Senate
File
470
-
Introduced
SENATE
FILE
470
BY
CHELGREN
A
BILL
FOR
An
Act
modifying
the
tax
brackets
and
tax
rates
imposed
under
1
the
individual
income
tax
and
corporate
income
tax
and
2
including
retroactive
applicability
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
422.5,
subsection
1,
Code
2015,
is
1
amended
to
read
as
follows:
2
1.
A
tax
is
imposed
upon
every
resident
and
nonresident
3
of
the
state
which
tax
shall
be
levied,
collected,
and
paid
4
annually
upon
and
with
respect
to
the
entire
taxable
income
as
5
defined
in
this
division
at
rates
as
follows:
6
a.
On
all
taxable
income
from
zero
through
one
thousand
7
dollars,
thirty-six
hundredths
of
one
percent.
8
b.
On
all
taxable
income
exceeding
one
thousand
dollars
but
9
not
exceeding
two
thousand
dollars,
seventy-two
hundredths
of
10
one
percent.
11
c.
On
all
taxable
income
exceeding
two
thousand
dollars
12
but
not
exceeding
four
thousand
dollars,
two
and
forty-three
13
hundredths
percent.
14
d.
On
all
taxable
income
exceeding
four
thousand
dollars
but
15
not
exceeding
nine
thousand
dollars,
four
and
one-half
percent.
16
e.
On
all
taxable
income
exceeding
nine
thousand
dollars
17
but
not
exceeding
fifteen
thousand
dollars
,
six
and
twelve
18
hundredths
five
percent.
19
f.
On
all
taxable
income
exceeding
fifteen
thousand
dollars
20
but
not
exceeding
twenty
thousand
dollars,
six
and
forty-eight
21
hundredths
percent.
22
g.
On
all
taxable
income
exceeding
twenty
thousand
dollars
23
but
not
exceeding
thirty
thousand
dollars,
six
and
eight-tenths
24
percent.
25
h.
On
all
taxable
income
exceeding
thirty
thousand
dollars
26
but
not
exceeding
forty-five
thousand
dollars,
seven
and
27
ninety-two
hundredths
percent.
28
i.
On
all
taxable
income
exceeding
forty-five
thousand
29
dollars,
eight
and
ninety-eight
hundredths
percent.
30
j.
f.
(1)
The
tax
imposed
upon
the
taxable
income
of
a
31
nonresident
shall
be
computed
by
reducing
the
amount
determined
32
pursuant
to
paragraphs
“a”
through
“i”
“e”
by
the
amounts
of
33
nonrefundable
credits
under
this
division
and
by
multiplying
34
this
resulting
amount
by
a
fraction
of
which
the
nonresident’s
35
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net
income
allocated
to
Iowa,
as
determined
in
section
1
422.8,
subsection
2
,
paragraph
“a”
,
is
the
numerator
and
the
2
nonresident’s
total
net
income
computed
under
section
422.7
is
3
the
denominator.
This
provision
also
applies
to
individuals
4
who
are
residents
of
Iowa
for
less
than
the
entire
tax
year.
5
(2)
(a)
The
tax
imposed
upon
the
taxable
income
of
a
6
resident
shareholder
in
an
S
corporation
or
of
an
estate
7
or
trust
with
a
situs
in
Iowa
that
is
a
shareholder
in
an
S
8
corporation,
which
S
corporation
has
in
effect
for
the
tax
9
year
an
election
under
subchapter
S
of
the
Internal
Revenue
10
Code
and
carries
on
business
within
and
without
the
state,
11
may
be
computed
by
reducing
the
amount
determined
pursuant
to
12
paragraphs
“a”
through
“i”
“e”
by
the
amounts
of
nonrefundable
13
credits
under
this
division
and
by
multiplying
this
resulting
14
amount
by
a
fraction
of
which
the
resident’s
or
estate’s
15
or
trust’s
net
income
allocated
to
Iowa,
as
determined
in
16
section
422.8,
subsection
2
,
paragraph
“b”
,
is
the
numerator
17
and
the
resident’s
or
estate’s
or
trust’s
total
net
income
18
computed
under
section
422.7
is
the
denominator.
If
a
resident
19
shareholder,
or
an
estate
or
trust
with
a
situs
in
Iowa
20
that
is
a
shareholder,
has
elected
to
take
advantage
of
this
21
subparagraph
(2),
and
for
the
next
tax
year
elects
not
to
take
22
advantage
of
this
subparagraph,
the
resident
or
estate
or
23
trust
shareholder
shall
not
reelect
to
take
advantage
of
this
24
subparagraph
for
the
three
tax
years
immediately
following
the
25
first
tax
year
for
which
the
shareholder
elected
not
to
take
26
advantage
of
this
subparagraph,
unless
the
director
consents
to
27
the
reelection.
