HF 965 (LSB 1903YH (5) 91)

HOUSE FILE 965

BY  GRASSLEY, ANDREWS, WULF, COLLINS, KNIFF MCCULLA, RINKER, WILZ, BODEN, VONDRAN, MEGGERS, WOOD, INGELS, HORA, A. MEYER, GOLDING, GUSTOFF, BOSSMAN, LOHSE, BERGAN, SMITH, WELDON, JONES, YOUNG, DUNWELL, C. JOHNSON, HOLT, HENDERSON, BARKER, and NORDMAN

A BILL FOR

An Act relating to the adoption tax credit available against the individual income tax, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.12A, subsection 2, Code 2025, is amended to read as follows:
   2.  The taxes imposed under this subchapter, less the credits allowed under section 422.12, shall be reduced by an adoption tax credit equal to the amount of qualified adoption expenses paid or incurred by the taxpayer in connection with the adoption of a child by the taxpayer, not to exceed five twenty thousand dollars per adoption.
    Sec. 2.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 3.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2024, for tax years beginning on or after that date if the adoption becomes final 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 relates to the adoption tax credit available against the individual income tax.
   Currently, the tax credit equals up to $5,000 of qualified adoption expenses per adoption. The bill increases the tax credit to equal up to $20,000 of qualified adoption expenses per adoption. Any credit in excess of the tax liability is refundable.
   “Qualified adoption expenses” means unreimbursed expenses paid or incurred in connection with the adoption of a child, including medical and hospital expenses of the biological mother which are incident to the child’s birth, welfare agency fees, legal fees, and all other fees and costs which relate to the adoption of a child.
   “Child” means an individual under 18 years of age.
   Current law in Code section 422.12A(4) determines the tax year when qualified adoption expenses are allowed.
   The bill takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2024, for adoptions finalized on or after that date.