Bill Text: IA SSB3141 | 2023-2024 | 90th General Assembly | Introduced
Bill Title: A bill for an act relating to state taxation by modifying future individual income tax rates, creating processes for reducing the individual income tax rate to zero, reducing future contingent corporate income tax rates, making appropriations, and including effective date, applicability, and retroactive applicability provisions.
Spectrum: Committee Bill
Status: (Introduced - Dead) 2024-02-01 - Subcommittee: Dawson, Driscoll, Jochum, Koelker, and Petersen. [SSB3141 Detail]
Download: Iowa-2023-SSB3141-Introduced.html
Senate
Study
Bill
3141
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
DAWSON)
A
BILL
FOR
An
Act
relating
to
state
taxation
by
modifying
future
1
individual
income
tax
rates,
creating
processes
for
2
reducing
the
individual
income
tax
rate
to
zero,
reducing
3
future
contingent
corporate
income
tax
rates,
making
4
appropriations,
and
including
effective
date,
applicability,
5
and
retroactive
applicability
provisions.
6
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
7
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DIVISION
I
1
CREATION
OF
TAXPAYER
RELIEF
TRUST
FUND,
INCOME
TAX
ELIMINATION
2
FUND
AND
BOARD
3
Section
1.
Section
2.46,
Code
2024,
is
amended
by
adding
the
4
following
new
subsection:
5
NEW
SUBSECTION
.
6.
Income
tax
elimination
board.
Beginning
6
on
or
after
July
1,
2026,
and
each
fiscal
year
thereafter
7
until
the
individual
income
tax
is
zero,
schedule
a
meeting
8
to
examine
and
discuss
the
actions
taken
by
the
income
tax
9
elimination
board
in
the
previous
fiscal
year.
10
Sec.
2.
Section
8.54,
subsection
1,
paragraph
b,
Code
2024,
11
is
amended
to
read
as
follows:
12
b.
“New
revenues”
means
moneys
which
are
received
by
the
13
state
due
to
increased
tax
rates
and
fees
or
newly
created
14
taxes
and
fees
over
and
above
those
moneys
which
are
received
15
due
to
state
taxes
and
fees
which
are
in
effect
as
of
January
16
1
following
the
December
state
revenue
estimating
conference.
17
“New
revenues”
also
includes
moneys
received
by
the
general
fund
18
of
the
state
due
to
new
transfers
over
and
above
those
moneys
19
received
by
the
general
fund
of
the
state
due
to
transfers
20
which
are
in
effect
as
of
January
1
following
the
December
21
state
revenue
estimating
conference.
The
department
of
22
management
shall
obtain
concurrence
from
the
revenue
estimating
23
conference
on
the
eligibility
of
transfers
to
the
general
24
fund
of
the
state
which
are
to
be
considered
as
new
revenue
25
in
determining
the
state
general
fund
expenditure
limitation.
26
However,
“new
revenues”
does
not
include
transfers
to
the
27
general
fund
of
the
state
from
the
income
tax
elimination
fund
28
pursuant
to
section
97E.4
that
occur
during
the
fiscal
year
29
immediately
proceeding
the
fiscal
year
for
which
the
adjusted
30
revenue
estimate
is
determined.
31
Sec.
3.
Section
8.57E,
subsection
2,
paragraph
a,
Code
2024,
32
is
amended
to
read
as
follows:
33
a.
Except
as
otherwise
provided
in
this
section
,
moneys
34
in
the
taxpayer
relief
fund
shall
only
be
used
pursuant
to
35
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appropriations
or
transfers
made
by
the
general
assembly
to
1
the
taxpayer
relief
trust
fund
in
section
97E.3
or
the
income
2
tax
elimination
fund
in
section
97E.4
or
for
tax
relief
or
3
reductions
in
income
tax
rates.
4
Sec.
4.
Section
8.57E,
Code
2024,
is
amended
by
adding
the
5
following
new
subsection:
6
NEW
SUBSECTION
.
2A.
a.
On
July
1,
2024,
there
is
7
transferred
from
the
taxpayer
relief
fund
to
the
income
tax
8
elimination
fund
created
in
section
97E.4,
one
hundred
million
9
dollars
for
administrative
purposes
under
chapter
97E.
10
b.
On
January
1,
2025,
there
is
transferred
from
the
11
taxpayer
relief
fund
to
the
taxpayer
relief
trust
fund
created
12
in
section
97E.3,
two
billion
six
hundred
million
dollars
for
13
the
purpose
of
producing
investment
returns
for
deposit
into
14
the
income
tax
elimination
fund.
15
c.
For
the
fiscal
year
beginning
July
1,
2026,
and
each
16
fiscal
year
thereafter,
there
is
transferred
from
the
taxpayer
17
relief
fund
to
the
taxpayer
relief
trust
fund
created
in
18
section
97E.3,
an
amount
equal
to
twenty-five
percent
of
the
19
moneys
transferred
to
the
taxpayer
relief
fund
during
the
20
preceding
fiscal
year.
21
Sec.
5.
Section
12B.10,
subsection
6,
Code
2024,
is
amended
22
by
adding
the
following
new
paragraphs:
23
NEW
PARAGRAPH
.
o.
Investments
by
the
taxpayer
relief
trust
24
fund
established
in
section
97E.3.
25
NEW
PARAGRAPH
.
p.
Investments
by
the
income
tax
elimination
26
fund
established
in
section
97E.4.
27
Sec.
6.
Section
12B.10C,
subsection
4,
unnumbered
paragraph
28
1,
Code
2024,
is
amended
to
read
as
follows:
29
The
following
entities
or
funds
are
not
subject
to
this
30
section
:
31
Sec.
7.
Section
12B.10C,
subsection
4,
Code
2024,
is
amended
32
by
adding
the
following
new
paragraph:
33
NEW
PARAGRAPH
.
l.
The
taxpayer
relief
trust
fund
34
established
in
section
97E.3.
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NEW
PARAGRAPH
.
m.
The
income
tax
elimination
trust
1
established
in
section
97E.4.
2
Sec.
8.
Section
97B.1,
subsection
1,
Code
2024,
is
amended
3
to
read
as
follows:
4
1.
The
“Iowa
Public
Employees’
Retirement
System”
is
5
established
as
an
independent
agency
within
the
executive
6
branch
of
state
government.
The
Iowa
public
employees’
7
retirement
system
shall
administer
the
retirement
system
8
established
under
this
chapter
,
and
beginning
July
1,
2024,
9
shall
administer
chapter
97E
.
10
Sec.
9.
NEW
SECTION
.
97E.1
Purpose.
11
The
purpose
of
this
chapter
is
to
create
and
ensure
economic
12
vitality
and
growth
for
the
benefit
of
future
generations
of
13
Iowans
by
setting
aside
and
protecting
moneys
today
in
order
to
14
responsibly
eliminate
the
individual
income
tax
in
the
future.
15
Sec.
10.
NEW
SECTION
.
97E.2
Definitions.
16
For
the
purpose
of
this
chapter
and
unless
otherwise
17
required
by
the
context:
18
1.
“Board”
means
the
income
tax
elimination
board.
19
2.
“Elimination
fund”
means
the
income
tax
elimination
fund.
20
3.
“System”
means
the
Iowa
public
employees’
retirement
21
system
as
defined
in
section
97B.1.
22
4.
“Trust
fund”
means
the
taxpayer
relief
trust
fund.
23
Sec.
11.
NEW
SECTION
.
97E.3
Taxpayer
relief
trust
fund.
24
1.
a.