This
subparagraph
also
applies
to
individuals
28
who
are
residents
of
Iowa
for
less
than
the
entire
tax
year.
29
(b)
This
subparagraph
(2)
shall
not
affect
the
amount
of
30
the
taxpayer’s
checkoffs
under
this
division
,
the
credits
from
31
tax
provided
under
this
division
,
and
the
allocation
of
these
32
credits
between
spouses
if
the
taxpayers
filed
separate
returns
33
or
separately
on
combined
returns.
34
Sec.
2.
Section
422.5,
subsection
2,
paragraph
a,
Code
2015,
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is
amended
to
read
as
follows:
1
a.
There
is
imposed
upon
every
resident
and
nonresident
2
of
this
state,
including
estates
and
trusts,
the
greater
of
3
the
tax
determined
in
subsection
1
,
paragraphs
“a”
through
“j”
4
“f”
,
or
the
state
alternative
minimum
tax
equal
to
seventy-five
5
percent
of
the
maximum
state
individual
income
tax
rate
for
the
6
tax
year,
rounded
to
the
nearest
one-tenth
of
one
percent,
of
7
the
state
alternative
minimum
taxable
income
of
the
taxpayer
as
8
computed
under
this
subsection
.
9
Sec.
3.
Section
422.5,
subsection
6,
Code
2015,
is
amended
10
to
read
as
follows:
11
6.
Upon
determination
of
the
latest
cumulative
inflation
12
factor,
the
director
shall
multiply
each
dollar
amount
set
13
forth
in
subsection
1
,
paragraphs
“a”
through
“i”
“e”
by
this
14
cumulative
inflation
factor,
shall
round
off
the
resulting
15
product
to
the
nearest
one
dollar,
and
shall
incorporate
the
16
result
into
the
income
tax
forms
and
instructions
for
each
tax
17
year.
18
Sec.
4.
Section
422.8,
subsection
2,
paragraph
a,
Code
2015,
19
is
amended
to
read
as
follows:
20
a.
Nonresident’s
net
income
allocated
to
Iowa
is
the
net
21
income,
or
portion
of
net
income,
which
is
derived
from
a
22
business,
trade,
profession,
or
occupation
carried
on
within
23
this
state
or
income
from
any
property,
trust,
estate,
or
24
other
source
within
Iowa.
However,
income
derived
from
a
25
business,
trade,
profession,
or
occupation
carried
on
within
26
this
state
and
income
from
any
property,
trust,
estate,
or
27
other
source
within
Iowa
shall
not
include
distributions
from
28
pensions,
including
defined
benefit
or
defined
contribution
29
plans,
annuities,
individual
retirement
accounts,
and
deferred
30
compensation
plans
or
any
earnings
attributable
thereto
so
long
31
as
the
distribution
is
directly
related
to
an
individual’s
32
documented
retirement
and
received
while
the
individual
is
a
33
nonresident
of
this
state.
If
a
business,
trade,
profession,
34
or
occupation
is
carried
on
partly
within
and
partly
without
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the
state,
only
the
portion
of
the
net
income
which
is
fairly
1
and
equitably
attributable
to
that
part
of
the
business,
2
trade,
profession,
or
occupation
carried
on
within
the
state
3
is
allocated
to
Iowa
for
purposes
of
section
422.5,
subsection
4
1
,
paragraph
“j”
“f”
,
and
section
422.13
and
income
from
any
5
property,
trust,
estate,
or
other
source
partly
within
and
6
partly
without
the
state
is
allocated
to
Iowa
in
the
same
7
manner,
except
that
annuities,
interest
on
bank
deposits
and
8
interest-bearing
obligations,
and
dividends
are
allocated
9
to
Iowa
only
to
the
extent
to
which
they
are
derived
from
a
10
business,
trade,
profession,
or
occupation
carried
on
within
11
the
state.
12
Sec.
5.
Section
422.11B,
Code
2015,
is
amended
to
read
as
13
follows:
14
422.11B
Minimum
tax
credit.
15
1.
a.
There
is
allowed
as
a
credit
against
the
tax
16
determined
in
section
422.5,
subsection
1
,
paragraphs
“a”
17
through
“j”
“f”
for
a
tax
year
an
amount
equal
to
the
minimum
18
tax
credit
for
that
tax
year.
19
b.
The
minimum
tax
credit
for
a
tax
year
is
the
excess,
20
if
any,
of
the
net
minimum
tax
imposed
for
all
prior
tax
21
years
beginning
on
or
after
January
1,
1987,
over
the
amount
22
allowable
as
a
credit
under
this
section
for
those
prior
tax
23
years.
24
2.
a.
The
allowable
credit
under
subsection
1
for
a
tax
25
year
shall
not
exceed
the
excess,
if
any,
of
the
tax
determined
26
in
section
422.5,
subsection
1
,
paragraphs
“a”
through
“j”
“f”
27
over
the
state
alternative
minimum
tax
as
determined
in
section
28
422.5,
subsection
2
.
