Text: HF02512 Text: HF02514 Text: HF02500 - HF02599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 HOUSE FILE 2513 1 2 1 3 AN ACT 1 4 RELATING TO THE INDIVIDUAL INCOME TAX BY ELIMINATING THE 1 5 TAXATION OF CERTAIN CAPITAL GAINS AND PROVIDING SPECIAL 1 6 TREATMENT OF GAINS FROM THE SALES OF BUSINESSES TO 1 7 DESCENDANTS, INCREASING THE AMOUNT OF PENSION INCOME 1 8 EXCLUDED, INCREASING CERTAIN PERSONAL EXEMPTION TAX 1 9 CREDITS, AND INCREASING AND EXPANDING THE TUITION AND 1 10 TEXTBOOK TAX CREDIT, EXEMPTING SALES AND SERVICES TO 1 11 CERTAIN NONPROFIT HOSPITALS FROM THE SALES, SERVICES, 1 12 AND USE TAXES, AND RELATING TO THE INCOME ELIGIBILITY 1 13 REQUIREMENTS FOR THE HOMESTEAD PROPERTY TAX CREDIT, MOBILE 1 14 HOME TAX CREDIT, OR REIMBURSEMENT FOR RENT CONSTITUTING 1 15 PROPERTY TAXES PAID, AND INCLUDING EFFECTIVE AND 1 16 PROSPECTIVE AND RETROACTIVE APPLICABILITY DATE PROVISIONS. 1 17 1 18 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 19 1 20 DIVISION I 1 21 CAPITAL GAINS 1 22 Section 1. Section 422.7, subsection 21, unnumbered 1 23 paragraph 1, Code Supplement 1997, is amended to read as 1 24 follows: 1 25 Subtractforty-five percent ofthe net capital gain from 1 26 the following: 1 27 Sec. 2. Section 422.7, subsection 21, paragraph a, Code 1 28 Supplement 1997, is amended to read as follows: 1 29 a. (1) Net capital gain from the sale of real property 1 30 used in a business, in which the taxpayer materially 1 31 participated for ten years, as defined in section 469(h) of 1 32 the Internal Revenue Code, and which has been held for a 1 33 minimum of ten years, or from the sale of a business, as 1 34 defined in section 422.42, in which the taxpayer was employed 1 35 or in which the taxpayer materially participated for ten 2 1 years, as defined in section 469(h) of the Internal Revenue 2 2 Code, and which has been held for a minimum of ten years. The 2 3 sale of a business means the sale of all or substantially all 2 4 of the tangible personal property or service of the business. 2 5 However, where the business is sold to individuals who are 2 6 all lineal descendants of the taxpayer, the taxpayer does not 2 7 have to have materially participated in the business in order 2 8 for the net capital gain from the sale to be excluded from 2 9 taxation. 2 10 However, in lieu of the net capital gain deduction in this 2 11 paragraph and paragraphs "b", "c", and "d", where the business 2 12 is sold to individuals who are all lineal descendants of the 2 13 taxpayer, the amount of capital gain from each capital asset 2 14 may be subtracted in determining net income. 2 15 (2) For purposes of this paragraph, "lineal descendant" 2 16 means children of the taxpayer, including legally adopted 2 17 children and biological children, stepchildren, grandchildren, 2 18 great-grandchildren, and any other lineal descendants of the 2 19 taxpayer. 2 20 Sec. 3. Section 422.7, subsection 21, unnumbered paragraph 2 21 2, Code Supplement 1997, is amended by striking the unnumbered 2 22 paragraph and inserting in lieu thereof the following: 2 23 However, to the extent otherwise allowed, the deduction 2 24 provided in this subsection is not allowed for purposes of 2 25 computation of a net operating loss in section 422.9, 2 26 subsection 3, and in computing the income for the taxable year 2 27 or years for which a net operating loss is deducted. 2 28 Sec. 4. EFFECTIVE AND APPLICABILITY DATES. This division 2 29 of this Act, being deemed of immediate importance, takes 2 30 effect upon enactment and applies retroactively to January 1, 2 31 1998, for tax years beginning on or after that date. 2 32 DIVISION II 2 33 PENSION INCOME EXCLUSION 2 34 Sec. 5. Section 422.7, subsection 34, Code Supplement 2 35 1997, is amended to read as follows: 3 1 34. For a person who is disabled, or is fifty-five years 3 2 of age or older, or is the surviving spouse of an individual 3 3 or a survivor having an insurable interest in an individual 3 4 who would have qualified for the exemption under this 3 5 subsection for the tax year, subtract, to the extent included, 3 6 the total amount of a governmental or other pension or 3 7 retirement pay, including, but not limited to, defined benefit 3 8 or defined contribution plans, annuities, individual 3 9 retirement accounts, plans maintained or contributed to by an 3 10 employer, or maintained or contributed to by a self-employed 3 11 person as an employer, and deferred compensation plans or any 3 12 