Beginning
January
1,
2025,
a
trust
fund
is
created,
25
separate
and
apart
from
all
other
public
moneys
or
funds
of
26
this
state
and
the
balance
in
the
trust
fund
shall
not
be
27
considered
part
of
the
balance
of
the
general
fund
of
the
28
state.
29
b.
Notwithstanding
section
12C.7,
subsection
2,
interest
30
or
earnings
on
moneys
deposited
in
the
trust
fund
shall
be
31
credited
to
the
fund.
Notwithstanding
section
8.33,
moneys
32
credited
to
the
trust
fund
shall
not
revert
at
the
close
of
a
33
fiscal
year.
34
2.
The
trust
fund
shall
consist
of
all
moneys
collected
by
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or
appropriated
or
transferred
to
the
trust
fund,
together
with
1
all
interest,
dividends,
and
rents,
and
shall
also
include
all
2
securities
or
investment
income
and
other
assets
acquired
by
3
and
through
the
use
of
the
moneys
belonging
to
the
trust
fund
4
and
any
other
moneys
that
have
been
paid
into
the
trust
fund.
5
3.
a.
The
system
is
hereby
made
the
custodian
of
the
trust
6
fund,
and
shall
administer
the
trust
fund,
and
shall
hold
and
7
disburse
the
trust
fund
in
accordance
with
the
requirements
of
8
this
chapter.
As
custodian,
the
system
shall
be
authorized
to
9
disburse
moneys
in
the
fund
upon
warrants
drawn
by
the
director
10
of
the
department
of
administrative
services
pursuant
to
the
11
order
of
the
system.
12
b.
The
system
shall
not
select
any
bank
or
other
third
13
party
for
the
purposes
of
investment
asset
safekeeping,
other
14
custody,
or
settlement
services
without
prior
consultation
with
15
and
approval
of
the
board.
16
c.
The
system,
subject
to
board
approval,
may
execute
17
contracts
and
agreements
with
investment
advisors,
consultants,
18
and
investment
management
and
benefit
consultant
firms
in
the
19
administration
of
investments
of
moneys
in
the
trust
fund.
20
4.
a.
All
moneys
that
are
appropriated
or
otherwise
21
transferred
or
deposited
into
the
trust
fund
are
appropriated
22
and
made
available
to
be
used
for
transfers
made
to
the
income
23
tax
elimination
fund
made
pursuant
to
subsection
5.
24
b.
The
expenses
to
administer
the
trust
fund
shall
be
as
25
provided
in
section
97E.5.
26
5.
Beginning
July
1,
2028,
and
each
July
1
thereafter,
five
27
percent
of
the
remaining
balance
of
the
trust
fund
at
the
close
28
of
the
preceding
fiscal
year
shall
be
transferred
to
the
income
29
tax
elimination
fund
created
in
section
97E.4.
30
6.
Moneys
in
the
trust
fund,
except
so
much
of
the
trust
31
fund
as
may
be
necessary
to
be
kept
on
hand
for
the
making
of
32
disbursements
under
this
chapter,
shall
be
invested
by
the
33
board
in
any
investments
according
to
the
investment
policy
of
34
the
board,
and
subject
to
the
requirements
of
chapters
12F,
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12H,
12J,
and
12K,
and
the
earnings
therefrom
shall
be
credited
1
to
the
fund.
2
7.
After
the
individual
income
tax
rate
is
adjusted
to
zero
3
pursuant
to
section
422.5B,
any
moneys
remaining
in
the
fund
4
shall
be
transferred
to
the
general
fund
of
the
state
in
the
5
same
fiscal
year.
6
Sec.
12.
NEW
SECTION
.
97E.4
Income
tax
elimination
fund.
7
1.
Commencing
July
1,
2024,
an
income
tax
elimination
fund
8
is
created
separate
and
apart
from
all
other
public
moneys
or
9
funds
of
this
state
and
the
balance
of
the
elimination
fund
10
shall
not
be
considered
part
of
the
balance
of
the
general
fund
11
of
the
state.
12
2.
a.
The
elimination
fund
shall
consist
of
all
moneys
13
transferred
to
the
elimination
fund
pursuant
to
section
97E.3
14
or
appropriated
to
or
otherwise
collected
by
the
elimination
15
fund
for
the
purpose
of
reducing
the
individual
income
tax
to
16
zero.
17
b.
Notwithstanding
section
12C.7,
subsection
2,
interest
or
18
earnings
on
moneys
deposited
in
the
income
tax
elimination
fund
19
shall
be
credited
to
the
elimination
fund.
Notwithstanding
20
section
8.33,
moneys
credited
to
the
income
tax
elimination
21
fund
shall
not
revert
at
the
close
of
a
fiscal
year.
22
3.
a.
The
system
is
hereby
made
custodian
of
the
23
elimination
fund,
and
shall
administer
the
elimination
fund,
24
and
shall
hold
and
disburse
the
fund
in
accordance
with
the
25
requirements
of
this
chapter.
As
custodian,
the
system
shall
26
be
authorized
to
disburse
moneys
in
the
elimination
fund
27
upon
warrants
drawn
by
the
director
of
the
department
of
28
administrative
services
pursuant
to
the
order
of
the
system.
29
b.
The
system
shall
not
select
any
bank
or
other
third
30
party
for
the
purposes
of
investment
asset
safekeeping,
other
31
custody,
or
settlement
services
without
prior
consultation
with
32
and
approval
of
the
board.
33
c.
The
system,
subject
to
board
approval,
may
execute
34
contracts
and
agreements
with
investment
advisors,
consultants,
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and
investment
management
and
benefit
consultant
firms
in
the
1
administration
of
investments
of
moneys
in
the
elimination
2
fund.
3
4.
a.
All
moneys
that
are
appropriated
or
otherwise
4
transferred
or
deposited
into
the
elimination
fund
are
5
appropriated
and
made
available
to
be
used
for
transfers
to
the
6
general
fund
as
provided
in
section
422.5B.
7
b.
The
expenses
to
administer
the
elimination
fund
shall
be
8
as
provided
in
section
97E.5.
9
5.
Moneys
in
the
elimination
fund,
except
so
much
of
the
10
elimination
fund
as
may
be
necessary
to
be
kept
on
hand
for
the
11
making
of
disbursements
under
this
section,
shall
be
invested
12
by
the
board
in
investments
authorized
for
the
Iowa
public
13
employees’
retirement
system
in
section
97B.7A,
and
subject
to
14
the
requirements
of
chapters
12F,
12H,
12J,
and
12K,
and
the
15
earnings
therefrom
shall
be
credited
to
the
fund.
16
6.
After
the
individual
income
tax
rate
is
adjusted
to
17
zero
pursuant
to
section
422.5B,
any
moneys
remaining
in
the
18
elimination
fund
shall
be
transferred
to
the
general
fund
of
19
the
state
in
the
same
fiscal
year.
20
Sec.
13.
NEW
SECTION
.
97E.5
Expenses.
21
1.
The
investment
management
and
administrative
expenses
22
for
the
trust
fund
and
elimination
fund
shall
be
charged
23
against
the
investment
income
of
the
elimination
fund.
24
2.
The
total
expenses
for
investment
management
and
25
administration
of
the
trust
fund
and
elimination
fund
shall
not
26
exceed
two
million
dollars
in
the
aggregate
per
year.
27
Sec.
14.
NEW
SECTION
.
97E.6
Income
tax
elimination
board.
28
1.
Beginning
July
1,
2024,
a
board
is
established.
