Bill Text: IA HF2456 | 2011-2012 | 84th General Assembly | Introduced
Bill Title: A bill for an act creating an individual income tax credit for contributions to an Iowa educational savings plan, promoting the use of such plans, and including retroactive applicability provisions.
Spectrum: Partisan Bill (Democrat 26-0)
Status: (Introduced - Dead) 2012-04-05 - Subcommittee, Helland, Kajtazovic, and Sands. H.J. 761. [HF2456 Detail]
Download: Iowa-2011-HF2456-Introduced.html
House
File
2456
-
Introduced
HOUSE
FILE
2456
BY
WILLEMS
,
STECKMAN
,
KELLEY
,
BERRY
,
WOLFE
,
WESSEL-KROESCHELL
,
COHOON
,
M.
SMITH
,
KRESSIG
,
GASKILL
,
H.
MILLER
,
R.
OLSON
,
THOMAS
,
HALL
,
T.
TAYLOR
,
WITTNEBEN
,
GAINES
,
KAJTAZOVIC
,
JACOBY
,
MUHLBAUER
,
WENTHE
,
OLDSON
,
ISENHART
,
RUNNING-MARQUARDT
,
HANSON
,
and
T.
OLSON
A
BILL
FOR
An
Act
creating
an
individual
income
tax
credit
for
1
contributions
to
an
Iowa
educational
savings
plan,
2
promoting
the
use
of
such
plans,
and
including
retroactive
3
applicability
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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5080YH
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84
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H.F.
2456
DIVISION
I
1
IOWA
EDUCATIONAL
SAVINGS
PLAN
TAX
CREDIT
2
Section
1.
Section
12D.3,
subsection
1,
paragraph
a,
Code
3
2011,
is
amended
to
read
as
follows:
4
a.
Each
participation
agreement
may
require
a
participant
5
to
agree
to
invest
a
specific
amount
of
money
in
the
trust
6
for
a
specific
period
of
time
for
the
benefit
of
a
specific
7
beneficiary.
A
participant
shall
not
be
required
to
make
an
8
annual
contribution
on
behalf
of
a
beneficiary.
The
maximum
9
contribution
that
may
be
deducted
for
Iowa
income
tax
purposes
10
shall
not
exceed
two
thousand
dollars
per
beneficiary
per
year
11
adjusted
annually
to
reflect
increases
in
the
consumer
price
12
index.
The
maximum
contribution
that
may
be
taken
as
a
credit
13
against
income
tax
liability
for
Iowa
income
tax
purposes
14
shall
not
exceed
two
thousand
dollars
per
participant
per
15
year
adjusted
annually
to
reflect
increases
in
the
consumer
16
price
index.
The
treasurer
of
state
shall
set
an
account
17
balance
limit
to
maintain
compliance
with
section
529
of
the
18
Internal
Revenue
Code.
A
contribution
shall
not
be
permitted
19
to
the
extent
it
causes
the
aggregate
balance
of
all
accounts
20
established
for
the
same
beneficiary
to
exceed
the
applicable
21
account
balance
limit.
22
Sec.
2.
Section
12D.9,
subsection
2,
Code
2011,
is
amended
23
to
read
as
follows:
24
2.
State
income
tax
treatment
of
the
Iowa
educational
25
savings
plan
trust
shall
be
as
provided
in
section
422.7
,
26
subsections
32
and
33
,
and
section
422.11I
.
27
Sec.
3.
NEW
SECTION
.
422.11I
Iowa
educational
savings
plan
28
tax
credit.
29
1.
The
taxes
imposed
under
this
division,
less
the
credits
30
allowed
under
section
422.12,
shall
be
reduced
by
an
Iowa
31
educational
savings
plan
tax
credit.
The
credit
shall
be
an
32
amount
equal
to
the
lesser
of
the
following:
33
a.
