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House Study Bill 63 - IntroducedA Bill ForAn Act 1creating the new resident and new graduate tax credits,
2available against the individual income tax, and including
3retroactive applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 422.12P New resident tax credit.
21. a. For purposes of this section, “new resident” means an
3individual who became a resident of Iowa upon taking full-time
4employment in this state, who remains a resident of and
5employed full-time in this state while claiming the credit, and
6who has not been a resident of this state at any time during the
7previous twelve-month period prior to establishing residency
8in this state.
9b. For purposes of this section, “public assistance” means
10the supplemental nutrition assistance program, the Medicaid
11program, or the family investment program.
122. a. The taxes imposed under this subchapter less the
13credits allowed under section 422.12 shall be reduced by a new
14resident tax credit equal to one hundred percent of the taxes
15imposed in a tax year for up to four consecutive tax years.
16b. An individual may claim the credit during either the
17first or second tax year of residency, and may take the
18credit consecutively every tax year thereafter as provided in
19paragraph “a”.
20c. An individual is eligible to take the credit one time in
21the individual’s lifetime. If an individual is unable to claim
22the credit in consecutive tax years, the individual shall be
23ineligible to claim the credit in a future tax year.
243. Any new resident tax credit in excess of the tax
25liability is not refundable.
264. An individual claiming the credit may claim an exemption
27from withholding on the state W-4 form.
285. Married taxpayers electing to file separate returns or
29filing separately on a combined return may avail themselves
30of the new resident tax credit by allocating the new resident
31tax credit to each spouse in the proportion that each spouse’s
32respective earned income bears to the total combined earned
33income.
346. An individual shall not be eligible to claim the credit
35if the person is receiving public assistance after the first
-1-1tax year the credit is claimed.
2 Sec. 2. NEW SECTION. 422.12Q New graduate tax credit.
31. a. For purposes of this section, “new graduate” means
4an individual who is within two years of graduation from an
5Iowa-based community college, college, university, or an
6apprenticeship program as defined in section 15B.2, who is a
7resident of and employed in this state, and who is thirty years
8of age or less during the first tax year when claiming the tax
9credit.
10b. For purposes of this section, “public assistance” means
11the supplemental nutrition assistance program, the Medicaid
12program, or the family investment program.
132. a. The taxes imposed under this subchapter less the
14credits allowed under section 422.12 shall be reduced by a new
15graduate tax credit equal to one hundred percent of the taxes
16imposed in a tax year for up to four consecutive tax years.
17b. An individual may claim the tax credit during either the
18first or second tax year after graduation, and may take the
19credit consecutively every tax year thereafter as provided in
20paragraph “a”.
21c. An individual is eligible to take the credit one time in
22the individual’s lifetime. If an individual is unable to claim
23the credit in consecutive tax years, the individual shall be
24ineligible to claim the credit in a future tax year.
253. Any new graduate tax credit in excess of the tax
26liability is not refundable.
274. An individual claiming the credit may claim an exemption
28from withholding on the state W-4 form.
295. Married taxpayers electing to file separate returns or
30filing separately on a combined return may avail themselves
31of the new graduate tax credit by allocating the new graduate
32tax credit to each spouse in the proportion that each spouse’s
33respective earned income bears to the total combined earned
34income.
356. An individual shall not be eligible to claim the credit
-2-1if the person is receiving public assistance after the first
2tax year the credit is claimed.
3 Sec. 3. CONTINGENT FUTURE REPEAL — CODE EDITOR DIRECTIVE
4— APPLICABILITY AFTER REPEAL.
51. Sections 422.12P and 422.12Q are repealed January 1
6following the occurrence of the statewide average annual
7unemployment rate equaling or exceeding four percent for three
8consecutive calendar years as calculated by the United States
9department of labor, bureau of labor statistics, beginning
10with calendar year 2024. The director of the department of
11workforce development or the director’s designee shall notify
12the Code editor when the annual statewide unemployment rate
13exceeds four percent for three consecutive calendar years as
14set forth in this subsection.
152. If the Code editor is notified by the director of the
16department of workforce development or the director’s designee
17that the condition in subsection 1 has been satisfied, the Code
18editor is directed to remove sections 422.12P and 422.12Q from
19the Code.
