House File 27 - Introduced



                                    HOUSE FILE       
                                    BY  RAECKER


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

                                      A BILL FOR

  1 An Act providing for contributions made to a qualified tuition
  2    program established by certain educational institutions to be
  3    deducted for individual income tax purposes and including
  4    effective and retroactive applicability date provisions.
  5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  6 TLSB 1638HH 81
  7 mg/sh/8

PAG LIN



  1  1    Section 1.  Section 422.7, Code 2005, is amended by adding
  1  2 the following new subsection:
  1  3    NEW SUBSECTION.  32A.  a.  Subtract contributions made by
  1  4 the taxpayer as a participant in a qualified tuition program,
  1  5 as defined in section 529(b) of the Internal Revenue Code,
  1  6 established by one or more eligible educational institutions.
  1  7 The maximum amount that may be subtracted under this paragraph
  1  8 equals the maximum amount that is deductible under section
  1  9 12D.3, subsection 1, paragraph "a", for contributions made to
  1 10 the Iowa educational savings plan trust minus any amount
  1 11 subtracted pursuant to subsection 32, paragraph "a", of this
  1 12 section.
  1 13    b.  Add the amount of cash refunds or withdrawals refunded
  1 14 to the taxpayer as a participant in a qualified tuition
  1 15 program that is not used to satisfy qualified higher education
  1 16 expenses, as defined in section 529(e) of the Internal Revenue
  1 17 Code, to the extent previously deducted under paragraph "a".
  1 18    Sec. 2.  EFFECTIVE AND RETROACTIVE DATE.  This Act, being
  1 19 deemed of immediate importance, takes effect upon enactment
  1 20 and applies retroactively to January 1, 2005, for tax years
  1 21 beginning on or after that date.
  1 22                           EXPLANATION
  1 23    This bill allows for an individual income tax deduction for
  1 24 contributions made to a qualified tuition program established
  1 25 by one or more educational institutions.  The program is the
  1 26 counterpart to the Iowa educational savings plan trust (state
  1 27 program) and allows a taxpayer to make contributions to a
  1 28 trust set up in the name of a designated beneficiary to pay
  1 29 the costs associated with higher education.  The amount that
  1 30 may be deducted is the maximum amount that may be deducted for
  1 31 contributions to the state program ($2,000, to be adjusted for
  1 32 inflation) less any amount that has been deducted for the tax
  1 33 year for contributions to the state program.
  1 34    The bill also provides that any refunds or withdrawals made
  1 35 which the taxpayer receives and which are not used for
  2  1 qualified tuition costs are to be included in income to the
  2  2 extent previously deducted.
  2  3    The bill takes effect upon enactment and applies
  2  4 retroactively to January 1, 2005, for tax years beginning on
  2  5 or after that date.
  2  6 LSB 1638HH 81
  2  7 mg/sh/8