House File 618 - Introduced HOUSE FILE 618 BY GOBBLE A BILL FOR An Act providing an exemption from the computation of net 1 income for individual and corporate income taxes of certain 2 wages paid by an employer to an employee while on parental 3 leave, and including applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2620YH (3) 89 jm/jh

H.F. 618 Section 1. Section 422.7, Code 2021, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 63. a. Subtract, to the extent included, 3 an amount equal to twenty percent of wages paid to an employee 4 by an employer while the employee is on parental leave 5 described in 5 U.S.C. §6382(a)(1)(A) and (B), not to exceed 6 twelve weeks of such pay, excluding wages paid during leave 7 classified as vacation, personal, medical, or sick. 8 b. A taxpayer who is a partner of a partnership or a 9 shareholder of a subchapter S corporation may exempt that 10 portion of wages qualified under this subsection paid by the 11 partnership or subchapter S corporation based on the taxpayer’s 12 pro rata share of the profits or losses from the partnership or 13 subchapter S corporation. 14 Sec. 2. Section 422.35, Code 2021, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION . 31. Subtract, to the extent included, an 17 amount equal to twenty percent of wages paid to an employee by 18 an employer while the employee is on parental leave described 19 in 5 U.S.C. §6382(a)(1)(A) and (B), not to exceed twelve weeks 20 of such pay, excluding wages paid during leave classified as 21 vacation, personal, medical, or sick. 22 Sec. 3. APPLICABILITY. This Act applies to tax years 23 beginning on or after January 1, 2022. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanation’s substance by the members of the general assembly. 27 This bill provides an exemption from the computation of net 28 income for individual and corporate income taxes of certain 29 wages paid by an employer to an employee while on parental 30 leave. 31 Under the bill, an employer may exempt from the calculation 32 of net income for individual or corporate income tax, as 33 applicable, 20 percent of wages paid to an employee while the 34 employee is on parental leave, not to exceed 12 weeks of such 35 -1- LSB 2620YH (3) 89 jm/jh 1/ 2

H.F. 618 pay, if the parental leave is for the birth of a child, or for 1 the placement of a child with the employee due to adoption 2 or foster care. The bill excludes from the exemption wages 3 paid during leave that are classified as vacation, personal, 4 medical, or sick. 5 For purposes of the individual income tax, a taxpayer who is 6 a partner of a partnership or a shareholder of a subchapter S 7 corporation may exempt that portion of wages qualified under 8 the bill paid by the partnership or subchapter S corporation 9 based on the taxpayer’s pro rata share of the profits or losses 10 from the partnership or subchapter S corporation. 11 The bill applies to tax years beginning on or after January 12 1, 2022. 13 -2- LSB 2620YH (3) 89 jm/jh 2/ 2