Text: SF02079 Text: SF02081 Text: SF02000 - SF02099 Text: SF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.4, subsection 1, paragraphs b and 1 2 c, Code Supplement 1999, are amended to read as follows: 1 3 b. "Cumulative inflation factor" means the product of the 1 4 annual inflation factor for the19882000 calendar year and 1 5 all annual inflation factors for subsequent calendar years as 1 6 determined pursuant to this subsection. The cumulative 1 7 inflation factor applies to all tax years beginning on or 1 8 after January 1 of the calendar year for which the latest 1 9 annual inflation factor has been determined. 1 10 c. The annual inflationfactorfactors for the19882000 1 11 calendar yearisand for the 2001 calendar year are one 1 12 hundred percent. 1 13 Sec. 2. Section 422.5, subsection 1, paragraphs a through 1 14 i, Code Supplement 1999, are amended by striking the 1 15 paragraphs and inserting in lieu thereof the following: 1 16 a. On all taxable income from zero through eight thousand 1 17 dollars, one and eighty-five hundredths percent. 1 18 b. On all taxable income exceeding eight thousand dollars 1 19 but not exceeding forty thousand dollars, five and three- 1 20 tenths percent. 1 21 c. On all taxable income exceeding forty thousand dollars 1 22 but not exceeding sixty thousand dollars, six and nine-tenths 1 23 percent. 1 24 d. On all taxable income exceeding sixty thousand dollars, 1 25 six and ninety-five hundredths percent. 1 26 Sec. 3. Section 422.5, subsection 1, paragraphs a through 1 27 i, Code Supplement 1999, are amended by striking the 1 28 paragraphs and inserting in lieu thereof the following: 1 29 a. On all taxable income from zero through eight thousand 1 30 dollars, one and eighty-five hundredths percent. 1 31 b. On all taxable income exceeding eight thousand dollars 1 32 but not exceeding forty thousand dollars, five and three- 1 33 tenths percent. 1 34 c. On all taxable income exceeding forty thousand dollars 1 35 but not exceeding sixty thousand dollars, six and thirty-five 2 1 hundredths percent. 2 2 d. On all taxable income exceeding sixty thousand dollars, 2 3 six and six-tenths percent. 2 4 Sec. 4. Section 422.5, subsection 1, paragraph j, Code 2 5 Supplement 1999, is amended to read as follows: 2 6j.e. (1) The tax imposed upon the taxable income of a 2 7 nonresident shall be computed by reducing the amount 2 8 determined pursuant to paragraphs "a" through"i""d" by the 2 9 amounts of nonrefundable credits under this division and by 2 10 multiplying this resulting amount by a fraction of which the 2 11 nonresident's net income allocated to Iowa, as determined in 2 12 section 422.8, subsection 2, paragraph "a", is the numerator 2 13 and the nonresident's total net income computed under section 2 14 422.7 is the denominator. This provision also applies to 2 15 individuals who are residents of Iowa for less than the entire 2 16 tax year. 2 17 (2) The tax imposed upon the taxable income of a resident 2 18 shareholder in an S corporation which has in effect for the 2 19 tax year an election under subchapter S of the Internal 2 20 Revenue Code and carries on business within and without the 2 21 state may be computed by reducing the amount determined 2 22 pursuant to paragraphs "a" through"i""d" by the amounts of 2 23 nonrefundable credits under this division and by multiplying 2 24 this resulting amount by a fraction of which the resident's 2 25 net income allocated to Iowa, as determined in section 422.8, 2 26 subsection 2, paragraph "b", is the numerator and the 2 27 resident's total net income computed under section 422.7 is 2 28 the denominator. If a resident shareholder has elected to 2 29 take advantage of this subparagraph, and for the next tax year 2 30 elects not to take advantage of this subparagraph, the 2 31 resident shareholder shall not reelect to take advantage of 2 32 this subparagraph for the three tax years immediately 2 33 following the first tax year for which the shareholder elected 2 34 not to take advantage of this subparagraph, unless the 2 35 director consents to the reelection. This subparagraph also 3 1 applies to individuals who are residents of Iowa for less than 3 2 the entire tax year. 3 3 This subparagraph shall not affect the amount of the 3 4 taxpayer's checkoff to the Iowa election campaign fund under 3 5 section 56.18, the checkoff for the fish and game fund in 3 6 section 456A.16, the credits from tax provided in sections 3 7 422.10, 422.11A, and 422.12 and the allocation of these 3 8 credits between spouses if the taxpayers filed separate 3 9 returns or separately on combined returns. 