Bill Text: IA SF40 | 2019-2020 | 88th General Assembly | Introduced
Bill Title: A bill for an act providing an exemption from the computation of the individual income tax of certain amounts of retirement income and including retroactive applicability provisions.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-01-17 - Subcommittee: Chapman, Bolkcom, and R. Smith. S.J. 125. [SF40 Detail]
Download: Iowa-2019-SF40-Introduced.html
Senate
File
40
-
Introduced
SENATE
FILE
40
BY
ZAUN
A
BILL
FOR
An
Act
providing
an
exemption
from
the
computation
of
the
1
individual
income
tax
of
certain
amounts
of
retirement
2
income
and
including
retroactive
applicability
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
8.57E,
subsection
2,
Code
2019,
is
1
amended
to
read
as
follows:
2
2.
Moneys
in
the
taxpayer
relief
fund
shall
only
be
used
3
pursuant
to
appropriations
or
transfers
made
by
the
general
4
assembly
for
tax
relief
,
including
but
not
limited
to
increases
5
in
the
general
retirement
income
exclusion
under
section
422.7,
6
subsection
31
,
or
reductions
in
income
tax
rates.
7
Sec.
2.
Section
422.5,
subsection
3,
paragraph
a,
Code
2019,
8
is
amended
to
read
as
follows:
9
a.
The
tax
shall
not
be
imposed
on
a
resident
or
nonresident
10
whose
net
income,
as
defined
in
section
422.7
,
is
thirteen
11
thousand
five
hundred
dollars
or
less
in
the
case
of
married
12
persons
filing
jointly
or
filing
separately
on
a
combined
13
return,
heads
of
household,
and
surviving
spouses
or
nine
14
thousand
dollars
or
less
in
the
case
of
all
other
persons;
15
but
in
the
event
that
the
payment
of
tax
under
this
division
16
would
reduce
the
net
income
to
less
than
thirteen
thousand
five
17
hundred
dollars
or
nine
thousand
dollars
as
applicable,
then
18
the
tax
shall
be
reduced
to
that
amount
which
would
result
19
in
allowing
the
taxpayer
to
retain
a
net
income
of
thirteen
20
thousand
five
hundred
dollars
or
nine
thousand
dollars
as
21
applicable.
The
preceding
sentence
does
not
apply
to
estates
22
or
trusts.
For
the
purpose
of
this
subsection
,
the
entire
net
23
income,
including
any
part
of
the
net
income
not
allocated
24
to
Iowa,
shall
be
taken
into
account.
For
purposes
of
this
25
subsection
,
net
income
includes
all
amounts
of
pensions
or
26
other
retirement
income,
except
for
military
retirement
pay
27
excluded
under
section
422.7,
subsection
31A
,
paragraph
“a”
,
28
or
section
422.7,
subsection
31B
,
paragraph
“a”
,
received
from
29
any
source
which
is
not
taxable
under
this
division
as
a
result
30
of
the
government
pension
exclusions
in
section
422.7
,
or
any
31
other
state
law.
If
the
combined
net
income
of
a
husband
and
32
wife
exceeds
thirteen
thousand
five
hundred
dollars,
neither
33
of
them
shall
receive
the
benefit
of
this
subsection
,
and
it
34
is
immaterial
whether
they
file
a
joint
return
or
separate
35
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returns.
However,
if
a
husband
and
wife
file
separate
returns
1
and
have
a
combined
net
income
of
thirteen
thousand
five
2
hundred
dollars
or
less,
neither
spouse
shall
receive
the
3
benefit
of
this
paragraph,
if
one
spouse
has
a
net
operating
4
loss
and
elects
to
carry
back
or
carry
forward
the
loss
as
5
provided
in
section
422.9,
subsection
3
.
A
person
who
is
6
claimed
as
a
dependent
by
another
person
as
defined
in
section
7
422.12
shall
not
receive
the
benefit
of
this
subsection
if
8
the
person
claiming
the
dependent
has
net
income
exceeding
9
thirteen
thousand
five
hundred
dollars
or
nine
thousand
dollars
10
as
applicable
or
the
person
claiming
the
dependent
and
the
11
person’s
spouse
have
combined
net
income
exceeding
thirteen
12
thousand
five
hundred
dollars
or
nine
thousand
dollars
as
13
applicable.
