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