Text: HF00741 Text: HF00743 Text: HF00700 - HF00799 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.5, subsection 1, paragraphs a 1 2 through i, Code 1999, are amended to read as follows: 1 3 a. On all taxable income from zero throughonefour 1 4 thousand dollars,thirty-six hundredths of onetwo percent. 1 5b. On all taxable income exceeding one thousand dollars1 6but not exceeding two thousand dollars, seventy-two hundredths1 7of one percent.1 8c. On all taxable income exceeding two thousand dollars1 9but not exceeding four thousand dollars, two and forty-three1 10hundredths percent.1 11d.b. On all taxable income exceeding four thousand 1 12 dollars but not exceedingninefifteen thousand dollars,four1 13and one-halffive percent. 1 14e. On all taxable income exceeding nine thousand dollars1 15but not exceeding fifteen thousand dollars, six and twelve1 16hundredths percent.1 17f.c. On all taxable income exceeding fifteen thousand 1 18 dollars but not exceedingtwentythirty thousand dollars, six 1 19 andforty-eight hundredthsfour-tenths percent. 1 20g. On all taxable income exceeding twenty thousand dollars1 21but not exceeding thirty thousand dollars, six and eight-1 22tenths percent.1 23h.d. On all taxable income exceeding thirty thousand 1 24 dollarsbut not exceeding forty-five thousand dollars,seven1 25 six andninety-two hundredthsfive-tenths percent. 1 26i. On all taxable income exceeding forty-five thousand1 27dollars, eight and ninety-eight hundredths percent.1 28 Sec. 2. Section 422.5, subsection 1, paragraph j, Code 1 29 1999, is amended to read as follows: 1 30j.e. (1) The tax imposed upon the taxable income of a 1 31 nonresident shall be computed by reducing the amount 1 32 determined pursuant to paragraphs "a" through"i""d" by the 1 33 amounts of nonrefundable credits under this division and by 1 34 multiplying this resulting amount by a fraction of which the 1 35 nonresident's net income allocated to Iowa, as determined in 2 1 section 422.8, subsection 2, paragraph "a", is the numerator 2 2 and the nonresident's total net income computed under section 2 3 422.7 is the denominator. This provision also applies to 2 4 individuals who are residents of Iowa for less than the entire 2 5 tax year. 2 6 (2) The tax imposed upon the taxable income of a resident 2 7 shareholder in an S corporation which has in effect for the 2 8 tax year an election under subchapter S of the Internal 2 9 Revenue Code and carries on business within and without the 2 10 state may be computed by reducing the amount determined 2 11 pursuant to paragraphs "a" through"i""d" by the amounts of 2 12 nonrefundable credits under this division and by multiplying 2 13 this resulting amount by a fraction of which the resident's 2 14 net income allocated to Iowa, as determined in section 422.8, 2 15 subsection 2, paragraph "b", is the numerator and the 2 16 resident's total net income computed under section 422.7 is 2 17 the denominator. If a resident shareholder has elected to 2 18 take advantage of this subparagraph, and for the next tax year 2 19 elects not to take advantage of this subparagraph, the 2 20 resident shareholder shall not reelect to take advantage of 2 21 this subparagraph for the three tax years immediately 2 22 following the first tax year for which the shareholder elected 2 23 not to take advantage of this subparagraph, unless the 2 24 director consents to the reelection. This subparagraph also 2 25 applies to individuals who are residents of Iowa for less than 2 26 the entire tax year. 2 27 This subparagraph shall not affect the amount of the 2 28 taxpayer's checkoff to the Iowa election campaign fund under 2 29 section 56.18, the checkoff for the fish and game fund in 2 30 section 456A.16, the credits from tax provided in sections 2 31 422.10, 422.11A, and 422.12 and the allocation of these 2 32 credits between spouses if the taxpayers filed separate 2 33 returns or separately on combined returns. 2 34 Sec. 3. Section 422.5, subsection 1, paragraph k, 2 35 unnumbered paragraph 1, Code 1999, is amended to read as 3 1 follows: 3 2 There is imposed upon every resident and nonresident of 3 3 this state, including estates and trusts, the greater of the 3 4 tax determined in paragraphs "a" through"j""e" or the state 3 5 alternative minimum tax equal to seventy-five percent of the 3 6 maximum state individual income tax rate for the tax year, 3 7 rounded to the nearest one-tenth of one percent, of the state 3 8 alternative minimum taxable income of the taxpayer as computed 3 9 under this paragraph. 