203. A taxpayer claiming the tax credit in section 422.12P or
21422.12Q prior to repeal pursuant to subsection 2 is eligible
22to claim the credit after the repeal up to any remaining tax
23years the taxpayer would have been eligible to claim prior to
24the repeal, as long as the taxpayer remains eligible to claim
25the credit under the law prior to repeal.
26 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies
27retroactively to January 1, 2023, for tax years beginning on
28or after that date.
29EXPLANATION
30The inclusion of this explanation does not constitute agreement with
31the explanation’s substance by the members of the general assembly.
32This bill creates the new resident and new graduate tax
33credits, which are available against the individual income tax.
34NEW RESIDENT TAX CREDIT. The bill defines “new resident” to
35mean an individual who became a resident of Iowa upon taking
-3-1full-time employment in this state, who remains a resident of
2and employed full-time in this state while claiming the credit,
3and who has not been a resident of this state at any time during
4the previous 12-month period prior to establishing residency.
5The new resident tax credit authorized in the bill is
6available to a new resident for up to four consecutive tax
7years following the establishment of residency in this state.
8A new resident may begin to claim the credit during either the
9first or second tax year of residency.
10The amount of the credit is equal to 100 percent of the
11income tax imposed in a tax year for up to four consecutive tax
12years.
13An individual is eligible to claim the new resident tax
14credit one time in the individual’s lifetime for the tax year
15period described in the bill.
16An individual claiming the new resident tax credit may claim
17an exemption from withholding on the state W-4 form.
18Any new resident tax credit in excess of tax liability is not
19refundable.
20An individual is not eligible to claim the credit if the
21person is receiving public assistance after the first tax year
22the credit is claimed. The bill defines “public assistance”
23to mean the supplemental nutrition assistance program, the
24Medicaid program, or the family investment program.
25NEW GRADUATE TAX CREDIT. The bill defines “new graduate” to
26mean an individual who is within two years of graduation from
27an Iowa-based community college, college, university, or an
28apprenticeship program as defined in Code section 15B.2, who is
29a resident of and employed in this state, and who is 30 years
30of age or less during the first tax year when claiming the tax
31credit.
32The new graduate tax credit authorized in the bill is
33available to a new graduate for up to four consecutive tax
34years following graduation. A new graduate may begin to claim
35the credit during either the first or second tax year after
-4-1graduation.
2The amount of the credit is equal to 100 percent of the
3income tax imposed in a tax year for up to four consecutive tax
4years.
5An individual is eligible to claim the new graduate tax
6credit one time in the individual’s lifetime for the tax year
7period described in the bill.
8An individual claiming the new graduate tax credit may claim
9an exemption from withholding on the state W-4 form.
10Any new graduate tax credit in excess of tax liability is not
11refundable.
12An individual is not eligible to claim the credit if the
13person is receiving public assistance after the first tax year
14the credit is claimed. The bill defines “public assistance”
15to mean the supplemental nutrition assistance program, the
16Medicaid program, or the family investment program.
17CONTINGENT FUTURE REPEAL — CODE EDITOR DIRECTIVE —
18APPLICABILITY AFTER REPEAL. The bill repeals the new resident
19tax credit and the new graduate tax credit January 1 following
20the occurrence of the statewide average annual unemployment
21rate equaling or exceeding 4 percent for three consecutive
22calendar years as calculated by the United States department of
23labor, bureau of labor statistics, beginning with calendar year
242024. The director of the department of workforce development
25or the director’s designee shall notify the Code editor when
26the annual statewide unemployment rate exceeds 4 percent for
27three consecutive calendar years.
28If the Code editor receives notification under the bill, the
29Code editor is directed to remove the tax credits.
30A taxpayer claiming a tax credit prior to repeal under the
31bill is eligible to claim the credit after the repeal up to
32any remaining tax years the taxpayer would have been eligible
33to claim prior to the repeal, as long as the taxpayer remains
34eligible to claim the credit under the law prior to repeal.
35APPLICABILITY. The bill applies retroactively to tax years
-5-1beginning on or after January 1, 2023.
