Bill Text: IA SF468 | 2015-2016 | 86th General Assembly | Introduced

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Bill Title: A bill for an act relating to the individual and corporate income taxes by reducing individual and corporate tax rates and eliminating a deduction for federal income taxes paid, and including retroactive applicability provisions.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2015-03-17 - Subcommittee, Quirmbach, Dotzler, and Feenstra. S.J. 600. [SF468 Detail]

Download: Iowa-2015-SF468-Introduced.html

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Senate File 468 - Introduced




                                 SENATE FILE       
                                 BY  CHELGREN

                                      A BILL FOR

  1 An Act relating to the individual and corporate income taxes by
  2    reducing individual and corporate tax rates and eliminating
  3    a deduction for federal income taxes paid, and including
  4    retroactive applicability provisions.
  5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 422.4, subsection 16, Code 2015, is
  1  2 amended to read as follows:
  1  3    16.  The words "taxable income" mean the net income as
  1  4 defined in section 422.7 minus the deductions allowed by
  1  5 section 422.9, in the case of individuals; in the case of
  1  6 estates or trusts, the words "taxable income" mean the taxable
  1  7 income (without a deduction for personal exemption) as computed
  1  8 for federal income tax purposes under the Internal Revenue
  1  9 Code, but with the adjustments specified in section 422.7 plus
  1 10 the Iowa income tax deducted in computing the federal taxable
  1 11 income and minus federal income taxes as provided in section
  1 12 422.9, if available.
  1 13    Sec. 2.  Section 422.5, subsection 1, paragraphs a, b, c, d,
  1 14 e, f, g, h, and i, Code 2015, are amended to read as follows:
  1 15    a.  On all taxable income from zero through one thousand
  1 16 dollars, thirty=six twenty=four hundredths of one percent.
  1 17    b.  On all taxable income exceeding one thousand dollars but
  1 18 not exceeding two thousand dollars, seventy=two forty=eight
  1 19  hundredths of one percent.
  1 20    c.  On all taxable income exceeding two thousand dollars but
  1 21 not exceeding four thousand dollars, two one and forty=three
  1 22  sixty=two hundredths percent.
  1 23    d.  On all taxable income exceeding four thousand dollars but
  1 24 not exceeding nine thousand dollars, four and one=half three
  1 25  percent.
  1 26    e.  On all taxable income exceeding nine thousand dollars
  1 27 but not exceeding fifteen thousand dollars, six four and twelve
  1 28  eight hundredths percent.
  1 29    f.  On all taxable income exceeding fifteen thousand dollars
  1 30 but not exceeding twenty thousand dollars, six four and
  1 31 forty=eight thirty=two hundredths percent.
  1 32    g.  On all taxable income exceeding twenty thousand dollars
  1 33 but not exceeding thirty thousand dollars, six four and
  1 34 eight=tenths fifty=three hundredths percent.
  1 35    h.  On all taxable income exceeding thirty thousand dollars
  2  1 but not exceeding forty=five thousand dollars, seven five and
  2  2 ninety=two twenty=eight hundredths percent.
  2  3    i.  On all taxable income exceeding forty=five thousand
  2  4 dollars, eight five and ninety=eight ninety=nine hundredths
  2  5 percent.
  2  6    Sec. 3.  Section 422.9, subsection 1, Code 2015, is amended
  2  7 to read as follows:
  2  8    1.  An optional standard deduction, after deduction of
  2  9 federal income tax, if available, equal to one thousand
  2 10 two hundred thirty dollars for a married person who files
  2 11 separately or a single person or equal to three thousand
  2 12 thirty dollars for a husband and wife who file a joint return,
  2 13 a surviving spouse, or a head of household. The optional
  2 14 standard deduction shall not exceed the amount remaining after
  2 15 deduction of the federal income tax, if available. The amount
  2 16 of federal income tax deducted shall be computed as provided
  2 17 in subsection 2, paragraph "b".
  2 18    Sec. 4.  Section 422.9, subsection 2, paragraph b, Code 2015,
  2 19 is amended to read as follows:
  2 20    b.  Add the amount of federal income taxes paid or accrued,
  2 21 as the case may be, during the tax year beginning on or after