The
29
duties
of
the
board
are
to
establish
and
implement
policy
in
30
matters
relating
to
the
investment
of
the
trust
fund
and
the
31
elimination
fund.
The
board
shall
be
the
trustee
of
the
trust
32
fund
and
the
elimination
fund.
33
2.
a.
At
least
annually
the
board
shall
have
a
public
34
meeting
and
review
the
investment
policies
and
procedures
used
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by
the
board
and
system.
Following
the
review
and
a
public
1
meeting,
the
board
shall,
pursuant
to
the
requirements
of
2
section
97E.7,
and
in
consultation
with
the
chief
investment
3
officer
of
the
system
and
other
relevant
personnel
of
the
4
system,
establish
an
investment
policy
and
goal
statement
that
5
shall
direct
the
investment
activities
concerning
each
fund.
6
b.
The
board
shall
review
and
approve,
prior
to
the
7
execution
of
a
contract
with
the
system,
the
hiring
of
each
8
investment
manager
and
investment
consultant
outside
of
state
9
government.
10
c.
The
board
shall
review
and
approve
the
selection
of
any
11
bank
used
by
the
system
pursuant
to
this
chapter.
12
3.
a.
The
board
shall
consist
of
eleven
members,
including
13
seven
voting
members
and
four
nonvoting
members.
14
b.
(1)
The
voting
members
shall
be
as
follows:
15
(a)
Four
public
members,
appointed
by
the
governor
who
16
each
have
substantial
experience
in
institutional
investments,
17
institutional
finance,
or
other
business
management.
18
(b)
Two
public
members,
appointed
by
the
governor
who
are
19
citizens
of
the
state.
20
(c)
The
director
of
the
department
of
management.
21
(2)
A
voting
member
shall
not
hold
other
office
or
position
22
under
the
laws
of
this
state,
or
any
other
state
or
territory
23
or
of
the
United
States.
24
c.
The
nonvoting
members
of
the
board
shall
be
two
state
25
representatives,
one
appointed
by
the
speaker
of
the
house
of
26
representatives
and
one
by
the
minority
leader
of
the
house,
27
and
two
state
senators,
one
appointed
by
the
majority
leader
of
28
the
senate
and
one
by
the
minority
leader
of
the
senate.
29
d.
Four
voting
members
of
the
board
shall
constitute
a
30
quorum.
31
e.
The
four
members
who
have
substantial
institutional
32
investment
experience
or
substantial
institutional
financial
33
experience
shall
be
paid
actual
expenses
incurred
as
a
member
34
and
shall
receive
a
per
diem
as
specified
in
section
7E.6
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for
each
day
of
service
not
exceeding
forty
days
per
year.
1
Legislative
members
shall
be
paid
the
per
diem
and
expenses
2
specified
in
section
2.10,
for
each
day
of
service.
The
per
3
diem
and
expenses
of
the
legislative
members
shall
be
paid
4
from
funds
appropriated
under
section
2.12.
The
two
remaining
5
public
members
and
the
director
of
the
department
of
management
6
shall
be
paid
actual
expenses
incurred
as
members
of
the
board
7
and
such
performance
as
members
of
the
board
shall
not
affect
8
benefits
such
as
salary,
vacation
accrual,
or
a
leave
of
9
absence
for
sickness
or
injury.
10
f.
The
appointive
terms
of
the
members
appointed
by
the
11
governor
are
for
six-year
staggered
terms
whose
initial
terms
12
shall
be
designated
by
the
governor
beginning
and
ending
as
13
provided
in
section
69.19.
If
there
is
a
vacancy
in
the
14
membership
of
the
board
for
one
of
the
members
appointed
by
15
the
governor,
the
governor
has
the
power
of
appointment.
16
Gubernatorial
appointees
to
this
board
are
subject
to
17
confirmation
by
the
senate.
18
4.
a.
Prior
to
any
rule
or
policy
adopted
by
the
board,
19
the
board
shall
notify
the
fiscal
committee
of
the
legislative
20
council
the
content
of
any
rule
or
policy
by
electronic
means,
21
and
shall
provide
the
fiscal
committee
at
least
ten
days
to
22
comment
on
the
rule
or
policy
before
adopting
the
rule
or
23
policy.
24
b.
Beginning
on
or
after
July
1,
2026,
and
each
fiscal
year
25
thereafter,
the
board
shall
report
to
the
fiscal
committee
of
26
the
legislative
council
including
the
investment
decisions,
27
transfers,
and
any
other
actions
taken
by
the
board
in
the
28
previous
fiscal
year.
29
Sec.
15.
NEW
SECTION
.
97E.7
Investment
and
management
of
30
funds
——
standards
——
immunity.
31
1.
In
establishing
the
investment
policy
of
the
trust
fund
32
and
elimination
fund
and
providing
for
the
separate
investment
33
of
each
fund,
the
system
and
board
shall
do
the
following:
34
a.
Exercise
the
judgment
and
care,
under
the
circumstances
35
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then
prevailing,
which
persons
of
prudence,
discretion,
and
1
intelligence
exercise
in
the
management
of
their
own
affairs,
2
not
for
the
purpose
of
speculation,
but
with
regard
to
the
3
permanent
disposition
of
the
funds,
considering
the
probable
4
income,
as
well
as
the
probable
safety,
of
their
capital.
5
b.
Give
appropriate
consideration
to
those
facts
and
6
circumstances
that
the
system
and
board
know
or
should
know
7
are
relevant
to
the
particular
investment
or
investment
policy
8
involved,
including
the
role
the
investment
plays
in
the
total
9
value
of
each
fund.
10
c.
For
the
purposes
of
this
subsection,
appropriate
11
consideration
includes
a
determination
that
the
particular
12
investment
or
investment
policy
is
reasonably
designed
to
13
further
the
purposes
of
each
fund,
taking
into
consideration
14
the
risk
of
loss
and
the
opportunity
for
gain
or
income
15
associated
with
the
investment
or
investment
policy
and
16
consideration
of
the
following
factors
as
they
relate
to
each
17
fund:
18
(1)
The
composition
of
the
fund
with
regard
to
19
diversification.
20
(2)
The
liquidity
and
current
return
of
the
investments
in
21
the
fund
relative
to
the
anticipated
cash
flow
requirements
of
22
the
fund.
23
(3)
The
projected
return
of
the
investments
relative
to
the
24
funding
objectives
of
the
fund.
25
2.
Within
the
limitations
of
the
investment
standards
26
prescribed
in
this
section,
the
system
may
acquire
and
retain
27
every
kind
of
property
and
every
kind
of
investment
which
28
persons
of
prudence,
discretion,
and
intelligence
acquire
or
29
retain
for
their
own
account.
Consistent
with
this
section,
30
investments
shall
be
made
in
a
manner
that
will
enhance
31
the
economy
of
this
state,
and
in
particular,
will
result
32
in
increased
employment
of
the
residents
of
this
state.
33
Investments
of
moneys
in
each
fund
are
not
subject
to
sections
34
73.15
through
73.21.
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3.
Except
as
provided
in
subsection
6,
if
there
is
loss
1
to
either
fund,
the
system,
the
employees
of
the
system,
2
the
members
of
the
board
severally,
and
the
board
are
not
3
personally
liable,
and
the
loss
shall
be
charged
against
the
4
appropriate
fund.
There
is
appropriated
from
the
appropriate
5
fund
the
amount
required
to
cover
a
loss.
6
4.
In
managing
the
investment
of
either
fund,
the
system,
in
7
accordance
with
the
investment
policy
established
by
the
board,
8
is
authorized
to
do
the
following:
9
a.
