Senate File 4 SENATE FILE BY McKIBBEN Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act increasing the exemption for pension and retirement income 2 for purposes of state individual income tax and providing a 3 retroactive applicability date. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1071XS 80 6 sc/pj/5 PAG LIN 1 1 Section 1. Section 422.7, subsection 31, Code 2003, is 1 2 amended to read as follows: 1 3 31. For a person who is disabled, or is fifty=five years 1 4 of age or older, or is the surviving spouse of an individual 1 5 or a survivor having an insurable interest in an individual 1 6 who would have qualified for the exemption under this 1 7 subsection for the tax year, subtract, to the extent included, 1 8 the total amount of a governmental or other pension or 1 9 retirement pay, including, but not limited to, defined benefit 1 10 or defined contribution plans, annuities, individual 1 11 retirement accounts, plans maintained or contributed to by an 1 12 employer, or maintained or contributed to by a self=employed 1 13 person as an employer, and deferred compensation plans or any 1 14 earnings attributable to the deferred compensation plans, up 1 15 to a maximum ofsixnine thousand dollars for a person, other 1 16 than a husband or wife, who files a separate state income tax 1 17 return and up to a maximum oftwelveeighteen thousand dollars 1 18 for a husband and wife who file a joint state income tax 1 19 return. However, a surviving spouse who is not disabled or 1 20 fifty=five years of age or older can only exclude the amount 1 21 of pension or retirement pay received as a result of the death 1 22 of the other spouse. A husband and wife filing separate state 1 23 income tax returns or separately on a combined state return 1 24 are allowed a combined maximum exclusion under this subsection 1 25 of up totwelveeighteen thousand dollars. Thetwelve1 26 eighteen thousand dollar exclusion shall be allocated to the 1 27 husband or wife in the proportion that each spouse's 1 28 respective pension and retirement pay received bears to total 1 29 combined pension and retirement pay received. 1 30 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 1 31 retroactively to January 1, 2003, for tax years beginning on 1 32 or after that date. 1 33 EXPLANATION 1 34 This bill increases the state individual income tax 1 35 exemption for pension and retirement pay from $6,000 to $9,000 2 1 for single filers and from $12,000 to $18,000 for married 2 2 taxpayers. The exemption is available to a taxpayer who is 2 3 disabled or 55 years of age or older, or a qualifying survivor 2 4 of such a taxpayer. 2 5 The bill applies retroactively to January 1, 2003, for tax 2 6 years beginning on or after that date. 2 7 LSB 1071XS 80 2 8 sc/pj/5