14
Sec.
3.
Section
422.5,
subsection
3,
Code
2019,
is
amended
15
by
adding
the
following
new
paragraph:
16
NEW
PARAGRAPH
.
c.
(1)
For
purposes
of
this
subsection,
17
net
income
includes
all
amounts
of
pensions
or
other
retirement
18
income,
except
for
military
retirement
pay
excluded
under
19
section
422.7,
subsection
31A,
paragraph
“a”
,
or
section
422.7,
20
subsection
31B,
paragraph
“a”
,
and
except
for
retirement
income
21
excluded
under
section
422.7,
subsection
31C,
received
from
any
22
source
which
is
not
taxable
under
this
division
as
a
result
23
of
the
government
pension
exclusions
in
section
422.7,
or
any
24
other
state
law.
25
(2)
This
paragraph
“c”
is
repealed
January
1,
2023.
26
Sec.
4.
Section
422.5,
subsection
3B,
paragraph
a,
Code
27
2019,
is
amended
to
read
as
follows:
28
a.
The
tax
shall
not
be
imposed
on
a
resident
or
nonresident
29
who
is
at
least
sixty-five
years
old
on
December
31
of
30
the
tax
year
and
whose
net
income,
as
defined
in
section
31
422.7
,
is
thirty-two
thousand
dollars
or
less
in
the
case
32
of
married
persons
filing
jointly
or
filing
separately
on
a
33
combined
return,
heads
of
household,
and
surviving
spouses
or
34
twenty-four
thousand
dollars
or
less
in
the
case
of
all
other
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persons;
but
in
the
event
that
the
payment
of
tax
under
this
1
division
would
reduce
the
net
income
to
less
than
thirty-two
2
thousand
dollars
or
twenty-four
thousand
dollars
as
applicable,
3
then
the
tax
shall
be
reduced
to
that
amount
which
would
result
4
in
allowing
the
taxpayer
to
retain
a
net
income
of
thirty-two
5
thousand
dollars
or
twenty-four
thousand
dollars
as
applicable.
6
The
preceding
sentence
does
not
apply
to
estates
or
trusts.
7
For
the
purpose
of
this
subsection
,
the
entire
net
income,
8
including
any
part
of
the
net
income
not
allocated
to
Iowa,
9
shall
be
taken
into
account.
For
purposes
of
this
subsection
,
10
net
income
includes
all
amounts
of
pensions
or
other
retirement
11
income,
except
for
military
retirement
pay
excluded
under
12
section
422.7,
subsection
31A
,
paragraph
“a”
,
or
section
422.7,
13
subsection
31B
,
paragraph
“a”
,
received
from
any
source
which
is
14
not
taxable
under
this
division
as
a
result
of
the
government
15
pension
exclusions
in
section
422.7
,
or
any
other
state
law.
16
If
the
combined
net
income
of
a
husband
and
wife
exceeds
17
thirty-two
thousand
dollars,
neither
of
them
shall
receive
the
18
benefit
of
this
subsection
,
and
it
is
immaterial
whether
they
19
file
a
joint
return
or
separate
returns.
However,
if
a
husband
20
and
wife
file
separate
returns
and
have
a
combined
net
income
21
of
thirty-two
thousand
dollars
or
less,
neither
spouse
shall
22
receive
the
benefit
of
this
paragraph,
if
one
spouse
has
a
net
23
operating
loss
and
elects
to
carry
back
or
carry
forward
the
24
loss
as
provided
in
section
422.9,
subsection
3
.
A
person
25
who
is
claimed
as
a
dependent
by
another
person
as
defined
in
26
section
422.12
shall
not
receive
the
benefit
of
this
subsection
27
if
the
person
claiming
the
dependent
has
net
income
exceeding
28
thirty-two
thousand
dollars
or
twenty-four
thousand
dollars
29
as
applicable
or
the
person
claiming
the
dependent
and
the
30
person’s
spouse
have
combined
net
income
exceeding
thirty-two
31
thousand
dollars
or
twenty-four
thousand
dollars
as
applicable.
32
Sec.
5.
Section
422.5,
subsection
3B,
Code
2019,
is
amended
33
by
adding
the
following
new
paragraph:
34
NEW
PARAGRAPH
.
d.