To
sell
any
securities
or
other
property
in
either
10
fund
and
reinvest
the
proceeds
when
such
action
may
be
deemed
11
advisable
by
the
system
for
the
protection
of
the
applicable
12
fund
or
the
preservation
of
the
value
of
the
investment.
13
Such
sale
of
securities
or
other
property
of
either
fund
and
14
reinvestment
shall
only
be
made
in
accordance
with
policies
15
of
the
board
in
the
manner
and
to
the
extent
provided
in
this
16
chapter.
17
b.
To
subscribe
for
the
purchase
of
securities
for
future
18
delivery
in
anticipation
of
future
income.
The
securities
19
shall
be
paid
for
by
anticipated
income
or
from
funds
from
the
20
sale
of
securities
or
other
property
held
by
the
applicable
21
fund.
22
c.
To
pay
for
securities
directed
to
be
purchased
upon
23
the
receipt
of
the
purchasing
bank’s
paid
statement
or
paid
24
confirmation
of
purchase.
25
5.
In
the
administration
of
the
investment
of
moneys
in
26
each
fund,
employees
of
the
system
and
members
of
the
board
27
may
travel
outside
the
state
for
the
purpose
of
meeting
with
28
investment
firms
and
consultants
and
attending
conferences
and
29
meetings
to
fulfill
their
fiduciary
responsibilities.
30
6.
The
system,
employees
of
the
system,
the
board,
the
31
members
of
the
board,
and
the
treasurer
of
state
are
not
32
personally
liable
for
actions
or
omissions
under
this
chapter
33
that
do
not
involve
malicious
or
wanton
misconduct
even
if
34
those
actions
or
omissions
violate
the
standards
established
in
35
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this
section.
1
Sec.
16.
NEW
SECTION
.
422.5B
Reduction
of
individual
income
2
tax
rates.
3
1.
For
tax
years
beginning
on
or
after
January
1,
2029,
4
and
notwithstanding
the
individual
income
tax
rate
in
section
5
422.5,
the
department
of
revenue
shall
determine
the
individual
6
income
tax
rate
as
provided
in
this
section.
The
tax
rate
7
in
effect
in
section
422.5
shall
remain
in
effect
until
the
8
rate
is
adjusted
pursuant
to
subsection
2.
A
rate
adjusted
in
9
subsection
2
shall
remain
in
effect
until
the
rate
is
adjusted
10
again
pursuant
to
this
section.
11
2.
a.
Before
November
1,
2028,
and
before
November
1
12
each
year
thereafter,
until
the
individual
income
tax
rate
is
13
adjusted
to
zero,
the
department
of
management
shall
determine
14
the
amount
of
money
available
in
the
income
tax
elimination
15
fund
in
section
97E.4,
and
the
net
individual
income
tax
16
receipts
at
the
close
of
the
preceding
fiscal
year.
The
amount
17
available
in
the
income
tax
elimination
fund
and
the
net
tax
18
receipts
shall
be
provided
to
the
department
of
revenue
for
the
19
calculation
in
paragraph
“b”
.
20
b.
By
November
1,
2028,
and
by
November
1
each
year
21
thereafter,
the
department
of
revenue
shall
adjust
the
22
individual
income
tax
rate
as
provided
in
this
paragraph
if
all
23
of
the
following
apply:
24
(1)
The
amount
of
net
sales
and
use
tax
revenue
collected
by
25
the
state
during
the
most
recent
October
1
through
September
30
26
calculation
period
is
greater
than
one
hundred
three
percent
27
of
the
net
sales
and
use
tax
revenue
collected
during
the
28
immediately
preceding
calculation
period
covering
the
same
29
months.
30
(2)
The
rate
is
able
to
be
adjusted
downward
at
least
31
one-tenth
of
one
percent
in
such
a
way
that
the
proposed
32
adjusted
rate
would
have
generated
an
amount
equal
to
the
net
33
individual
income
tax
receipts
generated
from
the
rate
in
the
34
preceding
fiscal
year
less
any
transfer
amount
from
the
income
35
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tax
elimination
fund
in
section
97E.4.
1
(3)
There
is
at
least
one
hundred
fifty
percent
of
the
2
amount
to
be
transferred
to
the
general
fund
pursuant
to
3
subsection
3
available
in
the
income
tax
elimination
fund
in
4
section
97E.4.
5
c.
If
a
determination
is
made
by
the
department
of
revenue
6
that
the
rate
is
subject
to
adjustment,
the
department
of
7
revenue
shall
adjust
the
rate
specified
in
section
422.5,
or
if
8
the
rate
has
been
previously
adjusted,
adjust
the
previously
9
adjusted
rate.
10
3.
If
an
adjustment
is
made
pursuant
to
subsection
2,
one
11
hundred
fifty
percent
of
the
amount
of
moneys
in
the
income
tax
12
elimination
fund
used
in
the
calculation
in
subsection
2
shall
13
be
transferred
to
the
general
fund
of
the
state
in
the
fiscal
14
year
the
rate
is
adjusted.
15
4.
If
a
rate
is
adjusted
pursuant
to
subsection
2,
the
16
director
of
revenue
shall
cause
an
advisory
notice
containing
17
the
new
individual
income
tax
rate
to
be
published
in
the
18
Iowa
administrative
bulletin
and
on
the
internet
site
of
the
19
department
of
revenue.
The
calculation
and
publication
of
the
20
adjusted
tax
rate
by
the
director
of
revenue
is
exempt
from
21
chapter
17A,
and
shall
be
submitted
for
publication
by
the
22
first
December
31
following
the
determination
date
to
adjust
23
the
rate.
24
DIVISION
II
25
INDIVIDUAL
INCOME
TAX
RATES
26
Sec.
17.
Section
421.27,
subsection
9,
paragraph
a,
27
subparagraph
(3),
Code
2024,
is
amended
to
read
as
follows:
28
(3)
In
the
case
of
all
other
entities,
including
29
corporations
described
in
section
422.36,
subsection
5
,
and
all
30
other
entities
required
to
file
an
information
return
under
31
section
422.15,
subsection
2
,
the
entity’s
Iowa
net
income
32
after
the
application
of
the
Iowa
business
activity
ratio,
if
33
applicable,
multiplied
by
the
top
income
tax
rate
imposed
under
34
section
422.5
or
422.5A
,
as
applicable,
for
the
tax
year,
less
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any
Iowa
tax
credits
available
to
the
entity.
1
Sec.
18.
Section
422.5,
subsection
1,
paragraph
a,
Code
2
2024,
is
amended
to
read
as
follows:
3
a.
(1)
A
tax
is
imposed
upon
every
resident
and
nonresident
4
of
the
state
which
tax
shall
be
levied,
collected,
and
paid
5
annually
upon
and
with
respect
to
the
entire
taxable
income
6
as
defined
in
this
subchapter
at
rates
as
provided
in
section
7
422.5A
.
This
subparagraph
is
repealed
January
1,
2026.
8
(2)
Commencing
with
tax
years
beginning
on
or
after
January
9
1,
2026,
but
before
January
1,
2027,
a
tax
is
imposed
upon
10
every
resident
and
nonresident
of
the
state
which
tax
shall
11
be
levied,
collected,
and
paid
annually
upon
and
with
respect
12
to
the
entire
taxable
income
as
defined
in
this
subchapter
at
13
a
rate
of
three
and
seven
hundred
seventy-five
thousandths
14
percent.