-6-jm/jh
2available against the individual income tax, and including
3retroactive applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 422.12P New resident tax credit.
21. a. For purposes of this section, “new resident” means an
3individual who became a resident of Iowa upon taking full-time
4employment in this state, who remains a resident of and
5employed full-time in this state while claiming the credit, and
6who has not been a resident of this state at any time during the
7previous twelve-month period prior to establishing residency
8in this state.
9b. For purposes of this section, “public assistance” means
10the supplemental nutrition assistance program, the Medicaid
11program, or the family investment program.
122. a. The taxes imposed under this subchapter less the
13credits allowed under section 422.12 shall be reduced by a new
14resident tax credit equal to one hundred percent of the taxes
15imposed in a tax year for up to four consecutive tax years.
16b. An individual may claim the credit during either the
17first or second tax year of residency, and may take the
18credit consecutively every tax year thereafter as provided in
19paragraph “a”.
20c. An individual is eligible to take the credit one time in
21the individual’s lifetime. If an individual is unable to claim
22the credit in consecutive tax years, the individual shall be
23ineligible to claim the credit in a future tax year.
243. Any new resident tax credit in excess of the tax
25liability is not refundable.
264. An individual claiming the credit may claim an exemption
27from withholding on the state W-4 form.
285. Married taxpayers electing to file separate returns or
29filing separately on a combined return may avail themselves
30of the new resident tax credit by allocating the new resident
31tax credit to each spouse in the proportion that each spouse’s
32respective earned income bears to the total combined earned
33income.
346. An individual shall not be eligible to claim the credit
35if the person is receiving public assistance after the first
-1-1tax year the credit is claimed.
2 Sec. 2. NEW SECTION. 422.12Q New graduate tax credit.
31. a. For purposes of this section, “new graduate” means
4an individual who is within two years of graduation from an
5Iowa-based community college, college, university, or an
6apprenticeship program as defined in section 15B.2, who is a
7resident of and employed in this state, and who is thirty years
8of age or less during the first tax year when claiming the tax
9credit.
10b. For purposes of this section, “public assistance” means
11the supplemental nutrition assistance program, the Medicaid
12program, or the family investment program.
132. a. The taxes imposed under this subchapter less the
14credits allowed under section 422.12 shall be reduced by a new
15graduate tax credit equal to one hundred percent of the taxes
16imposed in a tax year for up to four consecutive tax years.
17b. An individual may claim the tax credit during either the
18first or second tax year after graduation, and may take the
19credit consecutively every tax year thereafter as provided in
20paragraph “a”.
21c. An individual is eligible to take the credit one time in
22the individual’s lifetime. If an individual is unable to claim
23the credit in consecutive tax years, the individual shall be
24ineligible to claim the credit in a future tax year.
253. Any new graduate tax credit in excess of the tax
26liability is not refundable.
274. An individual claiming the credit may claim an exemption
28from withholding on the state W-4 form.
295. Married taxpayers electing to file separate returns or
30filing separately on a combined return may avail themselves
31of the new graduate tax credit by allocating the new graduate
32tax credit to each spouse in the proportion that each spouse’s
33respective earned income bears to the total combined earned
34income.
356. An individual shall not be eligible to claim the credit
-2-1if the person is receiving public assistance after the first
2tax year the credit is claimed.
3 Sec. 3. CONTINGENT FUTURE REPEAL — CODE EDITOR DIRECTIVE
4— APPLICABILITY AFTER REPEAL.
51. Sections 422.12P and 422.12Q are repealed January 1
6following the occurrence of the statewide average annual
7unemployment rate equaling or exceeding four percent for three
8consecutive calendar years as calculated by the United States
9department of labor, bureau of labor statistics, beginning
10with calendar year 2024. The director of the department of
11workforce development or the director’s designee shall notify
12the Code editor when the annual statewide unemployment rate
13exceeds four percent for three consecutive calendar years as
14set forth in this subsection.
152. If the Code editor is notified by the director of the
16department of workforce development or the director’s designee
17that the condition in subsection 1 has been satisfied, the Code
18editor is directed to remove sections 422.12P and 422.12Q from
19the Code.
