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 of six nine 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 of twelve eighteen 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 to twelve eighteen thousand dollars.  The twelve
  1 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