15
(3)
Commencing
with
tax
years
beginning
on
or
after
January
16
1,
2027,
a
tax
is
imposed
upon
every
resident
and
nonresident
17
of
the
state
which
tax
shall
be
levied,
collected,
and
paid
18
annually
upon
and
with
respect
to
the
entire
taxable
income
as
19
defined
in
this
subchapter
at
a
rate
of
three
and
sixty-five
20
hundredths
percent.
21
Sec.
19.
Section
422.5A,
subsection
1,
paragraph
a,
22
subparagraphs
(2)
and
(3),
Code
2024,
are
amended
to
read
as
23
follows:
24
(2)
For
the
tax
year
beginning
on
or
after
January
1,
2024,
25
but
before
January
1,
2025:
26
(a)
On
taxable
income
from
0
through
$12,000
$12,420
,
the
27
rate
of
4.40
3.90
percent.
28
(b)
On
taxable
income
exceeding
$12,000
$12,420
but
not
29
exceeding
$60,000
$62,100
,
the
rate
of
4.82
percent.
30
(c)
On
taxable
income
exceeding
$60,000
$62,100
,
the
rate
of
31
5.70
percent.
32
(3)
For
the
tax
year
beginning
on
or
after
January
1,
2025,
33
but
before
January
1,
2026:
34
(a)
On
taxable
income
from
0
through
$12,000
$25,000
,
the
35
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rate
of
4.40
3.90
percent.
1
(b)
On
taxable
income
exceeding
$12,000
$25,000
,
the
rate
of
2
4.82
percent.
3
Sec.
20.
Section
422.5A,
subsection
1,
paragraph
b,
4
subparagraphs
(2)
and
(3),
Code
2024,
are
amended
to
read
as
5
follows:
6
(2)
For
the
tax
year
beginning
on
or
after
January
1,
2024,
7
but
before
January
1,
2025:
8
(a)
On
taxable
income
from
0
through
$6,000
$6,210
,
the
rate
9
of
4.40
3.90
percent.
10
(b)
On
taxable
income
exceeding
$6,000
$6,120
but
not
11
exceeding
$30,000
$31,050
,
the
rate
of
4.82
percent.
12
(c)
On
taxable
income
exceeding
$30,000
$31,050
,
the
rate
of
13
5.70
percent.
14
(3)
For
the
tax
year
beginning
on
or
after
January
1,
2025,
15
but
before
January
1,
2026:
16
(a)
On
taxable
income
from
0
through
$6,000
$12,500
,
the
17
rate
of
4.40
3.90
percent.
18
(b)
On
taxable
income
exceeding
$6,000
$12,500
,
the
rate
of
19
4.82
percent.
20
Sec.
21.
Section
422.16,
subsection
2,
paragraph
e,
Code
21
2024,
is
amended
to
read
as
follows:
22
e.
For
the
purposes
of
this
subsection
,
state
income
tax
23
shall
be
withheld
at
the
highest
rate
described
in
section
24
422.5
or
422.5A
,
as
applicable,
from
supplemental
wages
of
an
25
employee
in
those
circumstances
in
which
the
employer
treats
26
the
supplemental
wages
as
wholly
separate
from
regular
wages
27
for
purposes
of
withholding
and
federal
income
tax
is
withheld
28
from
the
supplemental
wages
under
section
3402(g)
of
the
29
Internal
Revenue
Code.
30
Sec.
22.
Section
422.16B,
subsection
2,
paragraph
a,
Code
31
2024,
is
amended
to
read
as
follows:
32
a.
(1)
A
pass-through
entity
shall
file
a
composite
return
33
on
behalf
of
all
nonresident
members
and
shall
report
and
pay
34
the
income
or
franchise
tax
imposed
under
this
chapter
at
the
35
-14-
LSB
5025XC
(16)
90
jm/jh
14/
25
S.F.
_____
maximum
state
income
or
franchise
tax
rate
applicable
to
the
1
member
under
section
422.5,
422.5A,
422.33
,
or
422.63
on
the
2
nonresident
members’
distributive
shares
of
the
income
from
the
3
pass-through
entity.
4
(2)
The
tax
rate
applicable
to
a
tiered
pass-through
entity
5
shall
be
the
maximum
state
income
tax
rate
under
section
422.5
6
or
422.5A
,
as
applicable
.
7
Sec.
23.
Section
422.16C,
subsection
4,
paragraph
a,
Code
8
2024,
is
amended
to
read
as
follows:
9
a.
A
taxpayer
making
an
election
under
this
section
shall
10
be
subject
to
tax
in
an
amount
equal
to
the
maximum
rate
under
11
section
422.5
or
422.5A,
as
applicable,
imposed
against
the
12
taxable
income
of
the
taxpayer
for
the
taxable
year
properly
13
determined
under
this
chapter
and
allocated
and
apportioned
to
14
the
state
under
the
rules
adopted
by
the
department.
The
tax
15
shall
be
due
with
the
taxpayer’s
return
required
under
this
16
chapter
.
17
Sec.
24.
Section
422.25A,
subsection
5,
paragraph
c,
18
subparagraphs
(3),
(4),
and
(5),
Code
2024,
are
amended
to
read
19
as
follows:
20
(3)
Determine
the
total
distributive
share
of
all
final
21
federal
partnership
adjustments
and
positive
reallocation
22
adjustments
as
modified
by
this
title
that
are
reported
to
23
nonresident
individual
partners
and
nonresident
fiduciary
24
partners
and
allocate
and
apportion
such
adjustments
as
25
provided
in
section
422.33
at
the
partnership
or
tiered
26
partner
level,
and
multiply
the
resulting
amount
by
the
maximum
27
individual
income
tax
rate
pursuant
to
section
422.5
or
422.5A
,
28
as
applicable,
for
the
reviewed
year.
29
(4)
For
the
total
distributive
share
of
all
final
federal
30
partnership
adjustments
and
positive
reallocation
adjustments
31
as
modified
by
this
title
that
are
reported
to
tiered
partners:
32
(a)
Determine
the
amount
of
such
adjustments
which
are
of
a
33
type
that
would
be
subject
to
sourcing
to
Iowa
under
section
34
422.8,
subsection
2
,
paragraph
“a”
,
as
a
nonresident,
and
then
35
-15-
LSB
5025XC
(16)
90
jm/jh
15/
25
S.F.
_____
determine
the
portion
of
this
amount
that
would
be
sourced
to
1
Iowa
under
those
provisions
as
if
the
tiered
partner
were
a
2
nonresident.
3
(b)
Determine
the
amount
of
such
adjustments
which
are
of
4
a
type
that
would
not
be
subject
to
sourcing
to
Iowa
under
5
section
422.8,
subsection
2
,
paragraph
“a”
,
as
a
nonresident.
6
(c)
Determine
the
portion
of
the
amount
in
subparagraph
7
division
(b)
that
can
be
established,
as
prescribed
by
the
8
department
by
rule,
to
be
properly
allocable
to
indirect
9
partners
that
are
nonresident
partners
or
other
partners
not
10
subject
to
tax
on
the
adjustments.
11
(d)
Multiply
the
total
of
the
amounts
determined
in
12
subparagraph
divisions
(a)
and
(b),
reduced
by
any
amount
13
determined
in
subparagraph
division
(c),
by
the
highest
14
individual
income
tax
rate
pursuant
to
section
422.5
or
422.5A
,
15
as
applicable,
for
the
reviewed
year.
16
(5)
For
the
total
distributive
share
of
all
final
federal
17
partnership
adjustments
and
positive
reallocation
adjustments
18
as
modified
by
this
title
that
are
reported
to
resident
19
individual
partners
and
resident
fiduciary
partners,
multiply
20
that
amount
by
the
highest
individual
income
tax
rate
pursuant
21
to
section
422.5
or
422.5A
,
as
applicable,
for
the
reviewed
22
year.
