Senate File 101

                                       SENATE FILE       
                                       BY  TINSMAN


    Passed Senate,  Date               Passed House, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act increasing the exemption for pension and retirement
  2    income, including social security benefits, for purposes of
  3    state individual income tax and providing an applicability
  4    date.
  5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  6 TLSB 1555SS 80
  7 sc/pj/5

PAG LIN

  1  1    Section 1.  Section 422.7, subsection 31, Code 2003, is
  1  2 amended to read as follows:
  1  3    31.  For a person who is disabled, or is fifty=five years
  1  4 of age or older, or is the surviving spouse of an individual
  1  5 or a survivor having an insurable interest in an individual
  1  6 who would have qualified for the exemption under this
  1  7 subsection for the tax year, subtract, to the extent included,
  1  8 the total amount of a governmental or other pension or
  1  9 retirement pay, including, but not limited to, social security
  1 10 benefits, defined benefit or defined contribution plans,
  1 11 annuities, individual retirement accounts, plans maintained or
  1 12 contributed to by an employer, or maintained or contributed to
  1 13 by a self=employed person as an employer, and deferred
  1 14 compensation plans or any earnings attributable to the
  1 15 deferred compensation plans, up to a maximum of six twelve
  1 16 thousand dollars for a person, other than a husband or wife,
  1 17 who files a separate state income tax return and up to a
  1 18 maximum of twelve twenty=four thousand dollars for a husband
  1 19 and wife who file a joint state income tax return.  However, a
  1 20 surviving spouse who is not disabled or fifty=five years of
  1 21 age or older can only exclude the amount of pension or
  1 22 retirement pay received as a result of the death of the other
  1 23 spouse.  A husband and wife filing separate state income tax
  1 24 returns or separately on a combined state return are allowed a
  1 25 combined maximum exclusion under this subsection of up to
  1 26 twelve twenty=four thousand dollars.  The twelve twenty=four
  1 27 thousand dollar exclusion shall be allocated to the husband or
  1 28 wife in the proportion that each spouse's respective pension
  1 29 and retirement pay received bears to total combined pension
  1 30 and retirement pay received.
  1 31    For purposes of this subsection, "social security benefits"
  1 32 means social security benefits that are taxable after the
  1 33 deduction under subsection 13.
  1 34    Sec. 2.  APPLICABILITY.  This Act applies to tax years
  1 35 beginning on or after January 1, 2005.
  2  1                           EXPLANATION
  2  2    This bill increases the state individual income tax
  2  3 exemption for pension and retirement pay from $6,000 to
  2  4 $12,000 for single filers and from $12,000 to $24,000 for
  2  5 married taxpayers.  The exemption is available to a taxpayer
  2  6 who is disabled or 55 years of age or older, or a qualifying
  2  7 survivor of such a taxpayer.
  2  8    The bill includes social security benefits taxable under
  2  9 state law in the definition of pension and retirement pay.
  2 10    The bill applies to tax years beginning on or after January
  2 11 1, 2005.
  2 12 LSB 1555SS 80
  2 13 sc/pj/5