3 10 Sec. 5. Section 422.5, subsection 1, paragraph k, Code 3 11 Supplement 1999, is amended by relettering the paragraph as 3 12 paragraph f. 3 13 Sec. 6. Section 422.5, subsection 1, paragraph k, 3 14 unnumbered paragraph 1, Code Supplement 1999, is amended to 3 15 read as follows: 3 16 There is imposed upon every resident and nonresident of 3 17 this state, including estates and trusts, the greater of the 3 18 tax determined in paragraphs "a" through"j""e" or the state 3 19 alternative minimum tax equal to seventy-five percent of the 3 20 maximum state individual income tax rate for the tax year, 3 21 rounded to the nearest one-tenth of one percent, of the state 3 22 alternative minimum taxable income of the taxpayer as computed 3 23 under this paragraph. 3 24 Sec. 7. Section 422.5, subsections 2, 5, and 7, Code 3 25 Supplement 1999, are amended to read as follows: 3 26 2. However, the tax shall not be imposed on a resident or 3 27 nonresident whose net income, as defined in section 422.7, is 3 28 thirteen thousand five hundred dollars or less in the case of 3 29 married persons filing jointly or filing separately on a 3 30 combined return, unmarried heads of household, and surviving 3 31 spouses ornineten thousand dollars or less in the case of 3 32 all other persons; but in the event that the payment of tax 3 33 under this division would reduce the net income to less than 3 34 thirteen thousand five hundred dollars ornineten thousand 3 35 dollars as applicable, then the tax shall be reduced to that 4 1 amount which would result in allowing the taxpayer to retain a 4 2 net income of thirteen thousand five hundred dollars ornine4 3 ten thousand dollars as applicable. The preceding sentence 4 4 does not apply to estates or trusts. For the purpose of this 4 5 subsection, the entire net income, including any part of the 4 6 net income not allocated to Iowa, shall be taken into account. 4 7 For purposes of this subsection, net income includes all 4 8 amounts of pensions or other retirement income received from 4 9 any source which is not taxable under this division as a 4 10 result of the government pension exclusions in section 422.7, 4 11 or any other state law. If the combined net income of a 4 12 husband and wife exceeds thirteen thousand five hundred 4 13 dollars, neither of them shall receive the benefit of this 4 14 subsection, and it is immaterial whether they file a joint 4 15 return or separate returns. However, if a husband and wife 4 16 file separate returns and have a combined net income of 4 17 thirteen thousand five hundred dollars or less, neither spouse 4 18 shall receive the benefit of this paragraph, if one spouse has 4 19 a net operating loss and elects to carry back or carry forward 4 20 the loss as provided in section 422.9, subsection 3. A person 4 21 who is claimed as a dependent by another person as defined in 4 22 section 422.12 shall not receive the benefit of this 4 23 subsection if the person claiming the dependent has net income 4 24 exceeding thirteen thousand five hundred dollars ornineten 4 25 thousand dollars as applicable or the person claiming the 4 26 dependent and the person's spouse have combined net income 4 27 exceeding thirteen thousand five hundred dollars ornineten 4 28 thousand dollars as applicable. 4 29 In addition, if the married persons', filing jointly or 4 30 filing separately on a combined return, unmarried head of 4 31 household's, or surviving spouse's net income exceeds thirteen 4 32 thousand five hundred dollars, the regular tax imposed under 4 33 this division shall be the lesser of the maximum state 4 34 individual income tax rate times the portion of the net income 4 35 in excess of thirteen thousand five hundred dollars or the 5 1 regular tax liability computed without regard to this 5 2 sentence. Taxpayers electing to file separately shall compute 5 3 the alternate tax described in this paragraph using the total 5 4 net income of the husband and wife. The alternate tax 5 5 described in this paragraph does not apply if one spouse 5 6 elects to carry back or carry forward the loss as provided in 5 7 section 422.9, subsection 3. 