23
Sec.
25.
REPEAL.
2022
Iowa
Acts,
chapter
1002,
sections
19,
24
20,
21,
22,
23,
and
24,
are
repealed.
25
Sec.
26.
RETROACTIVE
APPLICABILITY.
The
following
apply
26
retroactively
to
January
1,
2024,
for
tax
years
beginning
on
27
or
after
that
date:
28
1.
The
portion
of
the
section
of
this
division
of
this
29
Act
amending
section
422.5A,
subsection
1,
paragraph
“a”,
30
subparagraph
(2).
31
2.
The
portion
of
the
section
of
this
division
of
this
32
Act
amending
section
422.5A,
subsection
1,
paragraph
“b”,
33
subparagraph
(2).
34
DIVISION
III
35
-16-
LSB
5025XC
(16)
90
jm/jh
16/
25
S.F.
_____
FUTURE
CONTINGENT
CORPORATE
INCOME
TAX
RATE
1
Sec.
27.
Section
422.33,
subsection
1,
paragraph
b,
2
subparagraph
(2),
subparagraph
division
(b),
subparagraph
3
subdivision
(iii),
Code
2024,
is
amended
to
read
as
follows:
4
(iii)
The
tax
rates
adjusted
pursuant
to
this
paragraph
5
shall
not
be
adjusted
below
five
and
one-half
four
and
6
nine-tenths
percent.
7
DIVISION
IV
8
FUTURE
CODE
EDITING
OF
INTERNAL
REFERENCES
9
Sec.
28.
Section
421.27,
subsection
9,
paragraph
a,
10
subparagraph
(3),
as
amended
by
this
Act,
is
amended
to
read
11
as
follows:
12
(3)
In
the
case
of
all
other
entities,
including
13
corporations
described
in
section
422.36,
subsection
5
,
and
all
14
other
entities
required
to
file
an
information
return
under
15
section
422.15,
subsection
2
,
the
entity’s
Iowa
net
income
16
after
the
application
of
the
Iowa
business
activity
ratio,
if
17
applicable,
multiplied
by
the
top
income
tax
rate
imposed
under
18
section
422.5
or
422.5A,
as
applicable,
for
the
tax
year,
less
19
any
Iowa
tax
credits
available
to
the
entity.
20
Sec.
29.
Section
422.5,
subsection
1,
paragraph
a,
as
21
amended
by
this
Act,
is
amended
to
read
as
follows:
22
a.
(1)
A
tax
is
imposed
upon
every
resident
and
nonresident
23
of
the
state
which
tax
shall
be
levied,
collected,
and
paid
24
annually
upon
and
with
respect
to
the
entire
taxable
income
25
as
defined
in
this
subchapter
at
rates
as
provided
in
section
26
422.5A
.
This
subparagraph
is
repealed
January
1,
2026.
27
(2)
(1)
Commencing
with
tax
years
beginning
on
or
after
28
January
1,
2026,
but
before
January
1,
2027,
a
tax
is
imposed
29
upon
every
resident
and
nonresident
of
the
state
which
tax
30
shall
be
levied,
collected,
and
paid
annually
upon
and
with
31
respect
to
the
entire
taxable
income
as
defined
in
this
32
subchapter
at
a
rate
of
three
and
seven
hundred
seventy-five
33
thousandths
percent.
34
(3)
(2)
Commencing
with
tax
years
beginning
on
or
after
35
-17-
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17/
25
S.F.
_____
January
1,
2027,
a
tax
is
imposed
upon
every
resident
and
1
nonresident
of
the
state
which
tax
shall
be
levied,
collected,
2
and
paid
annually
upon
and
with
respect
to
the
entire
taxable
3
income
as
defined
in
this
subchapter
at
a
rate
of
three
and
4
sixty-five
hundredths
percent.
5
Sec.
30.
Section
422.16,
subsection
2,
paragraph
e,
as
6
amended
by
this
Act,
is
amended
to
read
as
follows:
7
e.
For
the
purposes
of
this
subsection
,
state
income
tax
8
shall
be
withheld
at
the
highest
applicable
rate
described
in
9
section
422.5
or
422.5A,
as
applicable,
from
supplemental
wages
10
of
an
employee
in
those
circumstances
in
which
the
employer
11
treats
the
supplemental
wages
as
wholly
separate
from
regular
12
wages
for
purposes
of
withholding
and
federal
income
tax
is
13
withheld
from
the
supplemental
wages
under
section
3402(g)
of
14
the
Internal
Revenue
Code.
15
Sec.
31.
Section
422.16B,
subsection
2,
paragraph
a,
as
16
amended
by
this
Act,
is
amended
to
read
as
follows:
17
a.
(1)
A
pass-through
entity
shall
file
a
composite
return
18
on
behalf
of
all
nonresident
members
and
shall
report
and
pay
19
the
income
or
franchise
tax
imposed
under
this
chapter
at
the
20
maximum
state
income
or
franchise
tax
rate
applicable
to
the
21
member
under
section
422.5,
422.5A,
422.33
,
or
422.63
on
the
22
nonresident
members’
distributive
shares
of
the
income
from
the
23
pass-through
entity.
24
(2)
The
tax
rate
applicable
to
a
tiered
pass-through
entity
25
shall
be
the
maximum
state
income
tax
rate
applicable
under
26
section
422.5
or
422.5A,
as
applicable
.
27
Sec.
32.
Section
422.16C,
subsection
4,
paragraph
a,
as
28
amended
by
this
Act,
is
amended
to
read
as
follows:
29
a.
A
taxpayer
making
an
election
under
this
section
shall
30
be
subject
to
tax
in
an
amount
equal
to
the
maximum
applicable
31
rate
under
section
422.5
or
422.5A,
as
applicable,
imposed
32
against
the
taxable
income
of
the
taxpayer
for
the
taxable
33
year
properly
determined
under
this
chapter
and
allocated
34
and
apportioned
to
the
state
under
the
rules
adopted
by
the
35
-18-
LSB
5025XC
(16)
90
jm/jh
18/
25
S.F.
_____
department.
The
tax
shall
be
due
with
the
taxpayer’s
return
1
required
under
this
chapter
.
2
Sec.
33.
Section
422.25A,
subsection
5,
paragraph
c,
3
subparagraphs
(3),
(4),
and
(5),
as
amended
by
this
Act,
are
4
amended
to
read
as
follows:
5
(3)
Determine
the
total
distributive
share
of
all
final
6
federal
partnership
adjustments
and
positive
reallocation
7
adjustments
as
modified
by
this
title
that
are
reported
to
8
nonresident
individual
partners
and
nonresident
fiduciary
9
partners
and
allocate
and
apportion
such
adjustments
as
10
provided
in
section
422.33
at
the
partnership
or
tiered
partner
11
level,
and
multiply
the
resulting
amount
by
the
maximum
highest
12
individual
income
tax
rate
pursuant
to
section
422.5
or
422.5A,
13
as
applicable,
for
the
reviewed
year.
14
(4)
For
the
total
distributive
share
of
all
final
federal
15
partnership
adjustments
and
positive
reallocation
adjustments
16
as
modified
by
this
title
that
are
reported
to
tiered
partners:
17
(a)
Determine
the
amount
of
such
adjustments
which
are
of
a
18
type
that
would
be
subject
to
sourcing
to
Iowa
under
section
19
422.8,
subsection
2
,
paragraph
“a”
,
as
a
nonresident,
and
then
20
determine
the
portion
of
this
amount
that
would
be
sourced
to
21
Iowa
under
those
provisions
as
if
the
tiered
partner
were
a
22
nonresident.
