House File 183 - 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 an individual income tax deduction for 2 contributions made to a qualified tuition program established 3 by a state other than Iowa and including effective and 4 retroactive applicability date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1914HH 82 7 mg/es/88 PAG LIN 1 1 Section 1. Section 422.7, Code 2007, 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 a state other than Iowa or an agency or 1 7 instrumentality of such state. The maximum amount that may be 1 8 subtracted under this paragraph equals the maximum amount that 1 9 is deductible under section 12D.3, subsection 1, paragraph 1 10 "a", for contributions made to the Iowa educational savings 1 11 plan trust minus any amount subtracted pursuant to subsection 1 12 32, paragraph "a", of this 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, 2007, 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 a state other than Iowa. The program is the counterpart to 1 26 the Iowa educational savings plan trust (state program) and 1 27 allows a taxpayer to make contributions to a trust set up in 1 28 the name of a designated beneficiary to pay the costs 1 29 associated with higher education. The amount that may be 1 30 deducted is the maximum amount that may be deducted for 1 31 contributions to the Iowa state program (almost $2,600 for tax 1 32 year 2006, to be adjusted for inflation) less any amount that 1 33 has been deducted for the tax year for contributions to the 1 34 Iowa state program. 1 35 The bill also provides that any refunds or withdrawals made 2 1 which the taxpayer receives and which are not used for 2 2 qualified tuition costs are to be included in income to the 2 3 extent previously deducted. 2 4 The bill takes effect upon enactment and applies 2 5 retroactively to January 1, 2007, for tax years beginning on 2 6 or after that date. 2 7 LSB 1914HH 82 2 8 mg:rj/es/88.1