(1)
For
purposes
of
this
subsection,
35
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net
income
includes
all
amounts
of
pensions
or
other
retirement
1
income,
except
for
military
retirement
pay
excluded
under
2
section
422.7,
subsection
31A,
paragraph
“a”
,
or
section
422.7,
3
subsection
31B,
paragraph
“a”
,
and
except
for
retirement
income
4
excluded
under
section
422.7,
subsection
31C,
received
from
any
5
source
which
is
not
taxable
under
this
division
as
a
result
6
of
the
government
pension
exclusions
in
section
422.7,
or
any
7
other
state
law.
8
(2)
This
paragraph
“d”
is
repealed
January
1,
2023.
9
Sec.
6.
Section
422.7,
subsection
31,
Code
2019,
is
amended
10
to
read
as
follows:
11
31.
a.
For
a
person
who
is
disabled,
or
is
fifty-five
12
years
of
age
or
older,
or
is
the
surviving
spouse
of
an
13
individual
or
a
survivor
having
an
insurable
interest
in
an
14
individual
who
would
have
qualified
for
the
exemption
under
15
this
subsection
for
the
tax
year,
subtract,
to
the
extent
16
included,
the
total
amount
of
a
governmental
or
other
pension
17
or
retirement
pay,
including,
but
not
limited
to,
defined
18
benefit
or
defined
contribution
plans,
annuities,
individual
19
retirement
accounts,
plans
maintained
or
contributed
to
by
an
20
employer,
or
maintained
or
contributed
to
by
a
self-employed
21
person
as
an
employer,
and
deferred
compensation
plans
or
any
22
earnings
attributable
to
the
deferred
compensation
plans,
up
23
to
a
maximum
of
six
thousand
dollars
for
a
person,
other
than
a
24
husband
or
wife,
who
files
a
separate
state
income
tax
return
25
and
up
to
a
maximum
of
twelve
thousand
dollars
for
a
husband
26
and
wife
who
file
a
joint
state
income
tax
return.
However,
a
27
surviving
spouse
who
is
not
disabled
or
fifty-five
years
of
age
28
or
older
can
only
exclude
the
amount
of
pension
or
retirement
29
pay
received
as
a
result
of
the
death
of
the
other
spouse.
A
30
husband
and
wife
filing
separate
state
income
tax
returns
or
31
separately
on
a
combined
state
return
are
allowed
a
combined
32
maximum
exclusion
under
this
subsection
of
up
to
twelve
33
thousand
dollars.
The
twelve
thousand
dollar
exclusion
shall
34
be
allocated
to
the
husband
or
wife
in
the
proportion
that
each
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spouse’s
respective
pension
and
retirement
pay
received
bears
1
to
total
combined
pension
and
retirement
pay
received.
2
b.
This
subsection
is
repealed
January
1,
2023.
3
Sec.
7.
Section
422.7,
subsection
31A,
Code
2019,
is
amended
4
by
adding
the
following
new
paragraph:
5
NEW
PARAGRAPH
.
c.
This
section
is
repealed
January
1,
2023.
6
Sec.
8.
Section
422.7,
subsection
31B,
Code
2019,
is
amended
7
by
adding
the
following
new
paragraph:
8
NEW
PARAGRAPH
.
c.
This
subsection
is
repealed
January
1,
9
2023.
10
Sec.
9.
Section
422.7,
Code
2019,
is
amended
by
adding
the
11
following
new
subsection:
12
NEW
SUBSECTION
.
31C.
a.
(1)
For
tax
years
beginning
13
in
the
2019
calendar
year,
subtract,
to
the
extent
included,
14
twenty
percent
of
retirement
income
received
by
a
taxpayer
15
remaining
after
the
subtractions
in
subsections
31,
31A,
and
16
31B.
17
(2)
For
tax
years
beginning
in
the
2020
calendar
year,
18
subtract,
to
the
extent
included,
forty
percent
of
retirement
19
income
received
by
a
taxpayer
remaining
after
the
subtractions
20
in
subsections
31,
31A,
and
31B.
21
(3)
For
tax
years
beginning
in
the
2021
calendar
year,
22
subtract,
to
the
extent
included,
sixty
percent
of
retirement
23
income
received
by
a
taxpayer
remaining
after
the
subtractions
24
in
subsections
31,
31A,
and
31B.