3 10 Sec. 4. Section 422.5, subsections 2, 6, and 8, Code 1999, 3 11 are amended to read as follows: 3 12 2. However, the tax shall not be imposed on a resident or 3 13 nonresident whose net income, as defined in section 422.7, is 3 14thirteenfourteen thousand five hundred dollars or less in the 3 15 case of married persons filing jointly or filing separately on 3 16 a combined return, unmarried heads of household, and surviving 3 17 spouses ornineeleven thousand dollars or less in the case of 3 18 all other persons; but in the event that the payment of tax 3 19 under this division would reduce the net income to less than 3 20thirteenfourteen thousand five hundred dollars ornineeleven 3 21 thousand dollars as applicable, then the tax shall be reduced 3 22 to that amount which would result in allowing the taxpayer to 3 23 retain a net income ofthirteenfourteen thousand five hundred 3 24 dollars ornineeleven thousand dollars as applicable. The 3 25 preceding sentence does not apply to estates or trusts. For 3 26 the purpose of this subsection, the entire net income, 3 27 including any part of the net income not allocated to Iowa, 3 28 shall be taken into account. For purposes of this subsection, 3 29 net income includes all amounts of pensions or other 3 30 retirement income received from any source which is not 3 31 taxable under this division as a result of the government 3 32 pension exclusions in section 422.7, or any other state law. 3 33 If the combined net income of a husband and wife exceeds 3 34thirteenfourteen thousand five hundred dollars, neither of 3 35 them shall receive the benefit of this subsection, and it is 4 1 immaterial whether they file a joint return or separate 4 2 returns. However, if a husband and wife file separate returns 4 3 and have a combined net income ofthirteenfourteen thousand 4 4 five hundred dollars or less, neither spouse shall receive the 4 5 benefit of this paragraph, if one spouse has a net operating 4 6 loss and elects to carry back or carry forward the loss as 4 7 provided in section 422.9, subsection 3. A person who is 4 8 claimed as a dependent by another person as defined in section 4 9 422.12 shall not receive the benefit of this subsection if the 4 10 person claiming the dependent has net income exceeding 4 11thirteenfourteen thousand five hundred dollars ornineeleven 4 12 thousand dollars as applicable or the person claiming the 4 13 dependent and the person's spouse have combined net income 4 14 exceedingthirteenfourteen thousand five hundred dollars or 4 15nineeleven thousand dollars as applicable. 4 16 In addition, if the married persons', filing jointly or 4 17 filing separately on a combined return, unmarried head of 4 18 household's, or surviving spouse's net income exceedsthirteen4 19 fourteen thousand five hundred dollars, the regular tax 4 20 imposed under this division shall be the lesser of the maximum 4 21 state individual income tax rate times the portion of the net 4 22 income in excess ofthirteenfourteen thousand five hundred 4 23 dollars or the regular tax liability computed without regard 4 24 to this sentence. Taxpayers electing to file separately shall 4 25 compute the alternate tax described in this paragraph using 4 26 the total net income of the husband and wife. The alternate 4 27 tax described in this paragraph does not apply if one spouse 4 28 elects to carry back or carry forward the loss as provided in 4 29 section 422.9, subsection 3. 4 30 6. Upon determination of the latest cumulative inflation 4 31 factor, the director shall multiply each dollar amount set 4 32 forth in subsection 1, paragraphs "a" through"i""d", of this 4 33 section by this cumulative inflation factor, shall round off 4 34 the resulting product to the nearest one dollar, and shall 4 35 incorporate the result into the income tax forms and 5 1 instructions for each tax year. 5 2 8. In addition to the other taxes imposed by this section, 5 3 a tax is imposed on the amount of a lump sum distribution for 5 4 which the taxpayer has elected under section 402(e) of the 5 5 Internal Revenue Code to be separately taxed for federal 5 6 income tax purposes for the tax year. The rate of tax is 5 7 equal to twenty-five percent of the separate federal tax 5 8 imposed on the amount of the lump sum distribution. A 5 9 nonresident is liable for this tax only on that portion of the 5 10 lump sum distribution allocable to Iowa. The total amount of 5 11 the lump sum distribution subject to separate federal tax 5 12 shall be included in net income for purposes of determining 5 13 eligibility under thethirteenfourteen thousand five hundred 5 14 dollar or less ornineeleven thousand dollar or less 5 15 exclusion, as applicable. 5 16 Sec. 5. Section 422.8, subsection 2, paragraph a, Code 5 17 1999, is amended to read as follows: 5 18 a. Nonresident's net income allocated to Iowa is the net 5 19 income, or portion of net income, which is derived from a 5 20 business, trade, profession, or occupation carried on within 5 21 this state or income from any property, trust, estate, or 5 22 other source within Iowa. However, income derived from a 5 23 business, trade, profession, or occupation carried on within 5 24 this state and income from any property, trust, estate, or 5 25 other source within Iowa shall not include distributions from 5 26 pensions, including defined benefit or defined contribution 5 27 plans, annuities, individual retirement accounts, and deferred 5 28 compensation plans or any earnings attributable thereto so 5 29 long as the distribution is directly related to an 5 30 individual's documented retirement and received while the 5 31 individual is a nonresident of this state. If a business, 5 32 trade, profession, or occupation is carried on partly within 5 33 and partly without the state, only the portion of the net 5 34 income which is fairly and equitably attributable to that part 5 35 of the business, trade, profession, or occupation carried on 6 1 within the state is allocated to Iowa for purposes of section 6 2 422.5, subsection 1, paragraph"j""e", and section 422.13 and 6 3 income from any property, trust, estate, or other source 6 4 partly within and partly without the state is allocated to 6 5 Iowa in the same manner, except that annuities, interest on 6 6 bank deposits and interest-bearing obligations, and dividends 6 7 are allocated to Iowa only to the extent to which they are 6 8 derived from a business, trade, profession, or occupation 6 9 carried on within the state. 