Twenty-five
percent
of
the
annual
contributions
made
on
34
behalf
of
a
beneficiary
or
beneficiaries
to
an
Iowa
educational
35
-1-
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5080YH
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2456
savings
plan
trust
established
pursuant
to
chapter
12D.
1
b.
The
maximum
annual
Iowa
income
tax
credit
allowed
as
a
2
participant
in
the
Iowa
educational
savings
plan
trust
pursuant
3
to
section
12D.3,
subsection
1,
paragraph
“a”
.
4
2.
In
order
to
be
eligible,
all
of
the
following
must
apply:
5
a.
The
taxable
income
of
the
taxpayer,
computed
without
6
regard
to
section
422.7,
subsection
32,
paragraph
“a”
,
must
7
not
exceed
three
hundred
percent
of
the
United
States
poverty
8
level
as
defined
by
the
most
recently
revised
poverty
income
9
guidelines
by
the
United
States
department
of
health
and
human
10
services.
Married
taxpayers
who
file
separate
returns
or
file
11
separately
on
a
combined
return
form
must
determine
taxable
12
income
for
purposes
of
this
paragraph
based
upon
their
combined
13
income.
14
b.
The
taxpayer
must
not
make
the
adjustment
under
section
15
422.7,
subsection
32,
paragraph
“a”
,
in
the
same
year
as
a
16
credit
is
claimed
under
this
section.
17
3.
Any
credit
in
excess
of
the
tax
liability
shall
be
18
refunded.
In
lieu
of
claiming
a
refund,
the
taxpayer
may
19
elect
to
have
the
overpayment
shown
on
the
taxpayer’s
final,
20
completed
return
credited
to
the
tax
liability
for
the
21
following
tax
year.
22
4.
Amounts
refunded
to
the
taxpayer
resulting
from
the
23
cancellation
of
a
participation
agreement
shall
first
be
repaid
24
to
the
department
to
the
extent
previously
claimed
as
a
tax
25
credit
under
this
section
and
shall
then,
if
applicable,
be
26
treated
as
an
addition
to
net
income
under
section
422.7,
27
subsection
32,
paragraph
“b”
.
28
5.
Withdrawals
made
by
a
taxpayer
from
the
Iowa
educational
29
savings
plan
trust
for
purposes
other
than
the
payment
of
30
qualified
education
expenses
shall
first
be
repaid
to
the
31
department
to
the
extent
previously
claimed
as
a
tax
credit
32
under
this
section
and
shall
then,
if
applicable,
be
treated
33
as
an
addition
to
net
income
under
section
422.7,
subsection
34
32,
paragraph
“c”
.
35
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2456
Sec.
4.
RETROACTIVE
APPLICABILITY.
This
division
of
this
1
Act
applies
retroactively
to
January
1,
2012,
for
tax
years
2
beginning
on
or
after
that
date.
3
DIVISION
II
4
INFORMATIONAL
MATERIAL
RELATED
TO
IOWA
EDUCATIONAL
SAVINGS
PLAN
5
TRUST
6
Sec.
5.
NEW
SECTION
.
12G.3
Iowa
educational
savings
plan
7
informational
material.
8
1.
The
Iowa
financial
literacy
program
shall
create
a
9
written
informational
and
promotional
pamphlet
to
promote
10
the
creation
and
use
of
Iowa
educational
savings
plans
under
11
chapter
12D.
The
pamphlet
shall
contain,
at
a
minimum,
a
12
detailed
explanation
of
an
Iowa
educational
savings
plan,
13
instructions
for
opening
an
Iowa
educational
savings
plan,
and
14
the
tax
and
other
benefits
of
an
Iowa
educational
savings
plan.
15
2.
The
Iowa
financial
literacy
program
shall
provide
16
the
written
informational
and
promotional
pamphlet
to
the
17
department
of
education
for
dissemination
as
provided
in
18
section
256.24.
19
Sec.
6.
NEW
SECTION
.
256.24
Iowa
educational
savings
plan
20
informational
material.
