Senate File 27 SENATE FILE BY McKIBBEN Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act eliminating the tax on social security benefits under the 2 state individual income tax and including a retroactive 3 applicability date provision. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1073XS 80 6 mg/sh/8 PAG LIN 1 1 Section 1. Section 422.7, subsection 13, Code 2003, is 1 2 amended to read as follows: 1 3 13. a. Subtract, to the extent included, the amount of 1 4 additional social security benefits taxable under the Internal 1 5 Revenue Code for tax years beginning on or after January 1, 1 6 1994, but before January 1, 2003. The amount of social 1 7 security benefits taxable as provided in section 86 of the 1 8 Internal Revenue Code, as amended up to and including January 1 9 1, 1993, continues to apply for state income tax purposes for 1 10 tax years beginning on or after January 1, 1994, but before 1 11 January 1, 2003. 1 12 Married taxpayers, who file a joint federal income tax 1 13 return and who elect to file separate returns or who elect 1 14 separate filing on a combined return for state income tax 1 15 purposes, shall allocate between the spouses the amount of 1 16 benefits subtracted from net income in the ratio of the social 1 17 security benefits received by each spouse to the total of 1 18 these benefits received by both spouses. 1 19 b. Subtract, to the extent included, the amount of social 1 20 security benefits taxable under section 86 of the Internal 1 21 Revenue Code for tax years beginning on or after January 1, 1 22 2003. 1 23 Sec. 2. APPLICABILITY DATE. This Act applies 1 24 retroactively to January 1, 2003, for tax years beginning on 1 25 or after that date. 1 26 EXPLANATION 1 27 This bill exempts from the state individual income tax all 1 28 social security benefits received by the taxpayer for tax 1 29 years beginning on or after January 1, 2003. Prior to this 1 30 date, the tax on social security benefits is limited to a tax 1 31 on not more than 50 percent of social security benefits 1 32 received. The bill applies retroactively to January 1, 2003, 1 33 for tax years beginning on or after that date. 1 34 LSB 1073XS 80 1 35 mg/sh/8