SSB 1187 (LSB 2332XC (3) 88)

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 individual income tax purposes the net capital gain from sales or exchanges of assets, and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, subsection 21, Code 2019, is amended by striking the subsection and inserting in lieu thereof the following:
   21.  Subtract, to the extent included, the following percentages of the taxpayer’s net capital gain as defined in section 1222 of the Internal Revenue Code:
   a.  For tax years beginning in the 2019 calendar year, twenty percent.
   b.  For tax years beginning in the 2020 calendar year, forty percent.
   c.  For tax years beginning in the 2021 calendar year, sixty percent.
   d.  For tax years beginning in the 2022 calendar year, eighty percent.
   e.  For tax years beginning during or after the 2023 calendar year, one hundred percent.
    Sec. 2.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 3.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2019, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill excludes from the computation of net income for state tax purposes the net capital gain from sales or exchanges of assets, and includes applicability provisions.
   The bill phases in the capital gain tax exclusion from the computation of net income for state individual income tax purposes, as follows: 20 percent of net capital gains are excluded for tax years beginning in 2019, 40 percent of net capital gains are excluded for tax years beginning in 2020, 60 percent of net capital gains are excluded for tax years beginning in the 2021 calendar year, and 80 percent of net capital gains are excluded for tax years beginning in the 2022 calendar year. For tax years beginning on or after January 1, 2023, net capital gains are 100 percent excluded from the computation of net income for state individual income tax purposes.
   The bill takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2019.