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Senate File 214 - IntroducedA Bill ForAn Act 1relating to the establishment of a new deduction for
2any income of an employee resulting from the payment by an
3employer on the employee’s qualified education loan and
4including effective date and retroactive applicability
5provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 422.7, Code 2019, is amended by adding
2the following new subsection:
3 NEW SUBSECTION. 19. a. Subtract, to the extent included,
4income resulting from the payment by an employer of the
5taxpayer, whether paid to the taxpayer or to a lender, of
6principal or interest on any qualified education loan incurred
7by the taxpayer, if such qualified education loan was incurred
8by the taxpayer.
9b. If the taxpayer has a deduction in computing federal
10taxable income under section 221 of the Internal Revenue Code
11for interest on a qualified education loan, the taxpayer shall
12recompute for purposes of this subsection the amount of the
13deduction under paragraph “a” by not subtracting any amount of
14income resulting from the employer’s payment of interest on a
15qualified education loan that was also deducted by the taxpayer
16under section 221 of the Internal Revenue Code.
17c. For purposes of this subsection, “qualified education
18loan” means the same as defined in section 221 of the Internal
19Revenue Code.
20 Sec. 2. 2018 Iowa Acts, chapter 1161, section 112, is
21amended by striking the section and inserting in lieu thereof
22the following:
23SEC. 112. Section 422.7, Code 2018, is amended by adding the
24following new subsection:
25 NEW SUBSECTION. 18. Add, to the extent deducted for federal
26tax purposes, charitable contributions under section 170 of
27the Internal Revenue Code to the extent such contribution was
28made to an organization for the purpose of deposit in the Iowa
29education savings plan trust established in chapter 12D, and
30the taxpayer designated that any part of the contribution be
31used for the direct benefit of any dependent of the taxpayer or
32any other single beneficiary designated by the taxpayer.
33 Sec. 3. EFFECTIVE DATE. The following, being deemed of
34immediate importance, takes effect upon enactment:
35The section of this Act enacting section 422.7, subsection
-1-119.
2 Sec. 4. RETROACTIVE APPLICABILITY. The following applies
3retroactively to January 1, 2019, for tax years beginning on or
4after that date for payments made by an employer of principal
5or interest on a qualified education loan:
6The section of this Act enacting section 422.7, subsection
719.
8EXPLANATION
9The inclusion of this explanation does not constitute agreement with
10the explanation’s substance by the members of the general assembly.
11This bill changes the effective date for a new deduction
12for any income of an employee resulting from the payment by
13an employer, whether paid to the employee or a lender, of
14principal or interest on the employee’s qualified education
15loan. Currently, the new deduction is set to begin in tax year
162023 or in a later tax year, contingent upon the satisfaction
17of certain net general fund revenue amount and growth targets.
18The bill moves up the effective date for this new deduction
19to tax years beginning on or after January 1, 2019. In order
20to move up the effective date for the new deduction, the bill
21strikes 2018 Iowa Acts, chapter 1161, section 112. However,
22there is an unrelated provision to the new deduction in 2018
23Iowa Acts, chapter 1161, section 112, thus the bill reinserts
24the unrelated provision in order to preserve this provision.
25Federal income tax law does provide a limited deduction for
26a taxpayer’s payment of interest on qualified education loans,
27and the bill disallows the new Iowa deduction for any amount
28of income that represents an interest payment that was also
29deducted by the employee in computing federal taxable income.
30The bill defines “qualified education loan” to mean the same
31as defined in section 221 of the Internal Revenue Code.
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2any income of an employee resulting from the payment by an
3employer on the employee’s qualified education loan and
4including effective date and retroactive applicability
5provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 422.7, Code 2019, is amended by adding
2the following new subsection:
3 NEW SUBSECTION. 19. a. Subtract, to the extent included,
4income resulting from the payment by an employer of the
5taxpayer, whether paid to the taxpayer or to a lender, of
6principal or interest on any qualified education loan incurred
7by the taxpayer, if such qualified education loan was incurred
8by the taxpayer.
9b. If the taxpayer has a deduction in computing federal
10taxable income under section 221 of the Internal Revenue Code
11for interest on a qualified education loan, the taxpayer shall
12recompute for purposes of this subsection the amount of the
13deduction under paragraph “a” by not subtracting any amount of
14income resulting from the employer’s payment of interest on a
15qualified education loan that was also deducted by the taxpayer
16under section 221 of the Internal Revenue Code.
17c. For purposes of this subsection, “qualified education
18loan” means the same as defined in section 221 of the Internal
19Revenue Code.
20 Sec. 2. 2018 Iowa Acts, chapter 1161, section 112, is
21amended by striking the section and inserting in lieu thereof
22the following:
23SEC. 112. Section 422.7, Code 2018, is amended by adding the
24following new subsection:
25 NEW SUBSECTION. 18. Add, to the extent deducted for federal
26tax purposes, charitable contributions under section 170 of
27the Internal Revenue Code to the extent such contribution was
28made to an organization for the purpose of deposit in the Iowa
29education savings plan trust established in chapter 12D, and
30the taxpayer designated that any part of the contribution be
31used for the direct benefit of any dependent of the taxpayer or
32any other single beneficiary designated by the taxpayer.
33 Sec. 3. EFFECTIVE DATE. The following, being deemed of
34immediate importance, takes effect upon enactment:
35The section of this Act enacting section 422.7, subsection
-1-119.
2 Sec. 4. RETROACTIVE APPLICABILITY. The following applies
3retroactively to January 1, 2019, for tax years beginning on or
4after that date for payments made by an employer of principal
5or interest on a qualified education loan:
6The section of this Act enacting section 422.7, subsection
719.
8EXPLANATION
9The inclusion of this explanation does not constitute agreement with
10the explanation’s substance by the members of the general assembly.
11This bill changes the effective date for a new deduction
12for any income of an employee resulting from the payment by
13an employer, whether paid to the employee or a lender, of
14principal or interest on the employee’s qualified education
15loan. Currently, the new deduction is set to begin in tax year
162023 or in a later tax year, contingent upon the satisfaction
17of certain net general fund revenue amount and growth targets.
18The bill moves up the effective date for this new deduction
19to tax years beginning on or after January 1, 2019. In order
20to move up the effective date for the new deduction, the bill
21strikes 2018 Iowa Acts, chapter 1161, section 112. However,
22there is an unrelated provision to the new deduction in 2018
23Iowa Acts, chapter 1161, section 112, thus the bill reinserts
24the unrelated provision in order to preserve this provision.
25Federal income tax law does provide a limited deduction for
26a taxpayer’s payment of interest on qualified education loans,
27and the bill disallows the new Iowa deduction for any amount
28of income that represents an interest payment that was also
29deducted by the employee in computing federal taxable income.
30The bill defines “qualified education loan” to mean the same
31as defined in section 221 of the Internal Revenue Code.
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