6 10 Sec. 6. Section 422.9, subsection 1, Code 1999, is amended 6 11 to read as follows: 6 12 1. An optional standard deduction, after deduction of 6 13 federal income tax, equal to one thousand two hundred thirty 6 14 dollars for a married person who files separately or a single 6 15 person or equal to three thousand thirty dollars for a husband 6 16 and wife who file a joint return, a surviving spouse, or an 6 17 unmarried head of household. The optional standard deduction 6 18 shall not exceed the amount remaining after deduction of the 6 19 federal income tax. The amount of federal income taxes 6 20 deducted shall not exceed the amount as computed under 6 21 subsection 2, paragraph "b". 6 22 Sec. 7. Section 422.9, subsection 2, paragraph b, Code 6 23 1999, is amended by striking the paragraph and inserting in 6 24 lieu thereof the following: 6 25 b. Add the amount of federal income taxes paid with the 6 26 federal return or as a result of an adjustment to a federal 6 27 return for tax years ending prior to January 1, 1999. 6 28 Subtract the amount of federal income tax refunds received for 6 29 a tax year to the extent that the federal income tax was 6 30 deducted in a previous tax year. 6 31 Sec. 8. Section 422.11B, Code 1999, is amended to read as 6 32 follows: 6 33 422.11B MINIMUM TAX CREDIT. 6 34 1. There is allowed as a credit against the tax determined 6 35 in section 422.5, subsection 1, paragraphs "a" through"j"7 1 "e", for a tax year an amount equal to the minimum tax credit 7 2 for that tax year. 7 3 The minimum tax credit for a tax year is the excess, if 7 4 any, of the adjusted net minimum tax imposed for all prior tax 7 5 years beginning on or after January 1, 1987, over the amount 7 6 allowable as a credit under this section for those prior tax 7 7 years. 7 8 2. The allowable credit under subsection 1 for a tax year 7 9 shall not exceed the excess, if any, of the tax determined in 7 10 section 422.5, subsection 1, paragraphs "a" through"j""e", 7 11 over the state alternative minimum tax as determined in 7 12 section 422.5, subsection 1, paragraph "k". 7 13 The net minimum tax for a tax year is the excess, if any, 7 14 of the tax determined in section 422.5, subsection 1, 7 15 paragraph "k", for the tax year over the tax determined in 7 16 section 422.5, subsection 1, paragraphs "a" through"j""e", 7 17 for the tax year. 7 18 The adjusted net minimum tax for a tax year is the net 7 19 minimum tax for the tax year reduced by the amount which would 7 20 be the net minimum tax if the only item of tax preference 7 21 taken into account was that described in paragraph (6) of 7 22 section 57(a) of the Internal Revenue Code. 7 23 Sec. 9. Section 422.13, subsection 1A, Code 1999, is 7 24 amended to read as follows: 7 25 1A. Notwithstanding any other provision in this section, a 7 26 resident of this state is not required to make and file a 7 27 return if the person's net income is equal to or less than the 7 28 appropriate dollar amount listed in section 422.5, subsection 7 29 2, upon which tax is not imposed. A nonresident of this state 7 30 is not required to make and file a return if the person's 7 31 total net income in section 422.5, subsection 1, paragraph"j"7 32 "e", is equal to or less than the appropriate dollar amount 7 33 provided in section 422.5, subsection 2, upon which tax is not 7 34 imposed. For purposes of this subsection, the amount of a 7 35 lump sum distribution subject to separate federal tax shall be 8 1 included in net income for purposes of determining if a 8 2 resident is required to file a return and the portion of the 8 3 lump sum distribution that is allocable to Iowa is included in 8 4 total net income for purposes of determining if a nonresident 8 5 is required to make and file a return. 8 6 Sec. 10. APPLICABILITY. This Act applies retroactively to 8 7 January 1, 1999, for tax years beginning on or after that 8 8 date. 8 9 EXPLANATION 8 10 The bill eliminates the deduction for federal income taxes 8 11 paid from the individual income tax and adjusts the income tax 8 12 rates downward and increases the amount of the net income 8 13 exclusion below which no tax is owed to offset the effect of 8 14 the elimination of the deduction for federal income taxes. 8 15 The bill applies retroactively to January 1, 1999, for tax 8 16 years beginning on or after that date. 8 17 LSB 2293YH 78 8 18 mg/sc/14
Text: HF00741 Text: HF00743 Text: HF00700 - HF00799 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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