23
(b)
Determine
the
amount
of
such
adjustments
which
are
of
24
a
type
that
would
not
be
subject
to
sourcing
to
Iowa
under
25
section
422.8,
subsection
2
,
paragraph
“a”
,
as
a
nonresident.
26
(c)
Determine
the
portion
of
the
amount
in
subparagraph
27
division
(b)
that
can
be
established,
as
prescribed
by
the
28
department
by
rule,
to
be
properly
allocable
to
indirect
29
partners
that
are
nonresident
partners
or
other
partners
not
30
subject
to
tax
on
the
adjustments.
31
(d)
Multiply
the
total
of
the
amounts
determined
in
32
subparagraph
divisions
(a)
and
(b),
reduced
by
any
amount
33
determined
in
subparagraph
division
(c),
by
the
highest
34
individual
income
tax
rate
pursuant
to
section
422.5
or
422.5A,
35
-19-
LSB
5025XC
(16)
90
jm/jh
19/
25
S.F.
_____
as
applicable,
for
the
reviewed
year.
1
(5)
For
the
total
distributive
share
of
all
final
federal
2
partnership
adjustments
and
positive
reallocation
adjustments
3
as
modified
by
this
title
that
are
reported
to
resident
4
individual
partners
and
resident
fiduciary
partners,
multiply
5
that
amount
by
the
highest
individual
income
tax
rate
pursuant
6
to
section
422.5
or
422.5A,
as
applicable,
for
the
reviewed
7
year.
8
Sec.
34.
EFFECTIVE
DATE.
This
division
of
this
Act
takes
9
effect
January
1,
2026.
10
Sec.
35.
APPLICABILITY.
This
division
of
this
Act
applies
11
to
tax
years
beginning
on
or
after
January
1,
2026.
12
EXPLANATION
13
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
14
the
explanation’s
substance
by
the
members
of
the
general
assembly.
15
This
bill
relates
to
state
taxation
by
modifying
future
16
individual
income
tax
rates,
creating
processes
for
reducing
17
individual
income
tax
rates
to
zero,
and
reducing
future
18
contingent
corporate
income
tax
rates.
19
DIVISION
I
——
CREATION
OF
TAXPAYER
RELIEF
TRUST
FUND,
20
INCOME
TAX
ELIMINATION
FUND,
AND
BOARD.
The
bill
creates
the
21
taxpayer
relief
trust
fund
(trust
fund)
and
the
income
tax
22
elimination
fund
(ITEF)
for
the
purpose
of
reducing
future
23
individual
income
tax
rates
to
zero.
Under
the
bill,
moneys
24
are
transferred
through
both
funds
before
being
used
to
fund
25
the
reduction
of
individual
income
tax
rates.
26
TRANSFERS
FROM
TAXPAYER
RELIEF
FUND.
On
July
1,
2024,
the
27
bill
transfers
$100
million
from
the
taxpayer
relief
fund
(TRF)
28
to
the
ITEF.
29
On
January
1,
2025,
the
bill
transfers
$2.6
billion
from
30
the
TRF
to
the
trust
fund.
For
FY
2027,
and
each
fiscal
year
31
thereafter,
the
bill
transfers
from
TRF
to
the
trust
fund,
an
32
amount
equal
to
25
percent
of
moneys
transferred
into
the
TRF
33
each
fiscal
year.
34
TRUST
FUND.
The
trust
fund
is
created
beginning
January
35
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1,
2025,
separate
and
apart
from
all
other
public
moneys
or
1
funds
of
this
state
and
the
balance
in
the
trust
fund
shall
not
2
be
considered
part
of
the
balance
of
the
general
fund
of
the
3
state.
4
The
trust
fund
shall
consist
of
all
moneys
collected
by
or
5
appropriated
or
transferred
to
the
trust
fund
including
all
6
interest,
dividends,
and
rents,
and
shall
also
include
all
7
securities
or
investment
income
and
other
assets
acquired
by
8
the
use
of
the
moneys
in
the
trust
fund
and
any
other
moneys
9
that
have
been
transferred
or
paid
into
the
fund.
10
The
trust
fund
shall
be
administered
by
the
Iowa
public
11
employees’
retirement
system
(IPERS).
12
Beginning
July
1,
2028,
and
each
July
1
thereafter,
the
bill
13
transfers
5
percent
of
the
remaining
balance
of
the
trust
fund
14
at
the
close
of
the
preceding
fiscal
year
into
the
ITEF.
15
After
the
individual
income
tax
rate
is
adjusted
to
zero,
16
the
bill
requires
any
moneys
remaining
in
the
trust
fund
to
be
17
transferred
to
the
general
fund
of
the
state
in
the
fiscal
year
18
the
rate
is
adjusted
to
zero.
19
ITEF.
The
bill
establishes
the
ITEF
on
July
1,
2024.
The
20
ITEF
shall
consist
of
all
moneys
transferred
to
the
fund
from
21
the
trust
fund
or
appropriated
to
or
otherwise
collected
by
22
ITEF
for
the
purpose
of
reducing
the
individual
income
tax
rate
23
to
zero.
24
The
ITEF
shall
also
be
administered
by
IPERS.
The
moneys
25
in
the
ITEF
are
deposited
into
the
general
fund
of
the
state
26
when
individual
income
tax
rates
are
adjusted
pursuant
to
the
27
procedures
in
new
Code
section
422.5B
in
the
bill.
28
After
the
rate
is
adjusted
to
zero,
the
bill
requires
any
29
moneys
remaining
in
the
ITEF
to
be
transferred
to
the
general
30
fund
of
the
state
in
the
fiscal
year
the
rates
are
adjusted
to
31
zero.
32
EXPENSES.
The
investment
management
and
administrative
33
expenses
for
the
trust
fund
and
fund
shall
be
charged
against
34
the
investment
income
of
the
fund.
The
bill
limits
the
total
35
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investment
management
and
administrative
expenses
of
the
trust
1
fund
and
ITEF
to
$2
million
in
the
aggregate
per
year.
2
BOARD.
After
July
1,
2024,
the
bill
creates
a
board
to
3
establish
policy
and
to
review
implementation
of
the
policy,
in
4
matters
relating
to
the
investment
of
the
trust
fund
and
the
5
ITEF.
The
bill
establishes
the
board
as
trustee
of
both
funds.
6
The
bill
allows
the
board
to
review
and
approve,
prior
to
7
the
execution
of
a
contract
with
the
system,
the
hiring
of
each
8
investment
manager
and
investment
consultant
outside
of
state
9
government.
10
The
bill
allows
the
board
to
review
and
approve
the
selection
11
of
any
bank
used
by
IPERS
for
each
fund.
12
The
bill
requires
the
board
to
report
to
the
fiscal
committee
13
of
the
legislative
council.
14
The
board
shall
consist
of
11
members,
including
7
voting
15
members
and
4
nonvoting
members.
16
The
voting
members
shall
be
as
follows:
four
public
members,
17
appointed
by
the
governor
who
each
have
substantial
experience
18
in
institutional
investment,
institutional
finance,
or
business
19
management;
two
public
members,
appointed
by
the
governor
who
20
are
citizens
of
the
state;
and
the
director
of
the
department
21
of
management.
