Senate File 485 - Introduced SENATE FILE 485 BY SMITH A BILL FOR An Act increasing the amount of retirement income of certain 1 taxpayers that is exempt from the individual income tax and 2 including retroactive applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1838XS (2) 87 mm/sc

S.F. 485 Section 1. Section 422.7, subsection 31, Code 2017, is 1 amended to read as follows: 2 31. For a person who is disabled, or is fifty-five years of 3 age or older, or is the surviving spouse of an individual or 4 a survivor having an insurable interest in an individual who 5 would have qualified for the exemption under this subsection 6 for the tax year, subtract, to the extent included, the 7 total amount of a governmental or other pension or retirement 8 pay, including, but not limited to, defined benefit or 9 defined contribution plans, annuities, individual retirement 10 accounts, plans maintained or contributed to by an employer, 11 or maintained or contributed to by a self-employed person as 12 an employer, and deferred compensation plans or any earnings 13 attributable to the deferred compensation plans, up to a 14 maximum of six twelve thousand dollars for a person, other than 15 a husband or wife, who files a separate state income tax return 16 and up to a maximum of twelve twenty-four thousand dollars for 17 a husband and wife who file a joint state income tax return. 18 However, a surviving spouse who is not disabled or fifty-five 19 years of age or older can only exclude the amount of pension or 20 retirement pay received as a result of the death of the other 21 spouse. A husband and wife filing separate state income tax 22 returns or separately on a combined state return are allowed 23 a combined maximum exclusion under this subsection of up to 24 twelve twenty-four thousand dollars. The twelve twenty-four 25 thousand dollar exclusion shall be allocated to the husband or 26 wife in the proportion that each spouse’s respective pension 27 and retirement pay received bears to total combined pension and 28 retirement pay received. 29 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 30 retroactively to January 1, 2017, for tax years beginning on 31 or after that date. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -1- LSB 1838XS (2) 87 mm/sc 1/ 2

S.F. 485 Under current law, a maximum of $6,000 of retirement income 1 ($12,000 for married couples) is exempt from the individual 2 income tax for a taxpayer who is disabled, who is at least 55 3 years of age, or who is the surviving spouse or other specified 4 survivor of that taxpayer. This bill increases that exempt 5 amount of retirement income to $12,000 ($24,000 for married 6 couples). 7 The bill applies retroactively to January 1, 2017, for tax 8 years beginning on or after that date. 9 -2- LSB 1838XS (2) 87 mm/sc 2/ 2