29
b.
The
net
minimum
tax
for
a
tax
year
is
the
excess,
if
any,
30
of
the
tax
determined
in
section
422.5,
subsection
2
,
for
the
31
tax
year
over
the
tax
determined
in
section
422.5,
subsection
32
1
,
paragraphs
“a”
through
“j”
“f”
for
the
tax
year.
33
Sec.
6.
Section
422.33,
subsection
1,
Code
2015,
is
amended
34
by
striking
the
subsection
and
inserting
in
lieu
thereof
the
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following:
1
1.
a.
A
tax
is
imposed
annually
upon
each
corporation
doing
2
business
in
this
state,
or
deriving
income
from
sources
within
3
this
state,
at
the
rate
of
five
percent
of
the
taxable
income
4
received
by
the
corporation
during
the
income
year.
5
b.
For
purposes
of
this
section,
“taxable
income”
means
the
6
net
income
as
calculated
in
section
422.35
and
determined
to
7
be
reasonably
attributable
to
Iowa
pursuant
to
subsections
2
8
and
3.
9
Sec.
7.
Section
422.33,
subsection
1A,
Code
2015,
is
amended
10
to
read
as
follows:
11
1A.
There
is
imposed
upon
each
corporation
exempt
from
12
the
general
business
tax
on
corporations
by
section
422.34,
13
subsection
2
,
a
tax
at
the
rates
rate
specified
in
subsection
1
14
upon
the
state’s
apportioned
share
computed
in
accordance
with
15
subsections
2
and
3
of
the
unrelated
business
income
computed
16
in
accordance
with
the
Internal
Revenue
Code
and
with
the
17
adjustments
set
forth
in
section
422.35
.
18
Sec.
8.
Section
422.33,
subsection
4,
paragraph
a,
Code
19
2015,
is
amended
to
read
as
follows:
20
a.
In
addition
to
all
taxes
imposed
under
this
division
,
21
there
is
imposed
upon
each
corporation
doing
business
within
22
the
state
the
greater
of
the
tax
determined
in
subsection
1
,
23
paragraphs
“a”
through
“d”
or
the
state
alternative
minimum
tax
24
equal
to
sixty
percent
of
the
maximum
state
corporate
income
25
tax
rate,
rounded
to
the
nearest
one-tenth
of
one
percent,
of
26
the
state
alternative
minimum
taxable
income
of
the
taxpayer
27
computed
under
this
subsection
.
28
Sec.
9.
RETROACTIVE
APPLICABILITY.
This
Act
applies
29
retroactively
to
January
1,
2015,
for
tax
years
beginning
on
30
or
after
that
date.
31
EXPLANATION
32
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
33
the
explanation’s
substance
by
the
members
of
the
general
assembly.
34
This
bill
relates
to
the
tax
brackets
and
tax
rates
imposed
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on
individuals
and
corporations
under
the
individual
and
1
corporate
income
taxes.
2
INDIVIDUAL
INCOME
TAX.
Currently,
the
individual
income
tax
3
is
imposed
in
a
progressive
manner
using
nine
income
brackets
4
with
increasing
rates
ranging
from
a
low
of
0.36
percent
on
the
5
first
$1,539
of
taxable
income
to
a
high
of
8.98
percent
on
6
all
taxable
income
in
excess
of
$69,255.
The
taxable
income
7
amounts
in
each
bracket
are
indexed
for
inflation
each
year
by
8
the
department
of
revenue.
The
bill
eliminates
the
top
four
9
tax
brackets
and
tax
rates
and
lowers
the
rate
in
the
fifth
tax
10
bracket
from
6.12
percent
to
5
percent.
As
a
result,
the
new
11
tax
rates
and
tax
brackets
(2015
amounts)
are
as
follows:
12
1.
From
$0
to
$1,539,
0.36
percent.
13
2.
From
$1,540
to
$3,078,
0.72
percent.
14
3.
From
$3,079
to
$6,156,
2.43
percent.
15
4.
From
$6,157
to
$13,851,
4.5
percent.
16
5.
From
$13,852
and
over,
5
percent.
17
CORPORATE
INCOME
TAX.
Currently,
the
corporate
income
tax
18
is
imposed
in
a
progressive
manner
using
four
income
brackets
19
with
increasing
rates
ranging
from
a
low
of
6
percent
on
the
20
first
$25,000
of
taxable
income
to
a
high
of
12
percent
on
21
taxable
income
of
$250,000
or
more.
The
bill
eliminates
this
22
tiered
bracket
and
rate
structure
and
imposes
the
tax
at
a
rate
23
of
5
percent
on
the
corporation’s
taxable
income.
24
The
bill
applies
retroactively
to
tax
years
beginning
on
or
25
after
January
1,
2015.
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