5 8 5. Upon determination of the latest cumulative inflation 5 9 factor, the director shall multiply each dollar amount set 5 10 forth in subsection 1, paragraphs "a" through"i""d" of this 5 11 section by this cumulative inflation factor, shall round off 5 12 the resulting product to the nearest one dollar, and shall 5 13 incorporate the result into the income tax forms and 5 14 instructions for each tax year. 5 15 7. In addition to the other taxes imposed by this section, 5 16 a tax is imposed on the amount of a lump sum distribution for 5 17 which the taxpayer has elected under section 402(e) of the 5 18 Internal Revenue Code to be separately taxed for federal 5 19 income tax purposes for the tax year. The rate of tax is 5 20 equal to twenty-five percent of the separate federal tax 5 21 imposed on the amount of the lump sum distribution. A 5 22 nonresident is liable for this tax only on that portion of the 5 23 lump sum distribution allocable to Iowa. The total amount of 5 24 the lump sum distribution subject to separate federal tax 5 25 shall be included in net income for purposes of determining 5 26 eligibility under the thirteen thousand five hundred dollar or 5 27 less ornineten thousand dollar or less exclusion, as 5 28 applicable. 5 29 Sec. 8. Section 422.8, subsection 2, paragraph a, Code 5 30 1999, is amended to read as follows: 5 31 a. Nonresident's net income allocated to Iowa is the net 5 32 income, or portion of net income, which is derived from a 5 33 business, trade, profession, or occupation carried on within 5 34 this state or income from any property, trust, estate, or 5 35 other source within Iowa. However, income derived from a 6 1 business, trade, profession, or occupation carried on within 6 2 this state and income from any property, trust, estate, or 6 3 other source within Iowa shall not include distributions from 6 4 pensions, including defined benefit or defined contribution 6 5 plans, annuities, individual retirement accounts, and deferred 6 6 compensation plans or any earnings attributable thereto so 6 7 long as the distribution is directly related to an 6 8 individual's documented retirement and received while the 6 9 individual is a nonresident of this state. If a business, 6 10 trade, profession, or occupation is carried on partly within 6 11 and partly without the state, only the portion of the net 6 12 income which is fairly and equitably attributable to that part 6 13 of the business, trade, profession, or occupation carried on 6 14 within the state is allocated to Iowa for purposes of section 6 15 422.5, subsection 1, paragraph"j""e", and section 422.13 and 6 16 income from any property, trust, estate, or other source 6 17 partly within and partly without the state is allocated to 6 18 Iowa in the same manner, except that annuities, interest on 6 19 bank deposits and interest-bearing obligations, and dividends 6 20 are allocated to Iowa only to the extent to which they are 6 21 derived from a business, trade, profession, or occupation 6 22 carried on within the state. 6 23 Sec. 9. Section 422.8, subsection 4, Code 1999, is amended 6 24 to read as follows: 6 25 4. The amount of minimum tax paid to another state or 6 26 foreign country by a resident taxpayer of this state from 6 27 preference items derived from sources outside of Iowa shall be 6 28 allowed as a credit against the tax computed under this 6 29 division except that the credit shall not exceed what the 6 30 amount of state alternative minimum tax would have been on the 6 31 same preference items which were taxed by the other state or 6 32 foreign country. The limitation on this credit shall be 6 33 computed according to the following formula: The total of 6 34 preference items earned outside of Iowa and taxed by another 6 35 state or foreign country shall be divided by the total of 7 1 preference items of the resident taxpayer of Iowa. In 7 2 computing this quotient, those items excludable under section 7 3 422.5, subsection 1, paragraph"k""f", subparagraph (1) shall 7 4 not be used in computing the preference items. This quotient 7 5 multiplied times the net state alternative minimum tax as 7 6 determined in section 422.5, subsection 1, paragraph"k""f" 7 7 on the total of preference items as if entirely earned in Iowa 7 8 shall be the maximum tax credit against the Iowa alternative 7 9 minimum tax. However, the maximum tax credit will not be 7 10 allowed to the extent that the minimum tax imposed by the 7 11 other state or foreign country is less than the maximum tax 7 12 credit computed above. 