House File 24 - Introduced



                                       HOUSE FILE       
                                       BY  J. K. VAN FOSSEN


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

                                      A BILL FOR

  1 An Act relating to a phaseout of the state income taxation of
  2    social security benefits and providing a retroactive
  3    applicability date.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  5 TLSB 1692HH 81
  6 sc/sh/8

PAG LIN



  1  1    Section 1.  Section 422.7, subsection 13, Code 2005, 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, 2009.  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, 2009.
  1 12    b.  (1)  For tax years beginning in the 2005 calendar year,
  1 13 subtract, to the extent included, twenty percent of taxable
  1 14 social security benefits remaining after the subtraction in
  1 15 paragraph "a".
  1 16    (2)  For tax years beginning in the 2006 calendar year,
  1 17 subtract, to the extent included, forty percent of taxable
  1 18 social security benefits remaining after the subtraction in
  1 19 paragraph "a".
  1 20    (3)  For tax years beginning in the 2007 calendar year,
  1 21 subtract, to the extent included, sixty percent of taxable
  1 22 social security benefits remaining after the subtraction in
  1 23 paragraph "a".
  1 24    (4)  For tax years beginning in the 2008 calendar year,
  1 25 subtract, to the extent included, eighty percent of taxable
  1 26 social security benefits remaining after the subtraction in
  1 27 paragraph "a".
  1 28    c.  Married taxpayers, who file a joint federal income tax
  1 29 return and who elect to file separate returns or who elect
  1 30 separate filing on a combined return for state income tax
  1 31 purposes, shall allocate between the spouses the amount of
  1 32 benefits subtracted under paragraphs "a" and "b" from net
  1 33 income in the ratio of the social security benefits received
  1 34 by each spouse to the total of these benefits received by both
  1 35 spouses.
  2  1    d.  For tax years beginning on or after January 1, 2009,
  2  2 subtract, to the extent included, the amount of social
  2  3 security benefits taxable under section 86 of the Internal
  2  4 Revenue Code.
  2  5    Sec. 2.  RETROACTIVE APPLICABILITY.  This Act applies
  2  6 retroactively to January 1, 2005, for tax years beginning on
  2  7 or after that date.
  2  8                           EXPLANATION
  2  9    This bill phases out the state income tax on social
  2 10 security benefits over a five=year period.  For tax years
  2 11 beginning in 2005, 20 percent of taxable social security
  2 12 benefits are exempted; for tax years beginning in 2006, 40
  2 13 percent of taxable social security benefits are exempted; for
  2 14 tax years beginning in 2007, 60 percent of taxable social
  2 15 security benefits are exempted; for tax years beginning in
  2 16 2008, 80 percent of taxable social security benefits are
  2 17 exempted; and for tax years beginning on or after January 1,
  2 18 2009, 100 percent of social security benefits are exempted
  2 19 from state income taxation.
  2 20    The bill applies retroactively to January 1, 2005, for tax
  2 21 years beginning on or after that date.
  2 22 LSB 1692HH 81
  2 23 sc/sh/8