IRC {25A(b), is an
  1 30 education credit equal to a certain percentage of the tuition,
  1 31 fees, and course materials of attending a postsecondary
  1 32 educational institution for a taxpayer or the taxpayer's spouse
  1 33 or dependent.  The maximum credit is $2,500 per student, per
  1 34 tax year.  The credit is available for the first four years
  1 35 of postsecondary education and is gradually phased out for
  2  1 taxpayers with incomes between $80,000 and $90,000 for a
  2  2 single taxpayer and between $160,000 and $180,000 for married
  2  3 taxpayers.  The Iowa American opportunity tax credit will be
  2  4 available through tax year 2017, which is when the federal
  2  5 tax credit is set to expire.  Any credit in excess of the tax
  2  6 liability is refundable.
  2  7    Although married taxpayers must file a joint return to
  2  8 receive the federal tax credit, married taxpayers electing to
  2  9 file separate returns or separately on a combined return may
  2 10 claim the Iowa American opportunity tax credit by allocating
  2 11 the credit according to each spouse's respective net income.
  2 12    The bill applies retroactively to tax years beginning on or
  2 13 after January 1, 2015.
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