25
(4)
For
tax
years
beginning
in
the
2022
calendar
year,
26
subtract,
to
the
extent
included,
eighty
percent
of
retirement
27
income
received
by
a
taxpayer
remaining
after
the
subtractions
28
in
subsections
31,
31A,
and
31B.
29
(5)
For
tax
years
beginning
on
or
after
January
1,
2023,
30
subtract,
to
the
extent
included,
retirement
income
received
31
by
a
taxpayer.
32
b.
For
purposes
of
this
subsection,
“retirement
income”
33
means
a
governmental
or
other
pension
or
retirement
pay,
34
including
but
not
limited
to
defined
benefit
or
defined
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contribution
plans,
annuities,
individual
retirement
accounts,
1
plans
maintained
or
contributed
to
by
an
employer,
or
2
maintained
or
contributed
to
by
a
self-employed
person
as
an
3
employer,
and
deferred
compensation
plans
or
any
earnings
4
attributable
to
the
deferred
compensation
plans.
“Retirement
5
income”
includes
amounts
received
as
survivor
benefits
by
a
6
taxpayer
from
the
federal
government
pursuant
to
10
U.S.C
7
§1447,
et
seq.
8
Sec.
10.
RETROACTIVE
APPLICABILITY.
This
Act
applies
9
retroactively
to
January
1,
2019,
for
tax
years
beginning
on
10
or
after
that
date.
11
EXPLANATION
12
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
13
the
explanation’s
substance
by
the
members
of
the
general
assembly.
14
This
bill
relates
to
the
exclusion
of
retirement
income
from
15
the
computation
of
net
income
for
purposes
of
the
individual
16
income
tax.
17
Under
current
law,
a
taxpayer
may
exclude
all
retirement
18
pay,
including
certain
survivor
benefits,
received
from
the
19
federal
government
for
military
service
performed
in
the
armed
20
forces,
the
armed
forces
military
reserve,
or
national
guard.
21
In
addition,
a
taxpayer
who
is
disabled,
who
is
at
least
55
22
years
of
age,
or
who
is
the
surviving
spouse
or
other
specified
23
survivor
of
that
qualifying
taxpayer,
may
exclude
a
maximum
24
of
$6,000
of
other
retirement
income
($12,000
for
married
25
couples).
26
The
bill
strikes
a
provision
permitting
moneys
in
the
27
taxpayer
relief
fund
to
be
used
for
increases
in
the
general
28
retirement
income
exclusions
in
422.7(31)
because
the
bill
29
provides
for
a
complete
exclusion
of
such
retirement
income.
30
The
bill
phases
in
over
a
five-year
period
the
complete
31
exclusion
from
the
individual
income
tax
of
a
taxpayer’s
32
retirement
income
remaining
after
the
two
exclusions
referenced
33
above.
The
percentage
of
this
retirement
income
that
is
34
excluded
for
tax
years
beginning
in
2019,
2020,
2021,
and
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40
2022,
is
20
percent,
40
percent,
60
percent,
and
80
percent,
1
respectively.
For
tax
years
beginning
in
2023
or
later,
100
2
percent
of
a
taxpayer’s
retirement
income
will
be
excluded
from
3
the
individual
income
tax.
4
The
bill
also
excludes
this
retirement
income
from
the
5
calculation
of
net
income
for
purposes
of
determining
whether
6
or
not
a
taxpayer’s
net
income
exceeds
the
amount
at
which
the
7
individual
income
tax
will
not
be
imposed
pursuant
to
Code
8
section
422.5(3)
or
Code
section
422.5(3B),
and
for
which
an
9
individual
income
tax
return
is
not
required
to
be
filed,
and
10
for
purposes
of
calculating
the
alternate
tax
in
Code
section
11
422.5,
and
further
provides
that
any
retirement
income
excluded
12
from
the
individual
income
tax
will
not
be
added
back
to
these
13
calculations
for
tax
years
beginning
in
2023
or
later.
14
The
bill
defines
“retirement
income”
for
purposes
of
the
15
exclusion.
16
The
bill
applies
retroactively
to
January
1,
2019,
for
tax
17
years
beginning
on
or
after
that
date.
18
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