Senate File 47 - Introduced SENATE FILE 47 BY KETTERING A BILL FOR An Act increasing the amount and extending the availability of 1 the child and dependent care and early childhood development 2 tax credits and including retroactive applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1444XS (2) 84 tw/sc

S.F. 47 Section 1. Section 422.12C, subsection 1, Code 2011, is 1 amended to read as follows: 2 1. The taxes imposed under this division , less the amounts 3 of nonrefundable credits allowed under this division , shall 4 be reduced by a child and dependent care credit equal to the 5 following percentages of the federal child and dependent care 6 credit provided in section 21 of the Internal Revenue Code: 7 a. For a taxpayer with net income of less than ten thousand 8 dollars, seventy-five one hundred percent. 9 b. For a taxpayer with net income of ten thousand dollars 10 or more but less than twenty thousand dollars, sixty-five 11 seventy-five percent. 12 c. For a taxpayer with net income of twenty thousand dollars 13 or more but less than twenty-five thirty thousand dollars, 14 fifty-five sixty-five percent. 15 d. For a taxpayer with net income of twenty-five thirty 16 thousand dollars or more but less than thirty-five forty 17 thousand dollars, fifty fifty-five percent. 18 e. For a taxpayer with net income of thirty-five forty 19 thousand dollars or more but less than forty fifty thousand 20 dollars, forty fifty percent. 21 f. For a taxpayer with net income of forty fifty thousand 22 dollars or more but less than forty-five sixty thousand 23 dollars, thirty forty percent. 24 g. For a taxpayer with net income of forty-five sixty 25 thousand dollars or more , zero but less than eighty thousand 26 dollars, thirty percent. 27 h. For a taxpayer with net income of eighty thousand dollars 28 or more, zero percent. 29 Sec. 2. Section 422.12C, subsection 2, unnumbered paragraph 30 1, Code 2011, is amended to read as follows: 31 The taxes imposed under this division , less the amounts 32 of nonrefundable credits allowed under this division , may be 33 reduced by an early childhood development tax credit equal to 34 twenty-five percent of the first one thousand dollars which 35 -1- LSB 1444XS (2) 84 tw/sc 1/ 3

S.F. 47 the taxpayer has paid to others for each dependent, as defined 1 in the Internal Revenue Code, ages three through five for 2 early childhood development expenses. In determining the 3 amount of early childhood development expenses for the tax year 4 beginning in the 2006 calendar year only, such expenses paid 5 during November and December of the previous tax year shall 6 be considered paid in the tax year for which the tax credit 7 is claimed. This credit is available to a taxpayer whose net 8 income is less than forty-five eighty thousand dollars. If the 9 early childhood development tax credit is claimed for a tax 10 year, the taxpayer and the taxpayer’s spouse shall not claim 11 the child and dependent care credit under subsection 1 . As 12 used in this subsection , “early childhood development expenses” 13 means services provided to the dependent by a preschool, as 14 defined in section 237A.1 , materials, and other activities as 15 follows: 16 Sec. 3. RETROACTIVE APPLICABILITY DATE. This Act applies 17 retroactively to January 1, 2011, for tax years beginning on 18 or after that date. 19 EXPLANATION 20 This bill extends the availability of the child and 21 dependent care tax credit and the early childhood development 22 tax credit to taxpayers with net incomes of less than $80,000. 23 Currently, the credits are available to taxpayers with net 24 incomes of less than $45,000. 25 The bill also changes the schedule for determining the 26 amount of the child and dependent care tax credit. The credit 27 is equal to a percent of the federal child and dependent care 28 tax credit as follows: 29 Net Income Between Percentage 30 0 — $10,000 75 31 $10,000 — $20,000 65 32 $20,000 — $25,000 55 33 $25,000 — $35,000 50 34 $35,000 — $40,000 40 35 -2- LSB 1444XS (2) 84 tw/sc 2/ 3

S.F. 47 $40,000 — $45,000 30 1 $45,000 or more 0 2 The bill provides a new schedule as follows: 3 Net Income Between Percentage 4 0 — $10,000 100 5 $10,000 — $20,000 75 6 $20,000 — $30,000 65 7 $30,000 — $40,000 55 8 $40,000 — $50,000 50 9 $50,000 — $60,000 40 10 $60,000 — $80,000 30 11 $80,000 or more 0 12 The bill applies retroactively to January 1, 2011, for tax 13 years beginning on or after that date. 14 -3- LSB 1444XS (2) 84 tw/sc 3/ 3