Bill Text: IA SF468 | 2015-2016 | 86th General Assembly | Introduced
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
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: TLSB 2000XS (3) 86 mm/sc 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=sixtwenty=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=twoforty=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,twoone andforty=three 1 22sixty=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=halfthree 1 25 percent. 1 26 e. On all taxable income exceeding nine thousand dollars 1 27 but not exceeding fifteen thousand dollars,sixfour andtwelve 1 28eight hundredths percent. 1 29 f. On all taxable income exceeding fifteen thousand dollars 1 30 but not exceeding twenty thousand dollars,sixfour and 1 31forty=eightthirty=two hundredths percent. 1 32 g. On all taxable income exceeding twenty thousand dollars 1 33 but not exceeding thirty thousand dollars,sixfour and 1 34eight=tenthsfifty=three hundredths percent. 1 35 h. On all taxable income exceeding thirty thousand dollars 2 1 but not exceeding forty=five thousand dollars,sevenfive and 2 2ninety=twotwenty=eight hundredths percent. 2 3 i. On all taxable income exceeding forty=five thousand 2 4 dollars,eightfive andninety=eightninety=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 paidor 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 ofsixthree 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 ofeightfour 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 oftenfive percent. 3 11 d. On taxable income of two hundred fifty thousand dollars 3 12 or more, the rate oftwelvesix 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 16or 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. LSB 2000XS (3) 86 mm/sc