Senate File 359 - Introduced SENATE FILE 359 BY ZAUN A BILL FOR An Act relating to the corporate income tax rates imposed 1 on corporations and including retroactive applicability 2 provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1798XS (1) 86 mm/sc

S.F. 359 Section 1. Section 422.33, subsection 1, Code 2015, is 1 amended by striking the subsection and inserting in lieu 2 thereof the following: 3 1. a. A tax is imposed annually upon each corporation doing 4 business in this state, or deriving income from sources within 5 this state, at the rate of six percent of the taxable income 6 received by the corporation during the income year. 7 b. For purposes of this section, “taxable income” means the 8 net income as calculated in section 422.35 and determined to 9 be reasonably attributable to Iowa pursuant to subsections 2 10 and 3. 11 Sec. 2. Section 422.33, subsection 1A, Code 2015, is amended 12 to read as follows: 13 1A. There is imposed upon each corporation exempt from 14 the general business tax on corporations by section 422.34, 15 subsection 2 , a tax at the rates rate specified in subsection 1 16 upon the state’s apportioned share computed in accordance with 17 subsections 2 and 3 of the unrelated business income computed 18 in accordance with the Internal Revenue Code and with the 19 adjustments set forth in section 422.35 . 20 Sec. 3. Section 422.33, subsection 4, paragraph a, Code 21 2015, is amended to read as follows: 22 a. In addition to all taxes imposed under this division , 23 there is imposed upon each corporation doing business within 24 the state the greater of the tax determined in subsection 1 , 25 paragraphs “a” through “d” or the state alternative minimum tax 26 equal to sixty percent of the maximum state corporate income 27 tax rate, rounded to the nearest one-tenth of one percent, of 28 the state alternative minimum taxable income of the taxpayer 29 computed under this subsection . 30 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 31 retroactively to January 1, 2015, for tax years beginning on 32 or after that date. 33 EXPLANATION 34 The inclusion of this explanation does not constitute agreement with 35 -1- LSB 1798XS (1) 86 mm/sc 1/ 2

S.F. 359 the explanation’s substance by the members of the general assembly. 1 This bill relates to the tax rates applied to corporations 2 under the corporate income tax. 3 Currently, the corporate income tax is imposed in a 4 progressive manner using four income brackets with increasing 5 rates: on the first $25,000 of taxable income, the rate is 6 6 percent; on taxable income between $25,000 and $100,000, 7 the rate is 8 percent; on taxable income between $100,000 and 8 $250,000, the rate is 10 percent; on taxable income of $250,000 9 or more, the rate is 12 percent. The bill eliminates this 10 tiered bracket and rate structure and imposes the tax at the 11 rate of 6 percent on the corporation’s taxable income. 12 The bill applies retroactively to tax years beginning on or 13 after January 1, 2015. 14 -2- LSB 1798XS (1) 86 mm/sc 2/ 2