SENATE FILE 486

BY  FEENSTRA

A BILL FOR

An Act providing a reduction in the income tax rates for corporations doing business in the state and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 422.33, subsection 1, Code 2011, is amended to read as follows:
   1.
  a.  A tax is imposed annually upon each corporation doing business in this state, or deriving income from sources within this state, in an amount computed by applying the following rates of taxation to the net income received by the corporation during the income year:
   a.  (1)  On the first twenty-five thousand dollars of taxable income, or any part thereof, the rate of six three percent.
   b.  (2)  On taxable income between twenty-five thousand dollars and one hundred thousand dollars or any part thereof, the rate of eight four percent.
   c.  (3)  On taxable income between one hundred thousand dollars and two hundred fifty thousand dollars or any part thereof, the rate of ten five percent.
   d.  (4)  On taxable income of two hundred fifty thousand dollars or more, the rate of twelve six percent.

   b.  “Income from sources within this state” means income from real, tangible, or intangible property located or having a situs in this state.
   Sec. 2.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2011, for tax years beginning on or after that date.
EXPLANATION
   This bill reduces by half the tax rates imposed on corporations doing business in the state. Currently, there are four corporate income tax brackets. The bill reduces the tax rate for each bracket by half:
   1. On the first $25,000 of taxable income, the new rate is 3 percent.
   2. On taxable income between $25,000 and $100,000, the new rate is 4 percent.
   3. On taxable income between $100,000 and $250,000, the new rate is 5 percent.
   4. On taxable income of $250,000 or more, the new rate is 6 percent.
   The bill applies retroactively to January 1, 2011, for tax years beginning on or after that date.