Senate File 433 - Introduced SENATE FILE 433 BY WHITING A BILL FOR An Act relating to the Iowa educational savings plan trust 1 by excluding from the computation of net income for the 2 individual income tax withdrawals for the payment of 3 qualified education expenses for private instruction, and 4 including retroactive applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 2143XS (4) 89 jm/jh
S.F. 433 Section 1. Section 12D.1, subsection 2, Code 2021, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . 0j. “Private instruction” means independent 3 private instruction as defined in section 299A.1, subsection 4 2, paragraph “b” , competent private instruction under section 5 299A.2, or private instruction by a nonlicensed person under 6 section 299A.3. 7 Sec. 2. Section 12D.1, subsection 2, paragraph k, Code 2021, 8 is amended to read as follows: 9 k. “Qualified education expenses” means the same as 10 “qualified higher education expenses” as defined in section 11 529(e)(3) of the Internal Revenue Code, as amended by Pub. L. 12 No. 115-97, and shall include elementary and secondary school 13 expenses for tuition described in section 529(c)(7) of the 14 Internal Revenue Code, subject to the limitations imposed by 15 section 529(e)(3)(A) of the Internal Revenue Code. “Qualified 16 education expenses” includes expenses for the participation 17 in an apprenticeship program registered and certified with 18 the United States secretary of labor under section 1 of the 19 National Apprenticeship Act, 29 U.S.C. §50, and amounts paid as 20 principal or interest on any qualified education loan on behalf 21 of a beneficiary or a sibling of the beneficiary, subject to 22 the limitations imposed by section 529(c)(9)(B) and (C) of 23 the Internal Revenue Code. “Qualified education expenses” 24 includes the payment to others of expenses described in 25 section 529(e)(3)(A) of the Internal Revenue Code for private 26 instruction. 27 Sec. 3. Section 422.7, subsection 32, paragraph c, 28 subparagraph (1), Code 2021, is amended by adding the following 29 new subparagraph division: 30 NEW SUBPARAGRAPH DIVISION . (g) The payment of qualified 31 education expenses described in section 529(e)(3)(A) of the 32 Internal Revenue Code to others for private instruction at an 33 elementary or secondary school defined in subparagraph (2), 34 subparagraph division (b), subparagraph subdivision (ii), 35 -1- LSB 2143XS (4) 89 jm/jh 1/ 3
S.F. 433 subparagraph part (B). 1 Sec. 4. Section 422.7, subsection 32, paragraph c, 2 subparagraph (2), subparagraph division (b), subparagraph 3 subdivision (ii), Code 2021, is amended to read as follows: 4 (ii) (A) “Elementary or secondary school” includes an 5 elementary or secondary school located out of state that 6 educates a beneficiary who meets the definition of “children 7 requiring special education” in section 256B.2 , if the 8 elementary or secondary school is accredited under the laws of 9 the state in which it is located and adheres to the federal 10 Civil Rights Act of 1964 and applicable state law analogous to 11 chapter 216 . 12 (B) For purposes of this paragraph “c” , subparagraph (1), 13 subparagraph division (g), “elementary or secondary school” 14 means a nonaccredited nonpublic school, a cooperative study 15 program, a tutorial service, classes taken at an educational 16 institution or through a private service provider, and a course 17 taken online, all as part of a program or course of study for an 18 elementary or secondary school student. 19 Sec. 5. Section 422.7, subsection 32, paragraph c, 20 subparagraph (2), Code 2021, is amended by adding the following 21 new subparagraph division: 22 NEW SUBPARAGRAPH DIVISION . (0c) “Private instruction” means 23 the same as defined in section 12D.1, subsection 2. 24 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies 25 retroactively to January 1, 2021, for tax years beginning on 26 or after that date. 27 EXPLANATION 28 The inclusion of this explanation does not constitute agreement with 29 the explanation’s substance by the members of the general assembly. 30 This bill relates to the Iowa educational savings plan trust 31 (529 plan) by excluding from the computation of net income 32 for the individual income tax withdrawals for the payment of 33 qualified education expenses for private instruction. 34 The bill defines “private instruction” to mean independent 35 -2- LSB 2143XS (4) 89 jm/jh 2/ 3
S.F. 433 private instruction as defined in Code section 299A.1(2)(b), 1 competent private instruction under Code section 299A.2, or 2 private instruction by a nonlicensed person under Code section 3 299A.3. 4 Under the bill, “qualified education expenses” include 5 expenses described in section 529(e)(3)(A) of the Internal 6 Revenue Code for a nonaccredited nonpublic school, cooperative 7 study program, tutorial service, classes taken at an 8 educational institution or through a private service provider, 9 and a course taken online, all as part of a program or course of 10 study for an elementary or secondary school student. 11 The federal tax treatment of the type of withdrawal 12 described in the bill may differ from the state tax treatment 13 under the bill. 14 The bill applies retroactively to January 1, 2021, and 15 applies to tax years beginning on or after that date. 16 -3- LSB 2143XS (4) 89 jm/jh 3/ 3