House File 133 



                                  HOUSE FILE       
                                  BY  MAY, WINDSCHITL, HUSEMAN,
                                      L. MILLER, S. OLSON, FORRISTALL,
                                      BAUDLER, TYMESON, RASMUSSEN,
                                      WORTHAN, UPMEYER, BERRY, GRANZOW,
                                      WATTS, CHAMBERS, DE BOEF, HEATON,
                                      TJEPKES, JACOBS, WIENCEK,
                                      and ANDERSON


    Passed House, Date               Passed Senate, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act exempting from the individual income tax federal
  2    retirement pay received for military service and including a
  3    retroactive applicability date provision.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  5 TLSB 1370YH 82
  6 mg/gg/14

PAG LIN



  1  1    Section 1.  Section 422.7, Code 2007, is amended by adding
  1  2 the following new subsection:
  1  3    NEW SUBSECTION.  31A.  a.  Subject to paragraph "b", for a
  1  4 taxpayer forty years of age or older, subtract, to the extent
  1  5 included, retirement pay received from the federal government
  1  6 for military service performed in the armed forces, armed
  1  7 forces military reserve, or national guard.
  1  8    b.  The amount subtracted pursuant to paragraph "a" is
  1  9 limited to the following:
  1 10    (1)  Five thousand dollars for the first tax year the
  1 11 taxpayer claims the exclusion under this subsection.
  1 12    (2)  Ten thousand dollars for the second tax year the
  1 13 taxpayer claims the exclusion under this subsection.
  1 14    (3)  Fifteen thousand dollars for the third tax year the
  1 15 taxpayer claims the exclusion under this subsection.
  1 16    (4)  Twenty thousand dollars for the fourth tax year and
  1 17 subsequent tax years the taxpayer claims the exclusion under
  1 18 this subsection.
  1 19    c.  The exclusion of retirement benefits under this
  1 20 subsection is in addition to any exclusion provided under
  1 21 subsection 31.
  1 22    Sec. 2.  RETROACTIVE APPLICABILITY DATE.  This Act applies
  1 23 retroactively to January 1, 2007, for tax years beginning on
  1 24 or after that date.
  1 25                           EXPLANATION
  1 26    This bill provides for the exclusion of $20,000 of
  1 27 retirement benefits from federal military service in the armed
  1 28 forces, military reserve, or national guard, phased in over
  1 29 four years.  A taxpayer must be at least 40 years of age
  1 30 before claiming the exclusion.
  1 31    The bill applies retroactively to January 1, 2007, for tax
  1 32 years beginning on or after that date.
  1 33 LSB 1370YH 82
  1 34 mg:sc/gg/14