Senate File 424 - Introduced SENATE FILE 424 BY ANDERSON and BERTRAND A BILL FOR An Act increasing the amount of the exclusion from the 1 computation of net income for purposes of the individual 2 income tax of governmental or other pension or retirement 3 pay, and including retroactive applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1686XS (3) 85 mm/sc

S.F. 424 Section 1. Section 422.7, subsection 31, Code 2013, is 1 amended to read as follows: 2 31. a. For a person who is disabled, or is fifty-five 3 years of age or older, or is the surviving spouse of an 4 individual or a survivor having an insurable interest in an 5 individual who would have qualified for the exemption under 6 this subsection for the tax year, subtract, to the extent 7 included, the total amount of a governmental or other pension 8 or retirement pay, including, but not limited to, defined 9 benefit or defined contribution plans, annuities, individual 10 retirement accounts, plans maintained or contributed to by an 11 employer, or maintained or contributed to by a self-employed 12 person as an employer, and deferred compensation plans or any 13 earnings attributable to the deferred compensation plans, up 14 to a maximum of six thousand dollars for a person, other than a 15 husband or wife, who files a separate state income tax return 16 and up to a maximum of twelve thousand dollars for a husband 17 and wife who file a joint state income tax return as provided 18 in paragraphs “b” and “c” . 19 b. For a person, other than a married person, who files 20 a separate state income tax return, the subtraction in this 21 subsection shall not exceed the following amount: 22 (1) For tax years beginning in the 2013 calendar year, eight 23 thousand dollars. 24 (2) For tax years beginning in the 2014 calendar year, ten 25 thousand dollars. 26 (3) For tax years beginning in the 2015 calendar year, 27 twelve thousand dollars. 28 (4) For tax years beginning in the 2016 calendar year, 29 fourteen thousand dollars. 30 (5) For tax years beginning on or after January 1, 2017, 31 sixteen thousand dollars. 32 c. For a married couple who file a joint state income tax 33 return, the subtraction in this subsection shall not exceed the 34 following amount: 35 -1- LSB 1686XS (3) 85 mm/sc 1/ 3

S.F. 424 (1) For tax years beginning in the 2013 calendar year, 1 sixteen thousand dollars. 2 (2) For tax years beginning in the 2014 calendar year, 3 twenty thousand dollars. 4 (3) For tax years beginning in the 2015 calendar year, 5 twenty-four thousand dollars. 6 (4) For tax years beginning in the 2016 calendar year, 7 twenty-eight thousand dollars. 8 (5) For tax years beginning on or after January 1, 2017, 9 thirty-two thousand dollars. 10 d. However, a surviving spouse who is not disabled or 11 fifty-five years of age or older can only exclude the amount 12 of pension or retirement pay received as a result of the death 13 of the other spouse. A husband and wife married couple filing 14 separate state income tax returns or separately on a combined 15 state return are allowed a combined maximum exclusion under 16 this subsection of up to twelve thousand dollars. The twelve 17 thousand dollar exclusion the amount specified in paragraph 18 “c” , which exclusion shall be allocated to the husband or wife 19 each spouse in the proportion that each spouse’s respective 20 pension and retirement pay received bears to total combined 21 pension and retirement pay received. 22 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 23 retroactively to January 1, 2013, for tax years beginning on 24 or after that date. 25 EXPLANATION 26 This bill increases the amount of the exclusion from the 27 individual income tax of governmental or other pension or 28 retirement pay. 29 Under current law, a person who is disabled, 55 years of 30 age or older, or is the surviving spouse or other person 31 having an insurable interest in such person, can exclude from 32 the individual income tax a maximum of $6,000, or $12,000 33 for a married couple filing a joint income tax return, of 34 governmental or other pension or retirement pay. The bill 35 -2- LSB 1686XS (3) 85 mm/sc 2/ 3

S.F. 424 increases these maximum exclusion amounts progressively over 1 a five-year period as follows: 2 1. For tax years beginning in the 2013 calendar year, $8,000 3 for a single person, $16,000 for a married couple filing a 4 joint return. 5 2. For tax years beginning in the 2014 calendar year, 6 $10,000 for a single person, $20,000 for a married couple 7 filing a joint return. 8 3. For tax years beginning in the 2015 calendar year, 9 $12,000 for a single person, $24,000 for a married couple 10 filing a joint return. 11 4. For tax years beginning in the 2016 calendar year, 12 $14,000 for a single person, $28,000 for a married couple 13 filing a joint return. 14 5. For tax years beginning on or after January 1, 2017, 15 $16,000 for a single person, $32,000 for a married couple 16 filing a joint return. 17 The bill applies retroactively to January 1, 2013, for tax 18 years beginning on or after that date. 19 -3- LSB 1686XS (3) 85 mm/sc 3/ 3