Bill Text: IA SSB3181 | 2013-2014 | 85th General Assembly | Introduced

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Bill Title: A study bill for an act relating to the child and dependent care credit available against the individual income tax, and including retroactive applicability provisions.

Spectrum: Unknown

Status: (N/A - Dead) 2014-02-13 - In Ways and Means [SSB3181 Detail]

Download: Iowa-2013-SSB3181-Introduced.html

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Senate Study Bill 3181 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON BOLKCOM)
A BILL FOR
An Act relating to the child and dependent care credit
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. Section 422.12C, subsection 1, Code 2014, is
amended to read as follows:
1. a. The taxes imposed under this division , less the
amounts of nonrefundable credits allowed under this division ,
shall be reduced by a child and dependent care credit equal to
the following percentages of the federal child and dependent
care credit provided in section 21 of the Internal Revenue
Code , without regard to whether or not the federal credit was
limited by the taxpayer’s federal tax liability :
a. (1) For a taxpayer with net income of less than ten
fourteen thousand nine hundred eighty dollars, seventy-five
ninety-three and seventy-five hundredths percent.
b. (2) For a taxpayer with net income of ten fourteen
thousand nine hundred eighty dollars or more but less than
twenty twenty-nine thousand nine hundred sixty dollars,
sixty-five eighty-one and twenty-five hundredths percent.
c. (3) For a taxpayer with net income of twenty twenty-nine
thousand nine hundred sixty dollars or more but less than
twenty-five thirty-seven thousand four hundred fifty dollars,
fifty-five sixty-eight and seventy-five hundredths percent.
d. (4) For a taxpayer with net income of twenty-five
thirty-seven thousand four hundred fifty dollars or more but
less than thirty-five fifty-two thousand four hundred thirty
dollars, fifty sixty-two and five-tenths percent.
e. (5) For a taxpayer with net income of thirty-five
fifty-two thousand four hundred thirty dollars or more but less
than forty fifty-nine thousand nine hundred twenty dollars,
forty fifty percent.
f. (6) For a taxpayer with net income of forty fifty-nine
thousand nine hundred twenty dollars or more but less than
forty-five sixty-seven thousand four hundred ten dollars,
thirty thirty-seven and five-tenths percent.
g. (7) For a taxpayer with net income of forty-five
sixty-seven thousand four hundred ten dollars or more, zero
percent.
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b. For the tax year beginning in the 2014 calendar year
and for each subsequent tax year, the director shall multiply
the dollar amounts set forth in paragraph “a” by the latest
cumulative inflation factor, shall round off the resulting
product to the nearest one dollar, and shall incorporate the
result into the income tax forms and instructions for each tax
year. For purposes of this paragraph, “cumulative inflation
factor” means the product of the annual inflation factor for
the 2014 calendar year and all annual inflation factors for
subsequent calendar years as determined by section 422.4,
subsection 1, paragraph “a” . The cumulative inflation factor
applies to all tax years beginning on or after January 1 of the
calendar year for which the latest annual inflation factor has
been determined. Notwithstanding any other provision to the
contrary, the annual inflation factor for the 2014 calendar
year is one hundred percent.
Sec. 2. RETROACTIVE APPLICABILITY. This Act applies
retroactively to January 1, 2014, 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 relates to the Iowa child and dependent care tax
credit available against the individual income tax. The Iowa
child and dependent care tax credit is a refundable credit
calculated as a percentage of the nonrefundable federal child
and dependent care tax credit, depending on the Iowa net income
of the taxpayer.
Iowa Admin. Code 701-42.15(1), which governs the computation
of the Iowa credit, specifies that for taxpayers whose federal
credit is limited to their federal tax liability, the Iowa
credit shall be computed based on the lesser amount. In other
words, the amount of the Iowa credit is limited to a percentage
of the federal credit actually claimed against federal tax
liability, not a percentage of the total federal credit the
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S.F. _____
taxpayer was eligible to claim against federal tax liability.
The bill amends Code section 422.12C to provide that the
Iowa credit will be calculated as a percentage of the federal
credit, whether or not the federal credit was limited by the
taxpayer’s federal tax liability.
The bill also increases the net income amounts and credit
percentages in each of the seven graduated brackets used to
calculate the credit. The credit percentages in these seven
brackets currently range from a high of 75 percent of the
federal credit for taxpayers with net income of less than
$10,000, to a low of 30 percent of the federal credit for
taxpayers with net income of $40,000 or more but less than
$45,000. The credit is currently unavailable to taxpayers
whose net income is $45,000 or more. The bill increases these
to a high of 93.75 percent of the federal credit for taxpayers
with net income of less than $14,980, and to a low of 37.50
percent of the federal credit for taxpayers with net income
of $59,920 or more but less than $67,410. The credit will be
unavailable to taxpayers whose net income is $67,410 or more.
The bill also adjusts the future amount of each of the
net income amounts in the seven graduated credit brackets by
indexing the dollar amounts to inflation.
The bill applies retroactively to January 1, 2014, for tax
years beginning on or after that date.
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