Senate
File
460
-
Introduced
SENATE
FILE
460
BY
JOCHUM
,
KNOX
,
GIDDENS
,
WEINER
,
PETERSEN
,
QUIRMBACH
,
DONAHUE
,
DOTZLER
,
WINCKLER
,
BOULTON
,
WAHLS
,
BISIGNANO
,
T.
TAYLOR
,
TRONE
GARRIOTT
,
BENNETT
,
and
CELSI
A
BILL
FOR
An
Act
relating
to
the
child
and
dependent
and
early
childhood
1
development
tax
credits,
and
including
retroactive
2
applicability
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
422.12C,
subsection
1,
Code
2023,
is
1
amended
by
striking
the
subsection
and
inserting
in
lieu
2
thereof
the
following:
3
1.
The
taxes
imposed
under
this
subchapter,
less
the
amounts
4
of
nonrefundable
credits
allowed
under
this
subchapter,
shall
5
be
reduced
by
a
child
and
dependent
care
credit
equal
to
the
6
following
percentages
of
the
federal
child
and
dependent
care
7
credit
provided
in
section
21
of
the
Internal
Revenue
Code,
8
without
regard
to
whether
or
not
the
federal
credit
was
limited
9
by
the
taxpayer’s
federal
tax
liability:
10
a.
For
a
taxpayer
of
net
income
of
less
than
twenty-five
11
thousand
dollars,
one
hundred
percent.
12
b.
For
a
taxpayer
with
net
income
of
twenty-five
thousand
13
dollars
or
more
but
less
than
forty
thousand
dollars,
ninety
14
percent.
15
c.
For
a
taxpayer
with
net
income
of
forty
thousand
dollars
16
or
more
but
less
than
sixty
thousand
dollars,
seventy-five
17
percent.
18
d.
For
a
taxpayer
with
net
income
of
sixty
thousand
dollars
19
or
more
but
less
than
ninety
thousand
dollars,
fifty
percent.
20
e.
For
a
taxpayer
with
net
income
of
ninety
thousand
dollars
21
or
more,
zero
percent.
22
Sec.
2.
Section
422.12C,
Code
2023,
is
amended
by
adding
the
23
following
new
subsection:
24
NEW
SUBSECTION
.
5.
a.
Upon
determination
of
the
latest
25
cumulative
inflation
factor,
the
director
shall
multiply
26
each
net
income
level
set
forth
in
subsection
1
or
2
by
the
27
cumulative
inflation
factor,
shall
round
off
the
resulting
28
product
to
the
nearest
one
dollar,
and
shall
incorporate
the
29
result
into
the
net
income
levels
in
subsection
1
or
2
for
each
30
tax
year
beginning
on
or
after
January
1,
2023.
31
b.
For
purposes
of
this
subsection,
“cumulative
inflation
32
factor”
means
the
product
of
the
annual
inflation
factor
for
33
the
2024
calendar
year
and
all
annual
inflation
factors
for
34
subsequent
calendar
years
as
determined
by
section
422.4,
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subsection
1,
paragraph
“a”
.
The
cumulative
inflation
factor
1
applies
to
all
tax
years
beginning
on
or
after
January
1
of
2
the
calendar
year
for
which
the
latest
annual
inflation
factor
3
has
been
determined.
Notwithstanding
any
other
provision,
4
the
annual
inflation
factor
for
the
2023
calendar
year
is
one
5
hundred
percent.
6
Sec.
3.
RETROACTIVE
APPLICABILITY.
This
Act
applies
7
retroactively
to
January
1,
2023,
for
tax
years
beginning
on
8
or
after
that
date.
9
EXPLANATION
10
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
11
the
explanation’s
substance
by
the
members
of
the
general
assembly.
12
This
bill
relates
to
the
Iowa
child
and
dependent
care
tax
13
credit
and
the
early
childhood
development
tax
credit
available
14
against
the
individual
income
tax.
15
IOWA
CHILD
AND
DEPENDENT
CARE
TAX
CREDIT.
The
Iowa
child
16
and
dependent
care
tax
credit
is
a
refundable
credit
calculated
17
as
a
percentage
of
the
federal
child
and
dependent
care
tax
18
credit,
depending
on
the
Iowa
net
income
of
the
taxpayer.
19
Currently,
there
are
seven
graduated
Iowa
net
income
thresholds
20
used
to
calculate
the
credit.
The
bill
reduces
the
number
21
of
Iowa
net
income
thresholds
from
seven
thresholds
to
five
22
thresholds,
but
increases
the
Iowa
child
and
dependent
care
tax
23
credit
by
increasing
the
allowable
percentage
of
the
federal
24
child
and
dependent
care
tax
credit
that
may
be
used
by
the
25
taxpayer
to
calculate
the
Iowa
child
and
dependent
care
tax
26
credit.
27
Currently,
the
credit
percentages
in
these
seven
Iowa
28
net
income
thresholds
range
from
a
high
of
75
percent
of
29
the
federal
credit
for
taxpayers
with
net
income
of
less
30
than
$10,000,
to
a
low
of
30
percent
of
the
federal
credit
31
for
taxpayers
with
net
income
of
$40,000
or
more
but
less
32
than
$90,000.
Under
the
bill,
the
credit
percentages
in
the
33
thresholds
range
from
a
high
of
100
percent
of
the
federal
34
credit
for
taxpayers
with
a
net
income
of
less
than
$25,000,
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to
a
low
of
50
percent
of
the
federal
credit
for
taxpayers
with
1
net
income
of
$60,000
or
more
but
less
than
$90,000.
2
The
bill
also
adjusts
the
future
amount
of
each
of
the
3
Iowa
net
income
amounts
in
the
five
graduated
Iowa
net
income
4
thresholds
by
indexing
the
thresholds
to
inflation.
5
EARLY
CHILDHOOD
DEVELOPMENT
TAX
CREDIT.
The
early
childhood
6
development
tax
credit
is
a
refundable
credit
equaling
25
7
percent
of
the
first
$1,000
which
the
taxpayer
has
paid
to
8
others
for
each
dependent
ages
three
through
five
for
early
9
childhood
development
expenses,
if
the
taxpayer’s
income
is
10
less
than
$90,000.
The
bill
adjusts
the
future
amount
of
the
11
$90,000
Iowa
net
income
threshold
by
indexing
the
threshold
to
12
inflation.
13
APPLICABILITY.
The
bill
applies
retroactively
to
tax
years
14
beginning
on
or
after
January
1,
2023.
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