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PAG LIN
1 1 Section 1. Section 422.7, Code 1995, is amended by adding
1 2 the following new subsection:
1 3 NEW SUBSECTION. 32. a. Subtract, to the extent included,
1 4 the total amount of a governmental or other pension,
1 5 retirement pay, annuity, or other similar periodic payment
1 6 made under a plan maintained or contributed to by an employer,
1 7 or maintained or contributed to by a self-employed person as
1 8 an employer.
1 9 b. (1) Add back, of the amount subtracted in paragraph
1 10 "a", the lesser of the following:
1 11 (a) Fifty percent of the amount in paragraph "a".
1 12 (b) Fifty percent of the excess computed under
1 13 subparagraph (2).
1 14 (2) The excess for purposes of subparagraph (1) is the
1 15 amount by which the adjusted gross income plus interest and
1 16 dividends from securities which are exempt from federal income
1 17 tax less fifty percent of the amount in paragraph "a" exceed
1 18 the base amount. If there is no excess computed under this
1 19 subparagraph, this paragraph "b" does not apply to the
1 20 taxpayer.
1 21 c. For purposes of this subsection, "base amount" means
1 22 one of the following:
1 23 (1) Twenty-five thousand dollars, unless subparagraph (2)
1 24 or (3) applies.
1 25 (2) Thirty-two thousand dollars, in the case of a joint
1 26 return.
1 27 (3) Zero, if the taxpayer is married at the close of the
1 28 tax year, does not file a joint return, and does not live
1 29 apart from the spouse at all times during the tax year.
1 30 Sec. 2. This Act applies retroactively to January 1, 1995,
1 31 for tax years beginning on or after that date.
1 32 EXPLANATION
1 33 The bill exempts governmental and other pension benefits
1 34 made under a plan to which the employer or self-employed
1 35 person as an employer makes contributions from the state
2 1 individual income tax, except for an amount determined by a
2 2 formula similar to the formula used to determine the amount of
2 3 social security benefits included for state income tax
2 4 purposes. The formula is the lesser of 50 percent of the
2 5 pension benefits or 50 percent of the amount that the federal
2 6 adjusted gross income less 50 percent of the pension benefits
2 7 plus tax-exempt interest income exceeds a base amount. The
2 8 base amount is $25,000 unless it is a joint return where the
2 9 base amount is $32,000 or unless the taxpayer is married,
2 10 files a separate return, and does not live apart from the
2 11 spouse at all times, in which case the base amount is $0. The
2 12 bill applies retroactively to January 1, 1995, for tax years
2 13 beginning on or after that date.
2 14 LSB 1813SS 76
2 15 mg/sc/14.1
Text: SF00308 Text: SF00310 Text: SF00300 - SF00399 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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