7 13 Sec. 10. Section 422.9, subsection 1, Code Supplement 7 14 1999, is amended to read as follows: 7 15 1. An optional standard deduction, after deduction of 7 16 federal income tax, equal to one thousand two hundred thirty 7 17 dollars for a married person who files separately or a single 7 18 person or equal to three thousand thirty dollars for a husband 7 19 and wife who file a joint return, a surviving spouse, or an 7 20 unmarried head of household. The optional standard deduction 7 21 shall not exceed the amount remaining after deduction of the 7 22 federal income tax. The amount of federal income taxes 7 23 deducted shall not exceed the amount as computed under 7 24 subsection 2, paragraph "b". 7 25 Sec. 11. Section 422.9, subsection 1, Code Supplement 7 26 1999, is amended to read as follows: 7 27 1. An optional standard deduction, after deduction of7 28federal income tax,equal to one thousand two hundred thirty 7 29 dollars for a married person who files separately or a single 7 30 person or equal to three thousand thirty dollars for a husband 7 31 and wife who file a joint return, a surviving spouse, or an 7 32 unmarried head of household.The optional standard deduction7 33shall not exceed the amount remaining after deduction of the7 34federal income tax.7 35 Sec. 12. Section 422.9, subsection 2, paragraph b, Code 8 1 Supplement 1999, is amended by striking the paragraph and 8 2 inserting in lieu thereof the following: 8 3 b. Add the amount of federal income taxes paid or accrued, 8 4 as the case may be, to the extent the federal tax payment is 8 5 for a tax year beginning prior to January 1, 2000. Subtract 8 6 the amount of federal income tax refunds received in a tax 8 7 year to the extent that the federal income tax was deducted on 8 8 an Iowa individual income tax return for a tax year beginning 8 9 prior to January 1, 2000. 8 10 Sec. 13. Section 422.9, subsection 2, paragraph b, Code 8 11 Supplement 1999, is amended by striking the paragraph. 8 12 Sec. 14. Section 422.11B, Code 1999, is amended to read as 8 13 follows: 8 14 422.11B MINIMUM TAX CREDIT. 8 15 1. There is allowed as a credit against the tax determined 8 16 in section 422.5, subsection 1, paragraphs "a" through"j""e" 8 17 for a tax year an amount equal to the minimum tax credit for 8 18 that tax year. 8 19 The minimum tax credit for a tax year is the excess, if 8 20 any, of the adjusted net minimum tax imposed for all prior tax 8 21 years beginning on or after January 1, 1987, over the amount 8 22 allowable as a credit under this section for those prior tax 8 23 years. 8 24 2. The allowable credit under subsection 1 for a tax year 8 25 shall not exceed the excess, if any, of the tax determined in 8 26 section 422.5, subsection 1, paragraphs "a" through"j""e" 8 27 over the state alternative minimum tax as determined in 8 28 section 422.5, subsection 1, paragraph"k""f". 8 29 The net minimum tax for a tax year is the excess, if any, 8 30 of the tax determined in section 422.5, subsection 1, 8 31 paragraph"k""f" for the tax year over the tax determined in 8 32 section 422.5, subsection 1, paragraphs "a" through"j""e" 8 33 for the tax year. 8 34 The adjusted net minimum tax for a tax year is the net 8 35 minimum tax for the tax year reduced by the amount which would 9 1 be the net minimum tax if the only item of tax preference 9 2 taken into account was that described in paragraph (6) of 9 3 section 57(a) of the Internal Revenue Code. 9 4 Sec. 15. Section 422.13, subsection 1A, Code Supplement 9 5 1999, is amended to read as follows: 9 6 1A. Notwithstanding any other provision in this section, a 9 7 resident of this state is not required to make and file a 9 8 return if the person's net income is equal to or