Senate
File
437
-
Introduced
SENATE
FILE
437
BY
WAHLS
,
RAGAN
,
LYKAM
,
QUIRMBACH
,
J.
SMITH
,
MATHIS
,
CELSI
,
TRONE
GARRIOTT
,
GIDDENS
,
KINNEY
,
T.
TAYLOR
,
JOCHUM
,
BISIGNANO
,
BOLKCOM
,
BOULTON
,
DOTZLER
,
HOGG
,
and
PETERSEN
A
BILL
FOR
An
Act
relating
to
the
child
and
dependent
care
credit
and
1
the
early
childhood
development
credit
available
against
2
the
individual
income
tax,
and
including
retroactive
3
applicability
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
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Section
1.
Section
422.12C,
subsection
1,
Code
2021,
is
1
amended
to
read
as
follows:
2
1.
The
taxes
imposed
under
this
subchapter
,
less
the
amounts
3
of
nonrefundable
credits
allowed
under
this
subchapter
,
shall
4
be
reduced
by
a
child
and
dependent
care
credit
equal
to
the
5
following
percentages
of
the
federal
child
and
dependent
care
6
credit
provided
in
section
21
of
the
Internal
Revenue
Code,
7
without
regard
to
whether
or
not
the
federal
credit
was
limited
8
by
the
taxpayer’s
federal
tax
liability:
9
a.
For
a
taxpayer
with
net
income
of
less
than
ten
10
twenty-five
thousand
dollars,
seventy-five
percent.
11
b.
For
a
taxpayer
with
net
income
of
ten
twenty-five
12
thousand
dollars
or
more
but
less
than
twenty
thirty-five
13
thousand
dollars,
sixty-five
percent.
14
c.
For
a
taxpayer
with
net
income
of
twenty
thirty-five
15
thousand
dollars
or
more
but
less
than
twenty-five
forty
16
thousand
dollars,
fifty-five
percent.
17
d.
For
a
taxpayer
with
net
income
of
twenty-five
forty
18
thousand
dollars
or
more
but
less
than
thirty-five
fifty
19
thousand
dollars,
fifty
percent.
20
e.
For
a
taxpayer
with
net
income
of
thirty-five
fifty
21
thousand
dollars
or
more
but
less
than
forty
sixty
thousand
22
dollars,
forty
percent.
23
f.
For
a
taxpayer
with
net
income
of
forty
sixty
thousand
24
dollars
or
more
but
less
than
forty-five
sixty-five
thousand
25
dollars,
thirty
percent.
26
g.
For
a
taxpayer
with
net
income
of
forty-five
sixty-five
27
thousand
dollars
or
more,
zero
percent.
28
Sec.
2.
Section
422.12C,
subsection
2,
paragraph
a,
Code
29
2021,
is
amended
to
read
as
follows:
30
a.
The
taxes
imposed
under
this
subchapter
,
less
the
amounts
31
of
nonrefundable
credits
allowed
under
this
subchapter
,
may
32
be
reduced
by
an
early
childhood
development
tax
credit
equal
33
to
twenty-five
percent
of
the
first
one
thousand
dollars
34
which
the
taxpayer
has
paid
to
others
for
each
dependent,
as
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defined
in
the
Internal
Revenue
Code,
ages
three
through
five
1
for
early
childhood
development
expenses.
In
determining
the
2
amount
of
early
childhood
development
expenses
for
the
tax
year
3
beginning
in
the
2006
calendar
year
only,
such
expenses
paid
4
during
November
and
December
of
the
previous
tax
year
shall
5
be
considered
paid
in
the
tax
year
for
which
the
tax
credit
6
is
claimed.
This
credit
is
available
to
a
taxpayer
whose
net
7
income
is
less
than
forty-five
sixty-five
thousand
dollars.
If
8
the
early
childhood
development
tax
credit
is
claimed
for
a
tax
9
year,
the
taxpayer
and
the
taxpayer’s
spouse
shall
not
claim
10
the
child
and
dependent
care
credit
under
subsection
1
.
11
Sec.
3.
Section
422.12C,
Code
2021,
is
amended
by
adding
the
12
following
new
subsection:
13
NEW
SUBSECTION
.
5.
a.
Upon
determination
of
the
latest
14
cumulative
inflation
factor,
the
director
shall
multiply
15
each
net
income
level
set
forth
in
subsection
1
or
2
by
this
16
cumulative
inflation
factor,
shall
round
off
the
resulting
17
product
to
the
nearest
one
dollar,
and
shall
incorporate
the
18
result
into
the
net
income
levels
in
subsection
1
or
2
for
each
19
tax
year
beginning
on
or
after
January
1,
2021.
