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Senate Study Bill 1033 - IntroducedA Bill ForAn Act 1creating a new resident tax credit available against
2the individual income tax, and including applicability
3provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 422.12O New resident tax credit.
21. For purposes of this section, “new resident” means an
3individual who is a resident of Iowa working in this state, and
4who has not been a resident of this state at any time during the
5previous two tax years prior to establishing residency in this
6state.
72. a. The taxes imposed under this subchapter less the
8credits allowed under section 422.12 shall be reduced by a new
9resident tax credit equal to a percent of the taxes imposed
10under this subchapter less the amounts of credits allowed under
11this subchapter, as determined as follows:
12(1) For the first year, twenty percent.
13(2) For the second year, forty percent.
14(3) For the third year, sixty percent.
15(4) For the fourth year, eighty percent.
16(5) For the fifth year, one hundred percent.
17b. A new resident may claim the credit during either the
18first or second tax year of residency, and shall take the
19credit consecutively every tax year thereafter as provided in
20paragraph “a”.
213. Any credit in excess of the tax liability is not
22refundable but the excess for the tax year may be credited
23to the tax liability for the following five years or until
24depleted, whichever is earlier.
254. Married taxpayers electing to file separate returns or
26filing separately on a combined return may avail themselves
27of the new resident tax credit by allocating the new resident
28tax credit to each spouse in the proportion that each spouse’s
29respective earned income bears to the total combined earned
30income.
31 Sec. 2. APPLICABILITY. This Act applies to tax years
32beginning on or after January 1, 2022.
33EXPLANATION
34The inclusion of this explanation does not constitute agreement with
35the explanation’s substance by the members of the general assembly.
-1- 1This bill creates a new resident tax credit available
2against the individual income tax.
3The bill defines “new resident” to mean an individual who is
4a resident of Iowa working in this state, and who has not been a
5resident of this state at any time during the previous two tax
6years prior to establishing residency.
7The credit authorized in the bill is available to a new
8resident for the five consecutive tax years following the
9establishment of residency in this state. A new resident may
10begin to claim the credit during either the first or second tax
11year of residency.
12The amount of the credit is equal to a percent of the income
13tax imposed, determined as follows: for the first year, 20
14percent; for the second year, 40 percent; for the third year,
1560 percent; for the fourth year, 80 percent; and for the fifth
16year, 100 percent.
17Any credit provided in the bill in excess of tax liability is
18not refundable but the excess for the tax year may be credited
19to the tax liability for the following five years or until
20depleted, whichever is earlier.
21The bill applies to tax years beginning on or after January
221, 2022.
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2the individual income tax, and including applicability
3provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 422.12O New resident tax credit.
21. For purposes of this section, “new resident” means an
3individual who is a resident of Iowa working in this state, and
4who has not been a resident of this state at any time during the
5previous two tax years prior to establishing residency in this
6state.
72. a. The taxes imposed under this subchapter less the
8credits allowed under section 422.12 shall be reduced by a new
9resident tax credit equal to a percent of the taxes imposed
10under this subchapter less the amounts of credits allowed under
11this subchapter, as determined as follows:
12(1) For the first year, twenty percent.
13(2) For the second year, forty percent.
14(3) For the third year, sixty percent.
15(4) For the fourth year, eighty percent.
16(5) For the fifth year, one hundred percent.
17b. A new resident may claim the credit during either the
18first or second tax year of residency, and shall take the
19credit consecutively every tax year thereafter as provided in
20paragraph “a”.
213. Any credit in excess of the tax liability is not
22refundable but the excess for the tax year may be credited
23to the tax liability for the following five years or until
24depleted, whichever is earlier.
254. Married taxpayers electing to file separate returns or
26filing separately on a combined return may avail themselves
27of the new resident tax credit by allocating the new resident
28tax credit to each spouse in the proportion that each spouse’s
29respective earned income bears to the total combined earned
30income.
31 Sec. 2. APPLICABILITY. This Act applies to tax years
32beginning on or after January 1, 2022.
33EXPLANATION
34The inclusion of this explanation does not constitute agreement with
35the explanation’s substance by the members of the general assembly.
-1- 1This bill creates a new resident tax credit available
2against the individual income tax.
3The bill defines “new resident” to mean an individual who is
4a resident of Iowa working in this state, and who has not been a
5resident of this state at any time during the previous two tax
6years prior to establishing residency.
7The credit authorized in the bill is available to a new
8resident for the five consecutive tax years following the
9establishment of residency in this state. A new resident may
10begin to claim the credit during either the first or second tax
11year of residency.
12The amount of the credit is equal to a percent of the income
13tax imposed, determined as follows: for the first year, 20
14percent; for the second year, 40 percent; for the third year,
1560 percent; for the fourth year, 80 percent; and for the fifth
16year, 100 percent.
17Any credit provided in the bill in excess of tax liability is
18not refundable but the excess for the tax year may be credited
19to the tax liability for the following five years or until
20depleted, whichever is earlier.
21The bill applies to tax years beginning on or after January
221, 2022.
-2-jm/jh