  2 22 January 1, 2015, but before January 1, 2016, to the extent
  2 23 payment is for a tax year beginning prior to January 1, 2015,
  2 24  and subtract any federal income tax refunds received during
  2 25 the tax year beginning on or after January 1, 2015, but before
  2 26 January 1, 2016, to the extent the federal income tax was
  2 27 deducted for a tax year beginning prior to January 1, 2015.
  2 28 Where married persons, who have filed a joint federal income
  2 29 tax return, file separately, such total shall be divided
  2 30 between them according to the portion of the total paid or
  2 31 accrued, as the case may be, by each. Federal income taxes
  2 32 paid for a tax year in which an Iowa return was not required
  2 33 to be filed shall not be added and federal income tax refunds
  2 34 received from a tax year in which an Iowa return was not
  2 35 required to be filed shall not be subtracted.
  3  1    Sec. 5.  Section 422.33, subsection 1, paragraphs a, b, c,
  3  2 and d, Code 2015, are amended to read as follows:
  3  3    a.  On the first twenty=five thousand dollars of taxable
  3  4 income, or any part thereof, the rate of six three percent.
  3  5    b.  On taxable income between twenty=five thousand dollars
  3  6 and one hundred thousand dollars or any part thereof, the rate
  3  7 of eight four percent.
  3  8    c.  On taxable income between one hundred thousand dollars
  3  9 and two hundred fifty thousand dollars or any part thereof, the
  3 10 rate of ten five percent.
  3 11    d.  On taxable income of two hundred fifty thousand dollars
  3 12 or more, the rate of twelve six percent.
  3 13    Sec. 6.  Section 422.35, subsection 4, Code 2015, is amended
  3 14 to read as follows:
  3 15    4.  Subtract fifty percent of the federal income taxes paid
  3 16 or accrued, as the case may be, during the tax year beginning
  3 17 on or after January 1, 2015, but before January 1, 2016, to the
  3 18 extent payment is for a tax year beginning prior to January 1,
  3 19 2015, adjusted by any federal income tax refunds during the tax
  3 20 year beginning on or after January 1, 2015, but before January
  3 21 1, 2016, to the extent the federal income tax was deducted for
  3 22 a tax year beginning prior to January 1, 2015; and add the Iowa
  3 23 income tax deducted in computing said taxable income.
  3 24    Sec. 7.  Section 422.35, subsection 11, paragraph g, Code
  3 25 2015, is amended to read as follows:
  3 26    g.  The deductions described in paragraphs "a" through "f"
  3 27 of this subsection are allowed subject to the requirement that
  3 28 a corporation affected by the allocation provisions of section
  3 29 422.33 shall be permitted to deduct only that portion of the
  3 30 deductions for net operating loss, and federal income taxes if
  3 31 applicable, that is fairly and equitably allocable to Iowa,
  3 32 under rules prescribed by the director.
  3 33    Sec. 8.  RETROACTIVE APPLICABILITY.  This Act applies
  3 34 retroactively to January 1, 2015, for tax years beginning on
  3 35 or after that date.
  4  1                           EXPLANATION
  4  2 The inclusion of this explanation does not constitute agreement with
  4  3 the explanation's substance by the members of the general assembly.
  4  4    This bill relates to the individual and corporate income
  4  5 taxes.
  4  6    The bill eliminates, for the individual and corporate income
  4  7 tax, the deduction for federal income taxes paid and the
  4  8 inclusion of federal income tax refunds received except for a
  4  9 one=year phaseout in 2015, for taxes paid and refunds received
  4 10 in that year that relate to a prior tax year.
  4 11    The bill reduces by approximately 33 percent each of the nine
  4 12 tax rates under the individual income tax.  The current rates
  4 13 range from a low of 0.36 percent to a high of 8.98 percent.  The
  4 14 new rates will range from a low of 0.24 percent to a high of
  4 15 5.99 percent.
  4 16    The bill reduces by approximately 50 percent each of the four
  4 17 tax rates under the corporate income tax.  The current rates
  4 18 range from a low of 6 percent to a high of 12 percent.  The new
  4 19 rates will range from a low of 3 percent to a high of 6 percent.
  4 20    The bill applies retroactively to tax years beginning on or
  4 21 after January 1, 2015.
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