20
b.
For
purposes
of
this
subsection,
“cumulative
inflation
21
factor”
means
the
product
of
the
annual
inflation
factor
for
22
the
2021
calendar
year
and
all
annual
inflation
factors
for
23
subsequent
calendar
years
as
determined
by
section
422.4,
24
subsection
1,
paragraph
“a”
.
The
cumulative
inflation
factor
25
applies
to
all
tax
years
beginning
on
or
after
January
1
of
26
the
calendar
year
for
which
the
latest
annual
inflation
factor
27
has
been
determined.
Notwithstanding
any
other
provision,
28
the
annual
inflation
factor
for
the
2021
calendar
year
is
one
29
hundred
percent.
30
Sec.
4.
RETROACTIVE
APPLICABILITY.
This
Act
applies
31
retroactively
to
tax
years
beginning
on
or
after
January
1,
32
2021.
33
EXPLANATION
34
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
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the
explanation’s
substance
by
the
members
of
the
general
assembly.
1
This
bill
increases
the
Iowa
net
income
threshold
levels
2
for
purposes
of
calculating
the
Iowa
child
and
dependent
3
child
care
tax
credit
and
the
early
childhood
development
tax
4
credit
available
against
the
individual
income
tax.
The
Iowa
5
child
and
dependent
care
tax
credit
is
a
refundable
credit
6
calculated
as
a
percentage
of
the
nonrefundable
federal
child
7
and
dependent
care
tax
credit,
depending
on
the
Iowa
net
income
8
of
the
taxpayer.
The
early
childhood
development
tax
credit
9
is
a
refundable
credit
equaling
25
percent
of
the
first
$1,000
10
which
the
taxpayer
has
paid
to
others
for
each
dependent
ages
11
three
through
five
for
early
childhood
development
expenses.
12
IOWA
CHILD
AND
DEPENDENT
CHILD
CARE
TAX
CREDIT.
Currently,
13
there
are
seven
graduated
Iowa
net
income
thresholds
used
to
14
calculate
the
credit.
The
bill
increases
these
graduated
15
thresholds,
but
does
not
change
the
percentage
of
the
16
nonrefundable
federal
child
and
dependent
care
tax
credit
17
used
to
calculate
the
Iowa
child
and
dependent
child
care
tax
18
credit.
19
Currently,
the
credit
percentages
in
these
seven
Iowa
20
net
income
thresholds
range
from
a
high
of
75
percent
of
21
the
federal
credit
for
taxpayers
with
net
income
of
less
22
than
$10,000,
to
a
low
of
30
percent
of
the
federal
credit
23
for
taxpayers
with
net
income
of
$40,000
or
more
but
less
24
than
$45,000.
Under
the
bill,
the
credit
percentages
in
the
25
thresholds
range
from
a
high
of
75
percent
of
the
federal
26
credit
for
taxpayers
with
a
net
income
of
less
than
$25,000,
27
to
a
low
of
30
percent
of
the
federal
credit
for
taxpayers
with
28
net
income
of
$60,000
or
more
but
less
than
$65,000.
29
The
bill
also
adjusts
the
future
amount
of
each
of
the
Iowa
30
net
income
amounts
in
the
seven
graduated
Iowa
net
income
31
thresholds
by
indexing
the
thresholds
to
inflation.
32
EARLY
CHILDHOOD
DEVELOPMENT
TAX
CREDIT.
The
bill
increases
33
the
income
threshold
determining
the
eligibility
of
a
taxpayer
34
for
the
early
childhood
development
tax
credit.
The
bill
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increases
the
eligibility
threshold
from
a
taxpayer
earning
1
$45,000
per
year
to
$65,000
per
year.
By
increasing
the
2
eligibility
threshold,
taxpayers
earning
less
than
$65,000
are
3
now
eligible
to
take
the
early
childhood
development
tax
credit
4
equaling
25
percent
of
the
first
$1,000
which
the
taxpayer
has
5
paid
to
others
for
early
childhood
development
expenses
for
6
each
dependent
ages
three
through
five.
The
bill
also
adjusts
7
the
future
amount
of
the
net
income
threshold
by
indexing
the
8
threshold
to
inflation.
9
APPLICABILITY.
The
bill
applies
retroactively
to
tax
years
10
beginning
on
or
after
January
1,
2021.
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