House File 2111 HOUSE FILE BY ALONS, CHAMBERS, HEATON, KURTENBACH, and HEDDENS Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act modifying income requirements for the child and dependent 2 care state income tax credit for taxpayers with a child with 3 special needs and providing for retroactive applicability. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5408YH 80 6 jp/pj/5 PAG LIN 1 1 Section 1. Section 422.12C, Code 2003, is amended by 1 2 adding the following new subsection: 1 3 NEW SUBSECTION. 1A. For the purposes of this subsection, 1 4 "child with special needs" means the same as "family member" 1 5 as defined in section 225C.35. Notwithstanding subsection 1, 1 6 regardless of net income, if a taxpayer resides in a county in 1 7 which the department of human services does not offer the 1 8 children=at=home program and the taxpayer has a dependent 1 9 child with special needs, the taxes imposed under this 1 10 division, less the credits allowed under sections 422.11A, 1 11 422.11B, 422.12, and 422.12B, shall be reduced by a child and 1 12 dependent care credit equal to one hundred percent of the 1 13 federal child and dependent care credit provided in section 21 1 14 of the Internal Revenue Code. 1 15 Sec. 2. RETROACTIVE APPLICABILITY. This Act is 1 16 retroactively applicable to the tax year beginning January 1, 1 17 2004, and is applicable on and after that date. 1 18 EXPLANATION 1 19 This bill modifies the income requirements of the child and 1 20 dependent care state income tax credit for taxpayers with a 1 21 child with special needs. 1 22 Under current law, this credit is provided as a percentage 1 23 of the federal child and dependent care credit on a sliding 1 24 scale, depending upon the net income of the taxpayer. The 1 25 credit is completely phased out for taxpayers with a net 1 26 income of $40,000 or more. 1 27 The bill provides that a taxpayer who resides in a county 1 28 in which the department of human services does not offer the 1 29 children=at=home program and who has a dependent child with 1 30 special needs is eligible for 100 percent of the federal child 1 31 and dependent care credit, regardless of the taxpayer's net 1 32 income. The children=at=home program provides grant funding 1 33 in 14 counties to families with a special needs child, based 1 34 upon eligibility criteria used for the family support subsidy 1 35 program, except for annual income. Under the bill, a "child 2 1 with special needs" means the same as the definition of 2 2 "family member" for the family support subsidy program in Code 2 3 section 225C.35: a person who is less than 18 years of age 2 4 and who by educational determination has a moderate, severe, 2 5 or profound educational disability or special health care 2 6 needs, or who otherwise meets the definition of developmental 2 7 disability in federal law. 2 8 The bill is retroactively applicable to the tax year 2 9 beginning July 1, 2004, and is effective on and after that 2 10 date. 2 11 LSB 5408YH 80 2 12 jp/pj/5