earnings attributable to the deferred compensation plans, up 3 13 to a maximum ofthreefive thousand dollars for a person, 3 14 other than a husband or wife, who files a separate state 3 15 income tax return and up to a maximum ofsixten thousand 3 16 dollars for a husband and wife who file a joint state income 3 17 tax return. However, a surviving spouse who is not disabled 3 18 or fifty-five years of age or older can only exclude the 3 19 amount of pension or retirement pay received as a result of 3 20 the death of the other spouse. A husband and wife filing 3 21 separate state income tax returns or separately on a combined 3 22 state return are allowed a combined maximum exclusion under 3 23 this subsection of up to ten thousand dollars. The ten 3 24 thousand dollar exclusion shall be allocated to the husband or 3 25 wife in the proportion that each spouse's respective pension 3 26 and retirement pay received bears to total combined pension 3 27 and retirement pay received. 3 28 Sec. 6. This division of this Act, being deemed of 3 29 immediate importance, takes effect upon enactment and applies 3 30 retroactively to January 1, 1998, for tax years beginning on 3 31 or after that date. 3 32 DIVISION III 3 33 PERSONAL EXEMPTION CREDIT 3 34 Sec. 7. Section 422.12, subsection 1, paragraphs a and b, 3 35 Code 1997, is amended to read as follows: 4 1 a. For an estate or trust, a single individual, or a 4 2 married person filing a separate return,twentyforty dollars. 4 3 b. For a head of household, or a husband and wife filing a 4 4 joint return,fortyeighty dollars. 4 5 Sec. 8. This division of this Act applies retroactively to 4 6 January 1, 1998, for tax years beginning on or after that 4 7 date. 4 8 DIVISION IV 4 9 TUITION TAX CREDIT 4 10 Sec. 9. Section 422.12, subsection 2, Code 1997, is 4 11 amended to read as follows: 4 12 2. A tuition credit equal totentwenty-five percent of 4 13 the first one thousand dollars which the taxpayer has paid to 4 14 others for each dependent in grades kindergarten through 4 15 twelve, for tuition and textbooks of each dependent in 4 16 attending an elementary or secondary school situated in Iowa, 4 17 which school is accredited or approved under section 256.11, 4 18 which is not operated for profit, and which adheres to the 4 19 provisions of the federal Civil Rights Act of 1964 and chapter 4 20 216. As used in this subsection, "textbooks" means books and 4 21 other instructional materials and equipment used in elementary 4 22 and secondary schools in teaching only those subjects legally 4 23 and commonly taught in public elementary and secondary schools 4 24 in this state and does not include instructional books and 4 25 materials used in the teaching of religious tenets, doctrines, 4 26 or worship, the purpose of which is to inculcate those tenets, 4 27 doctrines, or worship, and does not include. "Textbooks" 4 28 includes books or materials used for extracurricular 4 29 activities including sporting events, musical or dramatic 4 30 events, speech activities, driver's education, or programs of 4 31 a similar nature. Notwithstanding any other provision, all 4 32 other credits allowed under this section and section 422.12B 4 33 shall be deducted before the tuition credit under this 4 34 subsection. The department, when conducting an audit of a 4 35 taxpayer's return, shall also audit the tuition tax credit 5 1 portion of the tax return. 5 2 As used in this subsection, "tuition" means any charges for 5 3 the expenses of personnel, buildings, equipment and materials 5 4 other than textbooks, and other expenses of elementary or 5 5 secondary schools which relate to the teaching only of those 5 6 subjects legally and commonly taught in public elementary and 5 7 secondary schools in this state and which do not relate to the 5 8 teaching of religious tenets, doctrines, or worship, the 5 9 purpose of which is to inculcate those tenets, doctrines, or 5 10 worship, and which do not. "Tuition" includes those expenses 5 11 which relate to extracurricular activities including sporting 5 12 events, musical or dramatic events, speech activities, 5 13 driver's education, or programs of a similar nature. 5 14 Sec. 10. This division of this Act applies retroactively 5 15 to January 1, 1998, for tax years beginning on or after that 5 16 date. 5 17 DIVISION V 5 18 EXEMPTION FOR NONPROFIT HOSPITALS 5 19 Sec. 11. Section 422.45, Code 1997, is amended by adding 5 20 the following new subsection: 5 21 NEW SUBSECTION. 