203. A taxpayer claiming the tax credit in section 422.12P or
21422.12Q prior to repeal pursuant to subsection 2 is eligible
22to claim the credit after the repeal up to any remaining tax
23years the taxpayer would have been eligible to claim prior to
24the repeal, as long as the taxpayer remains eligible to claim
25the credit under the law prior to repeal.
26 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies
27retroactively to January 1, 2023, for tax years beginning on
28or after that date.
29EXPLANATION
30The inclusion of this explanation does not constitute agreement with
31the explanation’s substance by the members of the general assembly.
32This bill creates the new resident and new graduate tax
33credits, which are available against the individual income tax.
34NEW RESIDENT TAX CREDIT. The bill defines “new resident” to
35mean an individual who became a resident of Iowa upon taking
-3-1full-time employment in this state, who remains a resident of
2and employed full-time in this state while claiming the credit,
3and who has not been a resident of this state at any time during
4the previous 12-month period prior to establishing residency.
5The new resident tax credit authorized in the bill is
6available to a new resident for up to four consecutive tax
7years following the establishment of residency in this state.
8A new resident may begin to claim the credit during either the
9first or second tax year of residency.
10The amount of the credit is equal to 100 percent of the
11income tax imposed in a tax year for up to four consecutive tax
12years.
13An individual is eligible to claim the new resident tax
14credit one time in the individual’s lifetime for the tax year
15period described in the bill.
16An individual claiming the new resident tax credit may claim
17an exemption from withholding on the state W-4 form.
18Any new resident tax credit in excess of tax liability is not
19refundable.
20An individual is not eligible to claim the credit if the
21person is receiving public assistance after the first tax year
22the credit is claimed. The bill defines “public assistance”
23to mean the supplemental nutrition assistance program, the
24Medicaid program, or the family investment program.
25NEW GRADUATE TAX CREDIT. The bill defines “new graduate” to
26mean an individual who is within two years of graduation from
27an Iowa-based community college, college, university, or an
28apprenticeship program as defined in Code section 15B.2, who is
29a resident of and employed in this state, and who is 30 years
30of age or less during the first tax year when claiming the tax
31credit.
32The new graduate tax credit authorized in the bill is
33available to a new graduate for up to four consecutive tax
34years following graduation. A new graduate may begin to claim
35the credit during either the first or second tax year after
-4-1graduation.
2The amount of the credit is equal to 100 percent of the
3income tax imposed in a tax year for up to four consecutive tax
4years.
5An individual is eligible to claim the new graduate tax
6credit one time in the individual’s lifetime for the tax year
7period described in the bill.
8An individual claiming the new graduate tax credit may claim
9an exemption from withholding on the state W-4 form.
10Any new graduate tax credit in excess of tax liability is not
11refundable.
12An individual is not eligible to claim the credit if the
13person is receiving public assistance after the first tax year
14the credit is claimed. The bill defines “public assistance”
15to mean the supplemental nutrition assistance program, the
16Medicaid program, or the family investment program.
17CONTINGENT FUTURE REPEAL — CODE EDITOR DIRECTIVE —
18APPLICABILITY AFTER REPEAL. The bill repeals the new resident
19tax credit and the new graduate tax credit January 1 following
20the occurrence of the statewide average annual unemployment
21rate equaling or exceeding 4 percent for three consecutive
22calendar years as calculated by the United States department of
23labor, bureau of labor statistics, beginning with calendar year
242024. The director of the department of workforce development
25or the director’s designee shall notify the Code editor when
26the annual statewide unemployment rate exceeds 4 percent for
27three consecutive calendar years.
28If the Code editor receives notification under the bill, the
29Code editor is directed to remove the tax credits.
30A taxpayer claiming a tax credit prior to repeal under the
31bill is eligible to claim the credit after the repeal up to
32any remaining tax years the taxpayer would have been eligible
33to claim prior to the repeal, as long as the taxpayer remains
34eligible to claim the credit under the law prior to repeal.
35APPLICABILITY. The bill applies retroactively to tax years
-5-1beginning on or after January 1, 2023.
-6-jm/jh