less than the 9 9 appropriate dollar amount listed in section 422.5, subsection 9 10 2, upon which tax is not imposed. A nonresident of this state 9 11 is not required to make and file a return if the person's 9 12 total net income in section 422.5, subsection 1, paragraph"j"9 13 "e", is equal to or less than the appropriate dollar amount 9 14 provided in section 422.5, subsection 2, upon which tax is not 9 15 imposed. For purposes of this subsection, the amount of a 9 16 lump sum distribution subject to separate federal tax shall be 9 17 included in net income for purposes of determining if a 9 18 resident is required to file a return and the portion of the 9 19 lump sum distribution that is allocable to Iowa is included in 9 20 total net income for purposes of determining if a nonresident 9 21 is required to make and file a return. 9 22 Sec. 16. Section 422.21, unnumbered paragraph 5, Code 9 23 Supplement 1999, is amended to read as follows: 9 24 The director shall determine for the19892000 calendar 9 25 year and each subsequent calendar year the annual and 9 26 cumulative inflation factors for each calendar year to be 9 27 applied to tax years beginning on or after January 1 of that 9 28 calendar year. The director shall compute the new dollar 9 29 amounts as specified to be adjusted in section 422.5 by the 9 30 latest cumulative inflation factor and round off the result to 9 31 the nearest one dollar. The annual and cumulative inflation 9 32 factors determined by the director are not rules as defined in 9 33 section 17A.2, subsection 11. The director shall determine 9 34 for the 1990 calendar year and each subsequent calendar year 9 35 the annual and cumulative standard deduction factors to be 10 1 applied to tax years beginning on or after January 1 of that 10 2 calendar year. The director shall compute the new dollar 10 3 amounts of the standard deductions specified in section 422.9, 10 4 subsection 1, by the latest cumulative standard deduction 10 5 factor and round off the result to the nearest ten dollars. 10 6 The annual and cumulative standard deduction factors 10 7 determined by the director are not rules as defined in section 10 8 17A.2, subsection 11. 10 9 Sec. 17. EFFECTIVE AND APPLICABILITY DATES. 10 10 1. This Act, being deemed of immediate importance, takes 10 11 effect upon enactment and applies retroactively to January 1, 10 12 2000, for tax years beginning on or after that date, except as 10 13 otherwise provided in this section. 10 14 2. Sections 2, 10, and 12 of this Act apply retroactively 10 15 to January 1, 2000, for tax years beginning in the 2000 10 16 calendar year. 10 17 3. Sections 3, 11, and 13 of this Act take effect January 10 18 1, 2001, for tax years beginning on or after that date. 10 19 EXPLANATION 10 20 This bill eliminates the deduction for federal income taxes 10 21 under the individual income tax, although federal income tax 10 22 paid in the 2000 tax year for any prior tax year may still be 10 23 deducted. Federal income tax refunds received in the 2000 tax 10 24 year will be reported on the Iowa return to the extent the tax 10 25 refund was deducted on a prior Iowa return. The individual 10 26 income tax rates are adjusted downward in sections 2 and 3 of 10 27 the bill. Section 2 includes the tax rates that will apply 10 28 only for tax years that begin in the 2000 calendar year. 10 29 Section 3 of the bill includes the permanent adjusted rates 10 30 that will be in effect for tax years beginning on or after 10 31 January 1, 2001, and will be indexed for inflation starting in 10 32 the 2002 tax year. The net income exclusion for single 10 33 taxpayers is increased from $9,000 to $10,000. A number of 10 34 coordinating amendments are included. 10 35 The bill contains effective date provisions, including 11 1 retroactive applicability date provisions. 11 2 LSB 5506XS 78 11 3 mg/cf/24
Text: SF02079 Text: SF02081 Text: SF02000 - SF02099 Text: SF Index Bills and Amendments: General Index Bill History: General Index
© 2000 Cornell College and League of Women Voters of Iowa
Comments about this site or page?
webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.
Last update: Fri Feb 11 03:35:00 CST 2000
URL: /DOCS/GA/78GA/Legislation/SF/02000/SF02080/000202.html
jhf