22
The
nonvoting
members
of
the
board
shall
be
two
state
23
representatives,
one
appointed
by
the
speaker
of
the
house
of
24
representatives
and
one
by
the
minority
leader
of
the
house,
25
and
two
state
senators,
one
appointed
by
the
majority
leader
of
26
the
senate
and
one
by
the
minority
leader
of
the
senate.
27
IPERS.
The
bill
requires
IPERS
and
the
board
to
develop
28
separate
investment
policies
for
each
fund.
IPERS
and
the
29
board
have
broader
authority
to
establish
the
investment
policy
30
for
the
trust
fund
than
the
investment
policy
for
ITEF.
The
31
investment
policy
for
the
ITEF
shall
be
similar
to
the
Iowa
32
public
employees’
retirement
system
in
Code
chapter
97B.
In
33
developing
the
investment
policy
for
either
fund,
the
bill
34
requires
IPERS
and
the
board
to
exercise
judgment
and
care
that
35
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requires
prudence,
discretion,
probable
income,
and
probable
1
safety,
as
if
investing
personal
funds.
The
board
is
required
2
to
give
appropriate
consideration
to
investments
that
are
3
reasonably
designed
to
further
the
purposes
of
each
fund,
4
taking
into
consideration
the
risk
of
loss
and
the
opportunity
5
for
gain
or
income
associated
with
the
investment
or
investment
6
policy.
7
The
bill
allows
each
fund
to
acquire
and
retain
every
kind
8
of
property
and
every
kind
of
investment
which
persons
of
9
prudence,
discretion,
and
intelligence
acquire
or
retain
for
a
10
personal
account.
11
The
bill
specifies
if
there
is
loss
to
either
fund,
IPERS,
12
the
employees
of
IPERS,
the
members
of
the
board
severally,
13
and
the
board
are
not
personally
liable,
and
the
loss
shall
be
14
charged
against
the
trust
fund
or
fund,
as
applicable,
unless
15
the
conduct
involves
malicious
or
wanton
misconduct.
16
IPERS,
in
accordance
with
the
investment
policy
established
17
by
the
board,
is
authorized
under
the
bill
to
sell
any
18
securities
or
other
property
in
the
trust
fund
and
reinvest
the
19
proceeds
when
such
action
may
be
deemed
advisable
by
IPERS
for
20
the
protection
of
the
fund
or
the
preservation
of
the
value
of
21
the
investment.
22
The
bill
allows
IPERS,
subject
to
board
approval,
to
23
execute
contracts
and
agreements
with
investment
advisors
and
24
consultants
in
the
administration
of
investments
of
moneys
in
25
either
fund.
26
ADJUSTING
INDIVIDUAL
INCOME
TAX
RATE.
By
November
1,
2028,
27
and
by
November
1
each
year
thereafter,
the
department
of
28
management
shall
determine
the
amount
of
moneys
available
in
29
the
ITEF,
and
the
net
individual
income
tax
receipts
at
the
30
close
of
the
preceding
fiscal
year.
The
amount
available
in
31
the
ITEF
and
the
net
tax
receipts
shall
be
provided
to
the
32
department
of
revenue
for
the
calculation
to
determine
if
33
the
individual
income
tax
rates
may
be
adjusted.
The
bill
34
specifies
the
department
of
revenue
shall
adjust
and
apply
a
35
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new
individual
income
tax
rate
in
such
a
way
that
the
rate
1
would
have
generated
an
amount
equal
to
the
net
receipts
2
generated
from
the
rate
in
the
preceding
fiscal
year
less
the
3
amount
transferred
from
the
ITEF.
4
The
bill
prohibits
the
rate
from
being
adjusted
unless
5
the
amount
of
net
sales
and
use
tax
revenue
collected
by
the
6
state
during
the
most
recent
October
1
through
September
30
7
calculation
period
is
greater
than
103
percent
of
the
net
sales
8
and
use
tax
revenue
collected
during
the
preceding
calculation
9
period
covering
the
same
months.
10
The
bill
prohibits
the
rate
from
being
adjusted
unless
the
11
rate
is
able
to
be
adjusted
at
least
one-tenth
of
1
percent.
12
The
rate,
when
adjusted,
shall
be
rounded
down
to
the
nearest
13
one-tenth
of
1
percent.
14
The
bill
prohibits
the
rate
from
being
adjusted
unless
15
at
least
150
percent
of
the
amount
to
be
transferred
to
the
16
general
fund
of
the
state
is
available
in
the
ITEF.
17
The
bill
requires
the
moneys
in
the
ITEF
be
transferred
to
18
the
general
fund
of
the
state
in
the
fiscal
year
the
rate
is
19
adjusted.
The
bill
specifies
the
transfer
from
the
ITEF
to
the
20
general
fund
of
the
state
shall
not
be
considered
“new
revenue”
21
for
purposes
of
the
general
fund
expenditure
limitation
in
Code
22
section
8.54.
23
If
a
tax
rate
is
adjusted,
the
bill
requires
the
director
24
of
revenue
to
cause
an
advisory
notice
containing
the
new
25
individual
income
tax
rate
to
be
published
in
the
Iowa
26
administrative
bulletin
and
on
the
internet
site
of
the
27
department
of
revenue.
The
calculation
and
publication
of
the
28
adjusted
tax
rate
by
the
director
of
revenue
is
exempt
from
29
Code
chapter
17A,
and
shall
be
submitted
for
publication
by
the
30
first
December
31
following
the
determination
date
to
adjust
31
the
tax
rates.
32
DIVISION
II
——
INDIVIDUAL
INCOME
TAX
RATES.
The
bill
changes
33
some
of
the
individual
income
tax
brackets
and
individual
34
income
tax
rates
for
the
tax
year
beginning
January
1,
2024,
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but
before
January
1,
2025,
and
for
the
tax
year
beginning
1
January
1,
2025,
but
before
January
1,
2026.
For
the
tax
year
2
beginning
January
1,
2026,
but
before
January
1,
2027,
the
bill
3
lowers
the
future
flat
individual
income
tax
rate
from
3.90
4
percent
to
3.775
percent.
For
tax
years
beginning
on
or
after
5
January
1,
2027,
the
bill
lowers
the
flat
individual
income
tax
6
rate
from
3.775
percent
to
3.65
percent.
The
flat
individual
7
income
tax
rate
of
3.65
percent
is
the
rate
that
will
be
8
subject
to
reduction
by
the
processes
established
in
the
bill.
9
DIVISION
III
——
FUTURE
CONTINGENT
CORPORATE
INCOME
TAX
RATE.
10
Under
current
law,
a
process
exists
by
which
corporate
income
11
tax
rates
may
be
lowered
if
net
corporate
income
tax
receipts
12
for
the
preceding
fiscal
year
exceed
$700
million.
Current
13
law
prohibits
the
corporate
rate
from
being
adjusted
below
5.5
14
percent.
The
bill
strikes
the
5.5
percent
corporate
tax
rate
15
minimum,
and
provides
that
the
corporate
tax
rate
minimum
shall
16
not
be
adjusted
below
4.90
percent.
17
DIVISION
IV
——
FUTURE
CODE
EDITING
OF
INTERNAL
REFERENCES.
18
The
bill
eliminates
internal
references
to
individual
income
19
tax
rates
in
Code
section
422.5A
due
to
moving
the
individual
20
income
tax
rate
to
Code
section
422.5.
The
bill
also
21
eliminates
references
to
“highest”,
“maximum”,
and
“top”
rate
22
because
the
individual
income
tax
rate
becomes
a
flat
rate
23
commencing
with
tax
years
beginning
on
or
after
January
1,
24
2026.
25
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