Bill Text: IA SF119 | 2021-2022 | 89th General Assembly | Introduced

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Bill Title: A bill for an act relating to the child and dependent care and early childhood development tax credits, and including applicability provisions.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2021-01-26 - Fiscal note. [SF119 Detail]

Download: Iowa-2021-SF119-Introduced.html

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Senate File 119 - Introduced
SENATE FILE 119
BY CARLIN
(COMPANION TO HF 1 BY BOSSMAN)
A BILL FOR
An Act relating to the child and dependent care and early
childhood development tax credits, and including
applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. Section 422.12C, subsection 1, paragraphs f and
g, Code 2021, are amended to read as follows:
f. For a taxpayer with net income of forty thousand dollars
or more but less than forty-five ninety thousand dollars,
thirty percent.
g. For a taxpayer with net income of forty-five ninety
thousand dollars or more, zero percent.
Sec. 2. Section 422.12C, subsection 2, paragraph a, Code
2021, is amended to read as follows:
a. The taxes imposed under this subchapter , less the amounts
of nonrefundable credits allowed under this subchapter , may
be reduced by an early childhood development tax credit equal
to twenty-five percent of the first one thousand dollars
which the taxpayer has paid to others for each dependent, as
defined in the Internal Revenue Code, ages three through five
for early childhood development expenses. In determining the
amount of early childhood development expenses for the tax year
beginning in the 2006 calendar year only, such expenses paid
during November and December of the previous tax year shall
be considered paid in the tax year for which the tax credit
is claimed. This credit is available to a taxpayer whose net
income is less than forty-five ninety thousand dollars. If the
early childhood development tax credit is claimed for a tax
year, the taxpayer and the taxpayer’s spouse shall not claim
the child and dependent care credit under subsection 1 .
Sec. 3. APPLICABILITY. This Act applies to tax years
beginning on or after January 1, 2021.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill increases the maximum Iowa net income threshold
level for purposes of calculating the Iowa child and dependent
care credit and the early childhood development tax credit
available against the individual income tax.
CHILD AND DEPENDENT CARE CREDIT. Currently, an individual
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S.F. 119
may claim 30 percent of the federal child and dependent care
credit provided in section 21 of the Internal Revenue Code
against the individual income tax if the individual’s net
income is less than $45,000. Under the bill, an individual may
claim 30 percent of the federal child and dependent care credit
provided in section 21 of the Internal Revenue Code against the
individual income tax if the individual’s net income is less
than $90,000.
EARLY CHILDHOOD DEVELOPMENT TAX CREDIT. The bill increases
the income threshold determining the eligibility of a taxpayer
for the early childhood development tax credit. The bill
increases the eligibility threshold from a taxpayer whose net
income is less than $45,000 per year to less than $90,000 per
year. By increasing the eligibility threshold, taxpayers whose
net income is less than $90,000 are now eligible to take the
early childhood development tax credit equaling 25 percent of
the first $1,000 which the taxpayer has paid to others for
early childhood development expenses for each dependent ages
three through five.
APPLICABILITY. The bill applies to tax years beginning on or
after January 1, 2021.
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