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House File 1 - IntroducedA Bill ForAn Act 1relating to the child and dependent care and early
2childhood development tax credits, and including
3applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 422.12C, subsection 1, paragraphs f and
2g, Code 2021, are amended to read as follows:
3f. For a taxpayer with net income of forty thousand dollars
4or more but less than forty-five ninety thousand dollars,
5thirty percent.
6g. For a taxpayer with net income of forty-five ninety
7 thousand dollars or more, zero percent.
8 Sec. 2. Section 422.12C, subsection 2, paragraph a, Code
92021, is amended to read as follows:
10a. The taxes imposed under this subchapter, less the amounts
11of nonrefundable credits allowed under this subchapter, may
12be reduced by an early childhood development tax credit equal
13to twenty-five percent of the first one thousand dollars
14which the taxpayer has paid to others for each dependent, as
15defined in the Internal Revenue Code, ages three through five
16for early childhood development expenses. In determining the
17amount of early childhood development expenses for the tax year
18beginning in the 2006 calendar year only, such expenses paid
19during November and December of the previous tax year shall
20be considered paid in the tax year for which the tax credit
21is claimed. This credit is available to a taxpayer whose net
22income is less than forty-five ninety thousand dollars. If the
23early childhood development tax credit is claimed for a tax
24year, the taxpayer and the taxpayer’s spouse shall not claim
25the child and dependent care credit under subsection 1.
26 Sec. 3. APPLICABILITY. This Act applies to tax years
27beginning on or after January 1, 2021.
28EXPLANATION
29The inclusion of this explanation does not constitute agreement with
30the explanation’s substance by the members of the general assembly.
31This bill increases the maximum Iowa net income threshold
32level for purposes of calculating the Iowa child and dependent
33care credit and the early childhood development tax credit
34available against the individual income tax.
35CHILD AND DEPENDENT CARE CREDIT. Currently, an individual
-1-1may claim 30 percent of the federal child and dependent care
2credit provided in section 21 of the Internal Revenue Code
3against the individual income tax if the individual’s net
4income is less than $45,000. Under the bill, an individual may
5claim 30 percent of the federal child and dependent care credit
6provided in section 21 of the Internal Revenue Code against the
7individual income tax if the individual’s net income is less
8than $90,000.
9EARLY CHILDHOOD DEVELOPMENT TAX CREDIT. The bill increases
10the income threshold determining the eligibility of a taxpayer
11for the early childhood development tax credit. The bill
12increases the eligibility threshold from a taxpayer whose net
13income is less than $45,000 per year to less than $90,000 per
14year. By increasing the eligibility threshold, taxpayers whose
15net income is less than $90,000 are now eligible to take the
16early childhood development tax credit equaling 25 percent of
17the first $1,000 which the taxpayer has paid to others for
18early childhood development expenses for each dependent ages
19three through five.
20APPLICABILITY. The bill applies to tax years beginning on or
21after January 1, 2021.
-2-jm/jh
2childhood development tax credits, and including
3applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 422.12C, subsection 1, paragraphs f and
2g, Code 2021, are amended to read as follows:
3f. For a taxpayer with net income of forty thousand dollars
4or more but less than forty-five ninety thousand dollars,
5thirty percent.
6g. For a taxpayer with net income of forty-five ninety
7 thousand dollars or more, zero percent.
8 Sec. 2. Section 422.12C, subsection 2, paragraph a, Code
92021, is amended to read as follows:
10a. The taxes imposed under this subchapter, less the amounts
11of nonrefundable credits allowed under this subchapter, may
12be reduced by an early childhood development tax credit equal
13to twenty-five percent of the first one thousand dollars
14which the taxpayer has paid to others for each dependent, as
15defined in the Internal Revenue Code, ages three through five
16for early childhood development expenses. In determining the
17amount of early childhood development expenses for the tax year
18beginning in the 2006 calendar year only, such expenses paid
19during November and December of the previous tax year shall
20be considered paid in the tax year for which the tax credit
21is claimed. This credit is available to a taxpayer whose net
22income is less than forty-five ninety thousand dollars. If the
23early childhood development tax credit is claimed for a tax
24year, the taxpayer and the taxpayer’s spouse shall not claim
25the child and dependent care credit under subsection 1.
26 Sec. 3. APPLICABILITY. This Act applies to tax years
27beginning on or after January 1, 2021.
28EXPLANATION
29The inclusion of this explanation does not constitute agreement with
30the explanation’s substance by the members of the general assembly.
31This bill increases the maximum Iowa net income threshold
32level for purposes of calculating the Iowa child and dependent
33care credit and the early childhood development tax credit
34available against the individual income tax.
35CHILD AND DEPENDENT CARE CREDIT. Currently, an individual
-1-1may claim 30 percent of the federal child and dependent care
2credit provided in section 21 of the Internal Revenue Code
3against the individual income tax if the individual’s net
4income is less than $45,000. Under the bill, an individual may
5claim 30 percent of the federal child and dependent care credit
6provided in section 21 of the Internal Revenue Code against the
7individual income tax if the individual’s net income is less
8than $90,000.
9EARLY CHILDHOOD DEVELOPMENT TAX CREDIT. The bill increases
10the income threshold determining the eligibility of a taxpayer
11for the early childhood development tax credit. The bill
12increases the eligibility threshold from a taxpayer whose net
13income is less than $45,000 per year to less than $90,000 per
14year. By increasing the eligibility threshold, taxpayers whose
15net income is less than $90,000 are now eligible to take the
16early childhood development tax credit equaling 25 percent of
17the first $1,000 which the taxpayer has paid to others for
18early childhood development expenses for each dependent ages
19three through five.
20APPLICABILITY. The bill applies to tax years beginning on or
21after January 1, 2021.
-2-jm/jh