52. The gross receipts from the sale or 5 22 rental of tangible personal property or from services 5 23 performed, rendered, or furnished to a nonprofit hospital 5 24 licensed pursuant to chapter 135B to be used in the operation 5 25 of the hospital. 5 26 DIVISION VI 5 27 HOMESTEAD CREDIT, RENT REIMBURSEMENT, AND 5 28 MOBILE HOME TAX CREDIT 5 29 Sec. 12. Section 425.23, subsection 1, Code 1997, is 5 30 amended to read as follows: 5 31 1. a. The tentative credit or reimbursement for a 5 32 claimant described in section 425.17, subsection 2, paragraph 5 33 "a" and paragraph "b" if no appropriation is made to the fund 5 34 created in section 425.40 shall be determined in accordance 5 35 with the following schedule: 6 1 Percent of property taxes 6 2 due or rent constituting 6 3 property taxes paid 6 4 If the household allowed as a credit or 6 5 income is: reimbursement: 6 6$ 0 – 5,999.99................100%6 76,000 – 6,999.99................ 856 87,000 – 7,999.99................ 706 98,000 – 9,999.99................ 506 1010,000 – 11,999.99................ 356 1112,000 – 13,999.99................ 256 12 $ 0 – 8,499.99 100% 6 13 8,500 – 9,499.99 85 6 14 9,500 – 10,499.99 70 6 15 10,500 – 12,499.99 50 6 16 12,500 – 14,499.99 35 6 17 14,500 – 16,499.99 25 6 18 b. If moneys have been appropriated to the fund created in 6 19 section 425.40, the tentative credit or reimbursement for a 6 20 claimant described in section 425.17, subsection 2, paragraph 6 21 "b", shall be determined as follows: 6 22 (1) If the amount appropriated under section 425.40 plus 6 23 any supplemental appropriation made for a fiscal year for 6 24 purposes of this lettered paragraph is at least twenty-seven 6 25 million dollars, the tentative credit or reimbursement shall 6 26 be determined in accordance with the following schedule: 6 27 Percent of property taxes 6 28 due or rent constituting 6 29 property taxes paid 6 30 If the household allowed as a credit or 6 31 income is: reimbursement: 6 32$ 0 – 5,999.99. ...............100%6 336,000 – 6,999.99................ 856 347,000 – 7,999.99................ 706 358,000 – 9,999.99................ 507 110,000 – 11,999.99................ 357 212,000 – 13,999.99................ 257 3 $ 0 – 8,499.99 100% 7 4 8,500 – 9,499.99 85 7 5 9,500 – 10,499.99 70 7 6 10,500 – 12,499.99 50 7 7 12,500 – 14,499.99 35 7 8 14,500 – 16,499.99 25 7 9 (2) If the amount appropriated under section 425.40 plus 7 10 any supplemental appropriation made for a fiscal year for 7 11 purposes of this lettered paragraph is less than twenty-seven 7 12 million dollars the tentative credit or reimbursement shall be 7 13 determined in accordance with the following schedule: 7 14 Percent of property taxes 7 15 due or rent constituting 7 16 property taxes paid 7 17 If the household allowed as a credit or 7 18 income is: reimbursement: 7 19$ 0 – 5,999.99............... 50%7 206,000 – 6,999.99................ 427 217,000 – 7,999.99................ 357 228,000 – 9,999.99................ 257 2310,000 – 11,999.99................ 177 2412,000 – 13,999.99................ 127 25 $ 0 – 8,499.99 50% 7 26 8,500 – 9,499.99 42 7 27 9,500 – 10,499.99 35 7 28 10,500 – 12,499.99 25 7 29 12,500 – 14,499.99 17 7 30 14,500 – 16,499.99 12 7 31 Sec. 13. Section 425.23, subsection 3, paragraph a, Code 7 32 1997, is amended to read as follows: 7 33 a. A person who is eligible to file a claim for credit for 7 34 property taxes due and who has a household income ofsixeight 7 35 thousand five hundred dollars or less and who has an unpaid 8 1 special assessment levied against the homestead may file a 8 2 claim for a special assessment credit with the county 8 3 treasurer. The department shall provide to the respective 8 4 treasurers the forms necessary for the administration of this 8 5 subsection. The claim shall be filed not later than September 8 6 30 of each year. Upon the filing of the claim, interest for 8 7 late payment shall not accrue against the amount of the unpaid 8 8 special assessment due and payable. The claim filed by the 8 9 claimant constitutes a claim for credit of an amount equal to 8 10 the actual amount due upon the unpaid special assessment, plus 8 11 interest, payable during the fiscal year for which the claim 8 12 is filed against the homestead of the claimant. However, 8 13 where the claimant is an individual described in section 8 14 425.17, subsection 2, paragraph "b", and the tentative credit 8 15 is determined according to the schedule insection 425.23,8 16 subsection 1, paragraph "b", subparagraph (2), of this 8 17 section, the claim filed constitutes a claim for credit of an 8 18 amount equal to one-half of the actual amount due and payable 8 19 during the fiscal year. The treasurer shall certify to the 8 20 director of revenue and finance not later than October 15 of 8 21 each year the total amount of dollars due for claims allowed. 