House File 2546 - Introduced HOUSE FILE 2546 BY PRICHARD , KONFRST , WESSEL-KROESCHELL , B. MEYER , OLDSON , STECKMAN , M. SMITH , BEARINGER , KRESSIG , BROWN-POWERS , WILLIAMS , MATSON , DONAHUE , STAED , KURTH , McKEAN , JAMES , KACENA , BRECKENRIDGE , JACOBY , OLSON , SUNDE , ISENHART , THEDE , GAINES , HUNTER , COHOON , DERRY , WILBURN , HALL , NIELSEN , BENNETT , JUDGE , EHLERT , WOLFE , FORBES , ANDERSON , MASCHER , WINCKLER , ABDUL-SAMAD , GASKILL , R. SMITH , LENSING , and McCONKEY A BILL FOR An Act relating to the child and dependent care credit 1 available against the individual income tax, and including 2 retroactive applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5407YH (4) 88 jm/jh

H.F. 2546 Section 1. Section 422.12C, subsection 1, Code 2020, is 1 amended by striking the subsection and inserting in lieu 2 thereof the following: 3 1. The taxes imposed under this division, less the amounts 4 of nonrefundable credits allowed under this division, shall 5 be reduced by a child and dependent care credit equal to the 6 following percentages of the federal child and dependent care 7 credit provided in section 21 of the Internal Revenue Code, 8 without regard to whether or not the federal credit was limited 9 by the taxpayer’s federal tax liability: 10 a. For a taxpayer with net income of less than forty-five 11 thousand dollars, one hundred percent. 12 b. For a taxpayer with net income of forty-five thousand 13 dollars or more but less than ninety thousand dollars, thirty 14 percent. 15 c. For a taxpayer with net income of ninety thousand dollars 16 or more but less than one hundred thousand dollars, twenty-five 17 percent. 18 d. For a taxpayer with net income of one hundred thousand 19 dollars or more but less than one hundred twenty-five thousand 20 dollars, twenty percent. 21 e. For a taxpayer with net income of one hundred twenty-five 22 thousand dollars or more but less than one hundred fifty 23 thousand dollars, fifteen percent. 24 f. For a taxpayer with net income of one hundred fifty 25 thousand dollars or more but less than one hundred seventy-five 26 thousand dollars, ten percent. 27 g. For a taxpayer with net income of one hundred 28 seventy-five thousand dollars or more but less than two hundred 29 fifty thousand dollars, five percent. 30 h. For a taxpayer with net income of two hundred fifty 31 thousand dollars or more, zero percent. 32 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 33 retroactively to January 1, 2020 for tax years beginning on or 34 after that date. 35 -1- LSB 5407YH (4) 88 jm/jh 1/ 2

H.F. 2546 EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 This bill increases the Iowa net income threshold levels for 4 purposes of calculating the Iowa child and dependent child care 5 tax credit available against the individual income tax. The 6 Iowa child and dependent care tax credit is a refundable credit 7 calculated as a percentage of the nonrefundable federal child 8 and dependent care tax credit, depending on the Iowa net income 9 of the taxpayer. 10 Currently, there are seven graduated Iowa net income 11 thresholds used to calculate the credit. The bill increases 12 these graduated thresholds from seven threshold levels to 13 eight threshold levels, and changes the percentage of the 14 nonrefundable federal child and dependent care tax credit 15 used to calculate the Iowa child and dependent child care tax 16 credit. 17 Currently, the credit percentages in these seven Iowa 18 net income thresholds range from a high of 75 percent of 19 the federal credit for taxpayers with net income of less 20 than $10,000, to a low of 30 percent of the federal credit 21 for taxpayers with net income of $40,000 or more but less 22 than $45,000. Under the bill, the credit percentages in the 23 thresholds range from a high of 100 percent of the federal 24 credit for taxpayers with a net income of less than $45,000 to 25 a low of 5 percent of the federal credit for taxpayers with net 26 income of $175,000 or more but less than $250,000. 27 The bill applies retroactively to January 1, 2020, for tax 28 years beginning on or after that date. 29 -2- LSB 5407YH (4) 88 jm/jh 2/ 2