Senate File 166 - Introduced SENATE FILE BY BARTZ Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act exempting from the income tax a portion of the retirement 2 pay of certain military retirees and including a retroactive 3 applicability date provision. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1757XS 83 6 tw/mg:sc/5 PAG LIN 1 1 Section 1. Section 422.7, subsection 31, Code 2009, is 1 2 amended to read as follows: 1 3 31. For a person who is disabled, or is fifty=five years 1 4 of age or older, or is retired from service in the armed 1 5 forces of the United States, the national guard, or the armed 1 6 forces military reserve and is receiving a full pension for 1 7 such service, or is the surviving spouse of an individual or a 1 8 survivor having an insurable interest in an individual who 1 9 would have qualified for the exemption under this subsection 1 10 for the tax year, subtract, to the extent included, the total 1 11 amount of a governmental or other pension or retirement pay, 1 12 including, but not limited to, defined benefit or defined 1 13 contribution plans, annuities, individual retirement accounts, 1 14 plans maintained or contributed to by an employer, or 1 15 maintained or contributed to by a self=employed person as an 1 16 employer, and deferred compensation plans or any earnings 1 17 attributable to the deferred compensation plans, up to a 1 18 maximum of six thousand dollars for a person, other than a 1 19 husband or wife, who files a separate state income tax return 1 20 and up to a maximum of twelve thousand dollars for a husband 1 21 and wife who file a joint state income tax return. However, a 1 22 surviving spouse who is not disabled or fifty=five years of 1 23 age or oldercanor is not receiving a full military pension 1 24 may only exclude the amount of pension or retirement pay 1 25 received as a result of the death of the other spouse. A 1 26 husband and wife filing separate state income tax returns or 1 27 separately on a combined state return are allowed a combined 1 28 maximum exclusion under this subsection of up to twelve 1 29 thousand dollars. The twelve thousand dollar exclusion shall 1 30 be allocated to the husband or wife in the proportion that 1 31 each spouse's respective pension and retirement pay received 1 32 bears to total combined pension and retirement pay received. 1 33 Sec. 2. RETROACTIVE APPLICABILITY DATE. This Act applies 1 34 retroactively to January 1, 2009, for tax years beginning on 1 35 or after that date. 2 1 EXPLANATION 2 2 This bill makes retirees from the armed forces, the 2 3 national guard, and the armed forces military reserve eligible 2 4 for an exemption from the individual income tax if they are 2 5 receiving a full pension for their service. The maximum 2 6 amount of the exemption, which includes other pensions or 2 7 retirement benefits received, is $6,000 for individuals and 2 8 $12,000 for married couples. 2 9 The bill applies retroactively to January 1, 2009, for tax 2 10 years beginning on or after that date. 2 11 LSB 1757XS 83 2 12 tw/mg:sc/5