Senate File 490 - Introduced SENATE FILE 490 BY COMMITTEE ON LABOR AND BUSINESS RELATIONS (SUCCESSOR TO SSB 1033) A BILL FOR An Act creating a new resident tax credit available against 1 the individual income tax, and including applicability 2 provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1625SV (2) 89 jm/jh
S.F. 490 Section 1. NEW SECTION . 422.12O New resident tax credit. 1 1. For purposes of this section, “new resident” means an 2 individual who establishes residency in this state on or after 3 January 1, 2022, is employed by an employer located in this 4 state, and who has not been a resident of this state at any 5 time during the previous two tax years prior to establishing 6 residency in this state. 7 2. a. The taxes imposed under this subchapter less the 8 credits allowed under section 422.12 shall be reduced by a new 9 resident tax credit equal to a percent of the taxes imposed 10 under this subchapter less the amounts of credits allowed under 11 this subchapter, as determined as follows: 12 (1) For the first year, twenty percent. 13 (2) For the second year, forty percent. 14 (3) For the third year, sixty percent. 15 (4) For the fourth year, eighty percent. 16 (5) For the fifth year, one hundred percent. 17 b. A new resident may begin to claim the credit in the first 18 year of residency or begin to claim the credit in the following 19 year after residency has been established. 20 c. Except for the first year of residency, a new resident 21 must be a resident of this state for the entire tax year for 22 each tax year that the new resident claims the credit. If the 23 new resident does not maintain residency in this state during 24 such time, the new resident is disqualified from claiming the 25 credit in that tax year and all future years. 26 d. An individual may establish residency in this state 27 for purposes of the credit only one time in the individual’s 28 lifetime. 29 3. Married taxpayers electing to file separate returns or 30 filing separately on a combined return may avail themselves 31 of the new resident tax credit by allocating the new resident 32 tax credit to each spouse in the proportion that each spouse’s 33 respective earned income bears to the total combined earned 34 income. 35 -1- LSB 1625SV (2) 89 jm/jh 1/ 3
S.F. 490 4. The department shall adopt rules pursuant to chapter 17A 1 to administer this section. 2 Sec. 2. APPLICABILITY. This Act applies to tax years 3 beginning on or after January 1, 2022. 4 EXPLANATION 5 The inclusion of this explanation does not constitute agreement with 6 the explanation’s substance by the members of the general assembly. 7 This bill creates a new resident tax credit available 8 against the individual income tax. 9 The bill defines “new resident” to mean an individual who 10 establishes residency in this state on or after January 1, 11 2022, is employed by an employer in this state, and who has not 12 been a resident of this state at any time during the previous 13 two tax years prior to establishing residency. 14 The credit authorized in the bill is available to a new 15 resident for the five consecutive tax years following the 16 establishment of residency in this state. A new resident may 17 begin to claim the credit in the first year of residency or 18 begin to claim the credit in the following year after residency 19 has been established. 20 Except for the first year of residency, the bill requires a 21 new resident to remain a resident of this state for each year 22 the credit is claimed. If the new resident does not maintain 23 residency, the new resident is disqualified from claiming 24 the tax credit in that tax year and future tax years. An 25 individual may establish residency in this state for purposes 26 of the credit only one time in the individual’s lifetime. 27 The amount of the credit is equal to a percent of the income 28 tax imposed, determined as follows: for the first year, 20 29 percent; for the second year, 40 percent; for the third year, 30 60 percent; for the fourth year, 80 percent; and for the fifth 31 year, 100 percent. 32 The bill requires the department of revenue to adopt rules 33 to administer the bill. 34 The bill applies to tax years beginning on or after January 35 -2- LSB 1625SV (2) 89 jm/jh 2/ 3
S.F. 490 1, 2022. 1 -3- LSB 1625SV (2) 89 jm/jh 3/ 3