HF 2337 (LSB 5861YH (2) 88)

HOUSE FILE 2337

BY  GASSMAN

A BILL FOR

An Act exempting pay received for providing certain child care services, and creating an additional personal exemption credit against the individual income tax, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  27A.  a.  Subtract, to the extent included, the amount of pay received by a taxpayer for child care home services.
   b.  As used in this section, “child care home” means the same as defined in section 237A.1.
    Sec. 2.  NEW SECTION.  422.10C  Additional personal exemption credit —— child.
   1.  The taxes imposed under this division less the credits allowed under this division, except for the credits for withheld tax and estimated tax paid in section 422.16, shall be reduced by an additional personal exemption credit in the amount of one thousand dollars for each dependent.
   2.  The additional personal exemption credit shall be added to any personal exemption claimed under section 422.12, subsection 2.
   3.  The tax credit shall be reduced but not below zero by the amount of the child and dependent care or early childhood development tax credits claimed by the taxpayer pursuant to section 422.12C.
   4.  Any credit in excess of the tax liability is refundable. However, for nonresidents or part-year residents, the amount of the credit in excess of the tax liability that may be refunded shall be in the ratio of their Iowa source net income to their all source net income under rules prescribed by the director.
   5.  For purposes of this section, “dependent” has the same meaning as provided by the Internal Revenue Code, except the dependent must be under the age of thirteen.
    Sec. 3.  EFFECTIVE DATE.  This Act takes effect January 1, 2021.
    Sec. 4.  APPLICABILITY.  This Act applies to tax years beginning on or after January 1, 2021.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill exempts certain pay received for providing certain child care services, and creates an additional personal exemption credit against the individual income tax.
   The bill exempts from the individual income tax pay received for providing child care home services. The bill defines “child care home” to mean the same as defined in Code section 237A.1.
   The bill provides that a taxpayer may claim an additional personal exemption tax credit for each dependent in addition to any personal exemption credit claimed under Code section 422.12(2).
   The tax credit is equal to $1,000 for each dependent, and is refundable.
   The tax credit shall be reduced but not below zero by the amount of the child and dependent care or early childhood development tax credits claimed by the taxpayer pursuant to Code section 422.12C.
   For purposes of the tax credit, the bill defines “dependent” to mean the same as provided by the Internal Revenue Code, except the dependent must be under the age of 13.
   The bill takes effect January 1, 2021, and applies to tax years beginning on or after that date.