Senate Study Bill 1187 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON FEENSTRA) A BILL FOR An Act excluding from the computation of net income for state 1 individual income tax purposes the net capital gain from 2 sales or exchanges of assets, and including retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2332XC (3) 88 jm/jh

S.F. _____ Section 1. Section 422.7, subsection 21, Code 2019, is 1 amended by striking the subsection and inserting in lieu 2 thereof the following: 3 21. Subtract, to the extent included, the following 4 percentages of the taxpayer’s net capital gain as defined in 5 section 1222 of the Internal Revenue Code: 6 a. For tax years beginning in the 2019 calendar year, twenty 7 percent. 8 b. For tax years beginning in the 2020 calendar year, forty 9 percent. 10 c. For tax years beginning in the 2021 calendar year, sixty 11 percent. 12 d. For tax years beginning in the 2022 calendar year, eighty 13 percent. 14 e. For tax years beginning during or after the 2023 calendar 15 year, one hundred percent. 16 Sec. 2. EFFECTIVE DATE. This Act, being deemed of immediate 17 importance, takes effect upon enactment. 18 Sec. 3. RETROACTIVE APPLICABILITY. This Act applies 19 retroactively to January 1, 2019, for tax years beginning on 20 or after that date. 21 EXPLANATION 22 The inclusion of this explanation does not constitute agreement with 23 the explanation’s substance by the members of the general assembly. 24 This bill excludes from the computation of net income for 25 state tax purposes the net capital gain from sales or exchanges 26 of assets, and includes applicability provisions. 27 The bill phases in the capital gain tax exclusion from the 28 computation of net income for state individual income tax 29 purposes, as follows: 20 percent of net capital gains are 30 excluded for tax years beginning in 2019, 40 percent of net 31 capital gains are excluded for tax years beginning in 2020, 32 60 percent of net capital gains are excluded for tax years 33 beginning in the 2021 calendar year, and 80 percent of net 34 capital gains are excluded for tax years beginning in the 2022 35 -1- LSB 2332XC (3) 88 jm/jh 1/ 2

S.F. _____ calendar year. For tax years beginning on or after January 1 1, 2023, net capital gains are 100 percent excluded from the 2 computation of net income for state individual income tax 3 purposes. 4 The bill takes effect upon enactment and applies 5 retroactively to tax years beginning on or after January 1, 6 2019. 7 -2- LSB 2332XC (3) 88 jm/jh 2/ 2