Bill Text: IA HSB63 | 2023-2024 | 90th General Assembly | Introduced

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Bill Title: A bill for an act creating the new resident and new graduate tax credits, available against the individual income tax, and including retroactive applicability provisions.

Spectrum: Committee Bill

Status: (Introduced - Dead) 2023-01-31 - Subcommittee recommends amendment and passage. Vote Total: 2-1. [HSB63 Detail]

Download: Iowa-2023-HSB63-Introduced.html

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House Study Bill 63 - Introduced
HOUSE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON KAUFMANN)
A BILL FOR
An Act creating the new resident and new graduate tax credits,
available against the individual income tax, and including
retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. NEW SECTION . 422.12P New resident tax credit.
1. a. For purposes of this section, “new resident” means an
individual who became a resident of Iowa upon taking full-time
employment in this state, who remains a resident of and
employed full-time in this state while claiming the credit, and
who has not been a resident of this state at any time during the
previous twelve-month period prior to establishing residency
in this state.
b. For purposes of this section, “public assistance” means
the supplemental nutrition assistance program, the Medicaid
program, or the family investment program.
2. a. The taxes imposed under this subchapter less the
credits allowed under section 422.12 shall be reduced by a new
resident tax credit equal to one hundred percent of the taxes
imposed in a tax year for up to four consecutive tax years.
b. An individual may claim the credit during either the
first or second tax year of residency, and may take the
credit consecutively every tax year thereafter as provided in
paragraph “a” .
c. An individual is eligible to take the credit one time in
the individual’s lifetime. If an individual is unable to claim
the credit in consecutive tax years, the individual shall be
ineligible to claim the credit in a future tax year.
3. Any new resident tax credit in excess of the tax
liability is not refundable.
4. An individual claiming the credit may claim an exemption
from withholding on the state W-4 form.
5. Married taxpayers electing to file separate returns or
filing separately on a combined return may avail themselves
of the new resident tax credit by allocating the new resident
tax credit to each spouse in the proportion that each spouse’s
respective earned income bears to the total combined earned
income.
6. An individual shall not be eligible to claim the credit
if the person is receiving public assistance after the first
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tax year the credit is claimed.
Sec. 2. NEW SECTION . 422.12Q New graduate tax credit.
1. a. For purposes of this section, “new graduate” means
an individual who is within two years of graduation from an
Iowa-based community college, college, university, or an
apprenticeship program as defined in section 15B.2, who is a
resident of and employed in this state, and who is thirty years
of age or less during the first tax year when claiming the tax
credit.
b. For purposes of this section, “public assistance” means
the supplemental nutrition assistance program, the Medicaid
program, or the family investment program.
2. a. The taxes imposed under this subchapter less the
credits allowed under section 422.12 shall be reduced by a new
graduate tax credit equal to one hundred percent of the taxes
imposed in a tax year for up to four consecutive tax years.
b. An individual may claim the tax credit during either the
first or second tax year after graduation, and may take the
credit consecutively every tax year thereafter as provided in
paragraph “a” .
c. An individual is eligible to take the credit one time in
the individual’s lifetime. If an individual is unable to claim
the credit in consecutive tax years, the individual shall be
ineligible to claim the credit in a future tax year.
3. Any new graduate tax credit in excess of the tax
liability is not refundable.
4. An individual claiming the credit may claim an exemption
from withholding on the state W-4 form.
5. Married taxpayers electing to file separate returns or
filing separately on a combined return may avail themselves
of the new graduate tax credit by allocating the new graduate
tax credit to each spouse in the proportion that each spouse’s
respective earned income bears to the total combined earned
income.
6. An individual shall not be eligible to claim the credit
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if the person is receiving public assistance after the first
tax year the credit is claimed.
Sec. 3. CONTINGENT FUTURE REPEAL —— CODE EDITOR DIRECTIVE
—— APPLICABILITY AFTER REPEAL.
1. Sections 422.12P and 422.12Q are repealed January 1
following the occurrence of the statewide average annual
unemployment rate equaling or exceeding four percent for three
consecutive calendar years as calculated by the United States
department of labor, bureau of labor statistics, beginning
with calendar year 2024. The director of the department of
