Senate File 2388 - Introduced
SENATE FILE
BY MILLER
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to a refundable preschool tax credit under the
2 individual income tax and including a retroactive
3 applicability date provision.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 422.11M PRESCHOOL TAX CREDIT.
1 2 1. The taxes imposed under this division, less the credits
1 3 allowed under sections 422.12 and 422.12B, shall be reduced by
1 4 a preschool tax credit equal to the first two thousand five
1 5 hundred dollars paid by the taxpayer for each dependent in
1 6 preschool for tuition and other expenses.
1 7 2. Any credit in excess of the tax liability shall be
1 8 refunded. In lieu of claiming a refund, a taxpayer may elect
1 9 to have the overpayment shown on the taxpayer's final,
1 10 completed return credited to the tax liability for the
1 11 following taxable year.
1 12 3. Married taxpayers who have filed joint federal returns
1 13 electing to file separate returns or to file separately on a
1 14 combined return form must determine the preschool tax credit
1 15 based upon their combined net income and allocate the total
1 16 credit amount to each spouse in the proportion that each
1 17 spouse's respective net income bears to the total combined net
1 18 income. Nonresidents or part=year residents of Iowa must
1 19 determine their Iowa preschool tax credit in the ratio of
1 20 their Iowa source net income to their all source net income.
1 21 Nonresidents or part=year residents who are married and elect
1 22 to file separate returns or to file separately on a combined
1 23 return form must allocate the Iowa preschool tax credit
1 24 between the spouses in the ratio of each spouse's Iowa source
1 25 net income to the combined Iowa source net income of the
1 26 taxpayers.
1 27 4. For purposes of this section:
1 28 a. "Expenses" means the cost of all of the following:
1 29 (1) Books that improve child development, including
1 30 textbooks, music books, art books, teacher's editions, and
1 31 reading books.
1 32 (2) Instructional materials required to be used in a child
1 33 development or educational lesson activity, including but not
1 34 limited to paper, notebooks, pencils, and art supplies.
1 35 (3) Lesson plans and curricula.
2 1 (4) Child development and educational activities outside
2 2 the home, including drama, art, music, and museum activities,
2 3 and the entrance fees for such activities, but not including
2 4 food or lodging, membership fees, or other nonacademic
2 5 expenses.
2 6 "Expenses" does not include the cost of services,
2 7 materials, or activities for the teaching of religious tenets,
2 8 doctrines, or worship, the purpose of which is to inculcate
2 9 those tenets, doctrines, or worship.
2 10 b. "Preschool" means an instructional program for four=
2 11 year=old children who are attending prekindergarten, as
2 12 defined by the state board of education under section 256.11,
2 13 which is administered by a public or private school system
2 14 accredited by the department of education.
2 15 c. "Tuition" means the charges for the expenses of
2 16 personnel, buildings, and equipment.
2 17 Sec. 2. RETROACTIVE APPLICABILITY DATE. This Act applies
2 18 retroactively to January 1, 2006, for tax years beginning on
2 19 or after that date.
2 20 EXPLANATION
2 21 This bill provides a refundable preschool tax credit under
2 22 the individual income tax. The amount of the credit equals
2 23 the first $2,500 paid by the taxpayer for each dependent
2 24 attending a preschool. Preschool is an instructional program
2 25 for four=year=old children attending prekindergarten, as
2 26 defined by the state board of education, and administered by a
2 27 public or private school system that is accredited by the
2 28 department of education. The credit is based upon the amount
2 29 spent for tuition and other expenses to attend the preschool.
2 30 Tuition involves the charges for the expenses of personnel,
2 31 buildings, and equipment. Expenses involve the cost of those
2 32 books, services, and activities that are used to assist in
2 33 child development. However, the cost of services, materials,
2 34 and activities for teaching religious tenets, doctrines, or
2 35 worship are not taken into consideration.
3 1 The bill applies retroactively to January 1, 2006, for tax
3 2 years beginning on or after that date.
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