21
The
department
shall
provide
to
the
parent
or
guardian
of
22
each
child
registering
for
kindergarten
in
this
state
a
copy
of
23
the
Iowa
educational
savings
plan
informational
and
promotional
24
pamphlet
created
and
provided
to
the
department
by
the
Iowa
25
financial
literacy
program
pursuant
to
section
12G.3.
26
EXPLANATION
27
This
bill
creates
an
Iowa
educational
savings
plan
tax
28
credit
and
provides
for
the
promotion
of
Iowa
educational
29
savings
plans.
30
Division
I
of
the
bill
relates
to
the
Iowa
educational
31
savings
plan
tax
credit.
Under
current
Code
section
422.7,
32
subsection
32,
a
participant
in
an
Iowa
educational
savings
33
plan
is
allowed
an
exemption
from
the
computation
of
the
34
individual
state
income
tax
for
certain
amounts
contributed
to
35
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2456
a
plan.
The
bill
creates
an
individual
income
tax
credit
equal
1
to
the
lesser
of
25
percent
of
the
annual
contributions
made
2
to
an
Iowa
educational
savings
plan
or
$2,000
per
participant
3
adjusted
annually
to
reflect
increases
in
the
consumer
price
4
index.
5
In
order
to
qualify
for
the
credit,
a
taxpayer’s
taxable
6
income
must
not
exceed
300
percent
of
the
United
States
poverty
7
level
as
defined
by
the
most
recently
revised
poverty
income
8
guidelines
by
the
United
States
health
and
human
services,
and
9
the
taxpayer
must
not
claim
the
individual
income
tax
exemption
10
mentioned
above.
In
determining
taxable
income
for
purposes
11
of
eligibility
for
the
tax
credit,
married
taxpayers
who
file
12
separate
returns
or
file
separately
on
a
combined
return
form
13
must
determine
taxable
income
based
upon
their
combined
income.
14
The
tax
credit
is
refundable
to
the
extent
it
exceeds
15
tax
liability.
In
lieu
of
claiming
a
refund,
a
taxpayer
16
may
elect
to
have
the
overpayment
shown
on
the
taxpayer’s
17
final,
completed
return
credited
to
the
tax
liability
for
the
18
following
tax
year.
19
The
bill
establishes
a
hierarchy
for
the
tax
treatment
20
of
amounts
received
by
a
taxpayer
from
the
cancellation
of
a
21
participation
agreement
or
withdrawn
from
a
plan
for
purposes
22
other
than
the
payment
of
qualified
education
expenses.
Those
23
amounts
shall
first
be
repaid
to
the
department
of
revenue
24
to
the
extent
previously
claimed
as
a
tax
credit.
Next,
if
25
applicable,
the
amounts
shall
be
treated
as
an
addition
to
net
26
income
under
Code
section
422.7,
subsection
32,
paragraph
“b”
27
or
“c”.
28
Division
II
of
the
bill
relates
to
the
promotion
of
Iowa
29
educational
savings
plans.
The
bill
directs
the
Iowa
financial
30
literacy
program,
which
is
a
program
within
the
office
of
31
the
treasurer
of
state,
to
create
a
written
informational
32
and
promotional
pamphlet
for
the
purpose
of
promoting
the
33
creation
and
use
of
Iowa
educational
savings
plans.
The
34
pamphlet
shall
contain,
at
a
minimum,
a
detailed
explanation
35
-4-
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5080YH
(4)
84
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5
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2456
of
an
Iowa
educational
savings
plan,
instructions
for
opening
1
a
plan,
and
the
tax
and
other
benefits
of
a
plan.
The
Iowa
2
financial
literacy
program
is
required
to
provide
the
pamphlet
3
to
the
department
of
education.
The
department
of
education
4
is
required
to
provide
a
copy
of
the
pamphlet
to
the
parent
or
5
guardian
of
each
child
registering
for
kindergarten
in
this
6
state.
7
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5080YH
(4)
84
mm/sc
5/
5
