Senate Study Bill 1033 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON LABOR AND BUSINESS RELATIONS BILL BY CHAIRPERSON WHITING) 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 1625XC (2) 89 jm/jh
S.F. _____ Section 1. NEW SECTION . 422.12O New resident tax credit. 1 1. For purposes of this section, “new resident” means an 2 individual who is a resident of Iowa working in this state, and 3 who has not been a resident of this state at any time during the 4 previous two tax years prior to establishing residency in this 5 state. 6 2. a. The taxes imposed under this subchapter less the 7 credits allowed under section 422.12 shall be reduced by a new 8 resident tax credit equal to a percent of the taxes imposed 9 under this subchapter less the amounts of credits allowed under 10 this subchapter, as determined as follows: 11 (1) For the first year, twenty percent. 12 (2) For the second year, forty percent. 13 (3) For the third year, sixty percent. 14 (4) For the fourth year, eighty percent. 15 (5) For the fifth year, one hundred percent. 16 b. A new resident may claim the credit during either the 17 first or second tax year of residency, and shall take the 18 credit consecutively every tax year thereafter as provided in 19 paragraph “a” . 20 3. Any credit in excess of the tax liability is not 21 refundable but the excess for the tax year may be credited 22 to the tax liability for the following five years or until 23 depleted, whichever is earlier. 24 4. Married taxpayers electing to file separate returns or 25 filing separately on a combined return may avail themselves 26 of the new resident tax credit by allocating the new resident 27 tax credit to each spouse in the proportion that each spouse’s 28 respective earned income bears to the total combined earned 29 income. 30 Sec. 2. APPLICABILITY. This Act applies to tax years 31 beginning on or after January 1, 2022. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -1- LSB 1625XC (2) 89 jm/jh 1/ 2
S.F. _____ This bill creates a new resident tax credit available 1 against the individual income tax. 2 The bill defines “new resident” to mean an individual who is 3 a resident of Iowa working in this state, and who has not been a 4 resident of this state at any time during the previous two tax 5 years prior to establishing residency. 6 The credit authorized in the bill is available to a new 7 resident for the five consecutive tax years following the 8 establishment of residency in this state. A new resident may 9 begin to claim the credit during either the first or second tax 10 year of residency. 11 The amount of the credit is equal to a percent of the income 12 tax imposed, determined as follows: for the first year, 20 13 percent; for the second year, 40 percent; for the third year, 14 60 percent; for the fourth year, 80 percent; and for the fifth 15 year, 100 percent. 16 Any credit provided in the bill in excess of tax liability is 17 not refundable but the excess for the tax year may be credited 18 to the tax liability for the following five years or until 19 depleted, whichever is earlier. 20 The bill applies to tax years beginning on or after January 21 1, 2022. 22 -2- LSB 1625XC (2) 89 jm/jh 2/ 2