Senate File 6 - Introduced



                                       SENATE FILE       
                                       BY  KETTERING


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

                                      A BILL FOR

  1 An Act relating to the child and dependent care and early
  2    childhood development tax credits and including a retroactive
  3    applicability date provision.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  5 TLSB 1175XS 82
  6 mg/je/5

PAG LIN



  1  1    Section 1.  Section 422.12C, subsection 1, Code 2007, is
  1  2 amended to read as follows:
  1  3    1.  The taxes imposed under this division, less the amounts
  1  4 of nonrefundable credits allowed under this division, shall be
  1  5 reduced by a child and dependent care credit equal to the
  1  6 following percentages of the federal child and dependent care
  1  7 credit provided in section 21 of the Internal Revenue Code:
  1  8    a.  For a taxpayer with net income of less than ten twenty
  1  9 thousand dollars, seventy=five percent.
  1 10    b.  For a taxpayer with net income of ten twenty thousand
  1 11 dollars or more but less than twenty forty thousand dollars,
  1 12 sixty=five percent.
  1 13    c.  For a taxpayer with net income of twenty forty thousand
  1 14 dollars or more but less than twenty=five fifty thousand
  1 15 dollars, fifty=five percent.
  1 16    d.  For a taxpayer with net income of twenty=five fifty
  1 17 thousand dollars or more but less than thirty=five seventy
  1 18 thousand dollars, fifty percent.
  1 19    e.  For a taxpayer with net income of thirty=five seventy
  1 20 thousand dollars or more but less than forty eighty thousand
  1 21 dollars, forty percent.
  1 22    f.  For a taxpayer with net income of forty eighty thousand
  1 23 dollars or more but less than forty=five ninety thousand
  1 24 dollars, thirty percent.
  1 25    g.  For a taxpayer with net income of forty=five ninety
  1 26 thousand dollars or more, zero percent.
  1 27    Sec. 2.  Section 422.12C, subsection 2, unnumbered
  1 28 paragraph 1, Code 2007, is amended to read as follows:
  1 29    The taxes imposed under this division, less the amounts of
  1 30 nonrefundable credits allowed under this division, may be
  1 31 reduced by an early childhood development tax credit equal to
  1 32 twenty=five percent of the first one thousand dollars which
  1 33 the taxpayer has paid to others for each dependent, as defined
  1 34 in the Internal Revenue Code, ages three through five for
  1 35 early childhood development expenses.  In determining the
  2  1 amount of early childhood development expenses for the tax
  2  2 year beginning in the 2006 calendar year only, such expenses
  2  3 paid during November and December of the previous tax year
  2  4 shall be considered paid in the tax year for which the tax
  2  5 credit is claimed.  This credit is available to a taxpayer
  2  6 whose net income is less than forty=five ninety thousand
  2  7 dollars.  If the early childhood development tax credit is
  2  8 claimed for a tax year, the taxpayer and the taxpayer's spouse
  2  9 shall not claim the child and dependent care credit under
  2 10 subsection 1.  As used in this subsection, "early childhood
  2 11 development expenses" means services provided to the dependent
  2 12 by a preschool, as defined in section 237A.1, materials, and
  2 13 other activities as follows:
  2 14    Sec. 3.  RETROACTIVE APPLICABILITY DATE.  This Act applies
  2 15 retroactively to January 1, 2007, for tax years beginning on
  2 16 or after that date.
  2 17                           EXPLANATION
  2 18    This bill increases the child and dependent care credit
  2 19 under the individual income tax by doubling the income limit
  2 20 in each credit bracket.  Thus, a taxpayer with less than
  2 21 $90,000 in net income is eligible for the credit, while under
  2 22 present law, a taxpayer with less than $45,000 in net income
  2 23 is eligible.  The maximum credit bracket under the bill is
  2 24 expanded to include taxpayers with net incomes of less than
  2 25 $20,000, while under present law, taxpayers may only have net
  2 26 incomes of less than $10,000 to receive the maximum credit.
  2 27    The bill also doubles the amount of net income that a
  2 28 taxpayer may have, from $45,000 to $90,000, and still qualify
  2 29 for the early childhood development tax credit.
  2 30    The bill applies retroactively to January 1, 2007, for tax
  2 31 years beginning on or after that date.
  2 32 LSB 1175XS 82
  2 33 mg:sc/je/5