House
File
191
-
Introduced
HOUSE
FILE
191
BY
WESSEL-KROESCHELL
A
BILL
FOR
An
Act
providing
an
individual
income
tax
credit
equal
to
a
1
percentage
of
the
federal
American
opportunity
tax
credit
2
and
including
retroactive
applicability
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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191
Section
1.
NEW
SECTION
.
422.10A
American
opportunity
tax
1
credit.
2
1.
The
taxes
imposed
under
this
division,
less
the
credits
3
allowed
under
section
422.12,
shall
be
reduced
by
an
American
4
opportunity
tax
credit
equal
to
twenty-five
percent
of
the
5
federal
American
opportunity
tax
credit
provided
in
section
6
25A(i)
of
the
Internal
Revenue
Code.
Any
credit
in
excess
of
7
the
tax
liability
is
refundable.
8
2.
Married
taxpayers
electing
to
file
separate
returns
or
9
filing
separately
on
a
combined
return
may
avail
themselves
of
10
the
American
opportunity
tax
credit
by
allocating
the
American
11
opportunity
tax
credit
to
each
spouse
in
the
proportion
that
12
each
spouse’s
respective
net
income
bears
to
the
total
combined
13
net
income.
Taxpayers
affected
by
the
allocation
provisions
14
of
section
422.8
shall
be
permitted
a
deduction
for
the
credit
15
only
in
the
amount
fairly
and
equitably
allocable
to
Iowa
under
16
rules
prescribed
by
the
director.
17
Sec.
2.
RETROACTIVE
APPLICABILITY.
This
Act
applies
18
retroactively
to
January
1,
2015,
for
tax
years
beginning
on
19
or
after
that
date.
20
EXPLANATION
21
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
22
the
explanation’s
substance
by
the
members
of
the
general
assembly.
23
This
bill
provides
a
state
individual
income
tax
credit
24
equal
to
25
percent
of
the
federal
American
opportunity
tax
25
credit
provided
in
section
25A(i)
of
the
Internal
Revenue
26
Code
(IRC).
In
general,
the
federal
American
opportunity
27
tax
credit,
which
is
a
modified
version
of
the
federal
hope
28
scholarship
tax
credit
described
in
IRC
§25A(b),
is
an
29
education
credit
equal
to
a
certain
percentage
of
the
tuition,
30
fees,
and
course
materials
of
attending
a
postsecondary
31
educational
institution
for
a
taxpayer
or
the
taxpayer’s
spouse
32
or
dependent.
The
maximum
credit
is
$2,500
per
student,
per
33
tax
year.
The
credit
is
available
for
the
first
four
years
34
of
postsecondary
education
and
is
gradually
phased
out
for
35
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191
taxpayers
with
incomes
between
$80,000
and
$90,000
for
a
1
single
taxpayer
and
between
$160,000
and
$180,000
for
married
2
taxpayers.
The
Iowa
American
opportunity
tax
credit
will
be
3
available
through
tax
year
2017,
which
is
when
the
federal
4
tax
credit
is
set
to
expire.
Any
credit
in
excess
of
the
tax
5
liability
is
refundable.
6
Although
married
taxpayers
must
file
a
joint
return
to
7
receive
the
federal
tax
credit,
married
taxpayers
electing
to
8
file
separate
returns
or
separately
on
a
combined
return
may
9
claim
the
Iowa
American
opportunity
tax
credit
by
allocating
10
the
credit
according
to
each
spouse’s
respective
net
income.
11
The
bill
applies
retroactively
to
tax
years
beginning
on
or
12
after
January
1,
2015.
13
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