8 22 The amount of reimbursement due each county shall be paid by 8 23 the director of revenue and finance by November 15 of each 8 24 year, drawn upon warrants payable to the respective treasurer. 8 25 There is appropriated annually from the general fund of the 8 26 state to the department of revenue and finance an amount 8 27 sufficient to carry out the provisions of this subsection. 8 28 The treasurer shall credit any moneys received from the 8 29 department against the amount of the unpaid special assessment 8 30 due and payable on the homestead of the claimant. 8 31 Sec. 14. Section 425.23, Code 1997, is amended by adding 8 32 the following new subsection: 8 33 NEW SUBSECTION. 4. a. For the base year beginning in the 8 34 1999 calendar year and for each subsequent base year, the 8 35 dollar amounts set forth in subsections 1 and 3 shall be 9 1 multiplied by the cumulative adjustment factor for that base 9 2 year. "Cumulative adjustment factor" means the product of the 9 3 annual adjustment factor for the 1998 base year and all annual 9 4 adjustment factors for subsequent base years. The cumulative 9 5 adjustment factor applies to the base year beginning in the 9 6 calendar year for which the latest annual adjustment factor 9 7 has been determined. 9 8 b. The annual adjustment factor for the 1998 base year is 9 9 one hundred percent. For each subsequent base year, the 9 10 annual adjustment factor equals the annual inflation factor 9 11 for the calendar year, in which the base year begins, as 9 12 computed in section 422.4 for purposes of the individual 9 13 income tax. 9 14 Sec. 15. Section 435.22, subsection 2, Code 1997, is 9 15 amended to read as follows: 9 16 2. If the owner of the home is an Iowa resident, has 9 17 attained the age of twenty-three years on or before December 9 18 31 of the base year, and has an income when included with that 9 19 of a spouse which is less thansixeight thousand five hundred 9 20 dollars per year, the annual tax shall not be imposed on the 9 21 home. If the income issixeight thousand five hundred 9 22 dollars or more but less thanfourteensixteen thousand five 9 23 hundred dollars, the annual tax shall be computed as follows: 9 24 If the Household Annual Tax Per 9 25 Income is: Square Foot: 9 26$ 6,000 – 6,999.99 3.0 cents9 277,000 – 7,999.99 6.09 288,000 – 9,999.99 10.09 2910,000 – 11,999.99 13.09 3012,000 – 13,999.99 15.09 31 $ 8,500 – 9,499.99 3.0 cents 9 32 9,500 – 10,499.99 6.0 9 33 10,500 – 12,499.99 10.0 9 34 12,500 – 14,499.99 13.0 9 35 14,500 – 16,499.99 15.0 10 1 For purposes of this subsection "income" means income as 10 2 defined in section 425.17, subsection 7, and "base year" means 10 3 the calendar year preceding the year in which the claim for a 10 4 reduced rate of tax is filed. The home reduced rate of tax 10 5 shall only be allowed on the home in which the claimant is 10 6 residing at the time in which the claim for a reduced rate of 10 7 tax is filed. 10 8 Beginning with the 1998 base year, the income dollar 10 9 amounts set forth in this subsection shall be multiplied by 10 10 the cumulative adjustment factor for that base year as 10 11 determined in section 425.23, subsection 4. 10 12 Sec. 16. APPLICABILITY. This division of this Act applies 10 13 to claims for credit for property taxes due, claims for 10 14 reimbursement for rent constituting property taxes paid, and 10 15 claims for credit for mobile home taxes due filed on or after 10 16 January 1, 1999. 10 17 10 18 10 19 10 20 RON J. CORBETT 10 21 Speaker of the House 10 22 10 23 10 24 10 25 MARY E. KRAMER 10 26 President of the Senate 10 27 10 28 I hereby certify that this bill originated in the House and 10 29 is known as House File 2513, Seventy-seventh General Assembly. 10 30 10 31 10 32 10 33 ELIZABETH ISAACSON 10 34 Chief Clerk of the House 10 35 Approved , 1998 11 1 11 2 11 3 11 4 TERRY E. BRANSTAD 11 5 Governor
Text: HF02512 Text: HF02514 Text: HF02500 - HF02599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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