workforce development or the director’s designee shall notify
the Code editor when the annual statewide unemployment rate
exceeds four percent for three consecutive calendar years as
set forth in this subsection.
2. If the Code editor is notified by the director of the
department of workforce development or the director’s designee
that the condition in subsection 1 has been satisfied, the Code
editor is directed to remove sections 422.12P and 422.12Q from
the Code.
3. A taxpayer claiming the tax credit in section 422.12P or
422.12Q prior to repeal pursuant to subsection 2 is eligible
to claim the credit after the repeal up to any remaining tax
years the taxpayer would have been eligible to claim prior to
the repeal, as long as the taxpayer remains eligible to claim
the credit under the law prior to repeal.
Sec. 4. RETROACTIVE APPLICABILITY. This Act applies
retroactively to January 1, 2023, for tax years beginning on
or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill creates the new resident and new graduate tax
credits, which are available against the individual income tax.
NEW RESIDENT TAX CREDIT. The bill defines “new resident” to
mean an individual who became a resident of Iowa upon taking
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full-time employment in this state, who remains a resident of
and employed full-time in this state while claiming the credit,
and who has not been a resident of this state at any time during
the previous 12-month period prior to establishing residency.
The new resident tax credit authorized in the bill is
available to a new resident for up to four consecutive tax
years following the establishment of residency in this state.
A new resident may begin to claim the credit during either the
first or second tax year of residency.
The amount of the credit is equal to 100 percent of the
income tax imposed in a tax year for up to four consecutive tax
years.
An individual is eligible to claim the new resident tax
credit one time in the individual’s lifetime for the tax year
period described in the bill.
An individual claiming the new resident tax credit may claim
an exemption from withholding on the state W-4 form.
Any new resident tax credit in excess of tax liability is not
refundable.
An individual is not eligible to claim the credit if the
person is receiving public assistance after the first tax year
the credit is claimed. The bill defines “public assistance”
to mean the supplemental nutrition assistance program, the
Medicaid program, or the family investment program.
NEW GRADUATE TAX CREDIT. The bill defines “new graduate” to
mean an individual who is within two years of graduation from
an Iowa-based community college, college, university, or an
apprenticeship program as defined in Code section 15B.2, who is
a resident of and employed in this state, and who is 30 years
of age or less during the first tax year when claiming the tax
credit.
The new graduate tax credit authorized in the bill is
available to a new graduate for up to four consecutive tax
years following graduation. A new graduate may begin to claim
the credit during either the first or second tax year after
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graduation.
The amount of the credit is equal to 100 percent of the
income tax imposed in a tax year for up to four consecutive tax
years.
An individual is eligible to claim the new graduate tax
credit one time in the individual’s lifetime for the tax year
period described in the bill.
An individual claiming the new graduate tax credit may claim
an exemption from withholding on the state W-4 form.
Any new graduate tax credit in excess of tax liability is not
refundable.
An individual is not eligible to claim the credit if the
person is receiving public assistance after the first tax year
the credit is claimed. The bill defines “public assistance”
to mean the supplemental nutrition assistance program, the
Medicaid program, or the family investment program.
CONTINGENT FUTURE REPEAL —— CODE EDITOR DIRECTIVE ——
APPLICABILITY AFTER REPEAL. The bill repeals the new resident
tax credit and the new graduate tax credit January 1 following
the occurrence of the statewide average annual unemployment
rate equaling or exceeding 4 percent for three consecutive
calendar years as calculated by the United States department of
labor, bureau of labor statistics, beginning with calendar year
2024. The director of the department of workforce development
or the director’s designee shall notify the Code editor when
the annual statewide unemployment rate exceeds 4 percent for
three consecutive calendar years.
If the Code editor receives notification under the bill, the
Code editor is directed to remove the tax credits.
A taxpayer claiming a tax credit prior to repeal under the
bill is eligible to claim the credit after the repeal up to
any remaining tax years the taxpayer would have been eligible
to claim prior to the repeal, as long as the taxpayer remains
eligible to claim the credit under the law prior to repeal.
APPLICABILITY. The bill applies retroactively to tax years
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beginning on or after January 1, 2023.
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