Senate File 93 - Introduced
SENATE FILE
BY TINSMAN
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act reducing the amounts of pension income and social security
2 benefits that are taxable by the state and including a
3 retroactive applicability date provision.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 1318XS 81
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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. The amount of social security benefits taxable as
1 7 provided in section 86 of the Internal Revenue Code, as
1 8 amended up to and including January 1, 1993, continues to
1 9 apply for state income tax purposes for tax years beginning on
1 10 or after January 1, 1994.
1 11 b. For tax years beginning on or after January 1, 2005,
1 12 subtract, to the extent included after the computation in
1 13 paragraph "a", eighty=seven and one=half percent of taxable
1 14 social security benefits.
1 15 c. Married taxpayers, who file a joint federal income tax
1 16 return and who elect to file separate returns or who elect
1 17 separate filing on a combined return for state income tax
1 18 purposes, shall allocate between the spouses the amount of
1 19 benefits subtracted under paragraphs "a" and "b" from net
1 20 income in the ratio of the social security benefits received
1 21 by each spouse to the total of these benefits received by both
1 22 spouses.
1 23 Sec. 2. Section 422.7, subsection 31, Code 2005, is
1 24 amended to read as follows:
1 25 31. For a person who is disabled, or is fifty=five years
1 26 of age or older, or is the surviving spouse of an individual
1 27 or a survivor having an insurable interest in an individual
1 28 who would have qualified for the exemption under this
1 29 subsection for the tax year, subtract, to the extent included,
1 30 the total amount of a governmental or other pension or
1 31 retirement pay, including, but not limited to, defined benefit
1 32 or defined contribution plans, annuities, individual
1 33 retirement accounts, plans maintained or contributed to by an
1 34 employer, or maintained or contributed to by a self=employed
1 35 person as an employer, and deferred compensation plans or any
2 1 earnings attributable to the deferred compensation plans, up
2 2 to a maximum of six twelve thousand dollars for a person,
2 3 other than a husband or wife, who files a separate state
2 4 income tax return and up to a maximum of twelve twenty=four
2 5 thousand dollars for a husband and wife who file a joint state
2 6 income tax return. However, a surviving spouse who is not
2 7 disabled or fifty=five years of age or older can only exclude
2 8 the amount of pension or retirement pay received as a result
2 9 of the death of the other spouse. A husband and wife filing
2 10 separate state income tax returns or separately on a combined
2 11 state return are allowed a combined maximum exclusion under
2 12 this subsection of up to twelve twenty=four thousand dollars.
2 13 The twelve twenty=four thousand dollar exclusion shall be
2 14 allocated to the husband or wife in the proportion that each
2 15 spouse's respective pension and retirement pay received bears
2 16 to total combined pension and retirement pay received.
2 17 Sec. 3. RETROACTIVE APPLICABILITY DATE. This Act applies
2 18 retroactively to January 1, 2005, for tax years beginning on
2 19 or after that date.
2 20 EXPLANATION
2 21 This bill reduces the amount of taxable social security
2 22 benefits by 87.5 percent and doubles the amount of the
2 23 exemptions of pension income to $24,000 for joint filers and
2 24 $12,000 for all other filers.
2 25 The bill applies retroactively to tax years beginning on or
2 26 after January 1, 2005.
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