SF 2257 (LSB 5589XS (5) 90)

SENATE FILE 2257

BY  WEINER, CELSI, WINCKLER, TRONE GARRIOTT, PETERSEN, BOULTON, DOTZLER, and DONAHUE

A BILL FOR

An Act creating a child tax credit available against the individual income tax, and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  422.12P  Child tax credit.
   1.  As used in this section, “child” means the same as dependent under section 21 of the Internal Revenue Code who has not attained thirteen years of age.
   2.  a.  The taxes imposed under this subchapter, less the amounts of nonrefundable credits allowed under this subchapter, shall be reduced by a child tax credit equal to the following amounts per child in the case of married persons filing jointly:
   (1)  For taxable income from zero through thirty-five thousand dollars, one thousand two hundred dollars.
   (2)  For taxable income exceeding thirty-five thousand dollars but not exceeding sixty thousand dollars, six hundred dollars.
   (3)  For taxable income exceeding sixty thousand dollars but not exceeding eighty-five thousand dollars, two hundred dollars.
   b.  The taxes imposed under this subchapter, less the amounts of nonrefundable credits allowed under this subchapter, shall be reduced by a child tax credit equal to the following amounts per child in the case of any other taxpayer other than married persons filing jointly:
   (1)  For taxable income from zero through twenty-five thousand dollars, one thousand two hundred dollars.
   (2)  For taxable income exceeding twenty-five thousand dollars but not exceeding fifty thousand dollars, six hundred dollars.
   (3)  For taxable income exceeding fifty thousand dollars but not exceeding seventy-five thousand dollars, two hundred dollars.
   3.  Any credit in excess of the tax liability is refundable. In lieu of claiming a refund, the taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year.
   4.  Nonresidents or part-year residents of Iowa must determine their child tax credit under subsection 2 in the ratio of their Iowa source net income to their all source net income.
   5.  The department shall adopt rules pursuant to chapter 17A to administer this section.
    Sec. 2.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2024, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates a child tax credit available against the individual income tax.
   Under the bill, the child tax credit is a refundable tax credit available for a taxpayer based upon the income of the taxpayer and the number of dependent children the taxpayer has under 13 years of age.
   The tax credit is refundable and in lieu of claiming a refund, the taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year.
   The bill requires nonresidents or part-year residents of this state to determine their tax credit in the ratio of their Iowa source net income to their all source net income. 
   The department of revenue is required to adopt rules to administer the bill.
   The bill applies retroactively to tax years beginning on or after January 1, 2024.