A bill for an act modifying the child and dependent care credit available against the individual income tax, and including retroactive applicability provisions.(Formerly HF 962 .)

House

File

1020

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Introduced

HOUSE

FILE

1020

BY

COMMITTEE

ON

WAYS

AND

MEANS

(SUCCESSOR

TO

HF

962)

A

BILL

FOR

An

Act

modifying

the

child

and

dependent

care

credit

available

1

against

the

individual

income

tax,

and

including

retroactive

2

applicability

provisions.

3

BE

IT

ENACTED

BY

THE

GENERAL

ASSEMBLY

OF

THE

STATE

OF

IOWA:

4

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1020

Section

1.

Section

422.12C,

subsection

1,

Code

2025,

is

1

amended

to

read

as

follows:

2

1.

The

taxes

imposed

under

this

subchapter

,

less

the

amounts

3

of

nonrefundable

credits

allowed

under

this

subchapter

,

shall

4

be

reduced

by

a

child

and

dependent

care

credit

equal

to

the

5

following

percentages

of

the

federal

child

and

dependent

care

6

credit

provided

in

section

21

of

the

Internal

Revenue

Code,

7

without

regard

to

whether

or

not

the

federal

credit

was

limited

8

by

the

taxpayer’s

federal

tax

liability:

9

a.

For

a

taxpayer

with

net

income

of

less

than

ten

thousand

10

dollars,

seventy-five

percent.

11

b.

For

a

taxpayer

with

net

income

of

ten

thousand

dollars

or

12

more

but

less

than

twenty

thousand

dollars,

sixty-five

percent.

13

c.

For

a

taxpayer

with

net

income

of

twenty

thousand

dollars

14

or

more

but

less

than

twenty-five

thousand

dollars,

fifty-five

15

percent.

16

d.

For

a

taxpayer

with

net

income

of

twenty-five

thousand

17

dollars

or

more

but

less

than

thirty-five

thousand

dollars

,

18

fifty

percent.

19

e.

For

a

taxpayer

with

net

income

of

thirty-five

thousand

20

dollars

or

more

but

less

than

forty

thousand

dollars,

forty

21

percent.

22

f.

For

a

taxpayer

with

net

income

of

forty

thousand

dollars

23

or

more

but

less

than

ninety

thousand

dollars,

thirty

percent.

24

g.

For

a

taxpayer

with

net

income

of

ninety

thousand

dollars

25

or

more,

zero

percent.

26

Sec.

2.

RETROACTIVE

APPLICABILITY.

This

Act

applies

27

retroactively

to

January

1,

2025,

for

tax

years

beginning

on

28

or

after

that

date.

29

EXPLANATION

30

The

inclusion

of

this

explanation

does

not

constitute

agreement

with

31

the

explanation’s

substance

by

the

members

of

the

general

assembly.

32

This

bill

relates

to

the

Iowa

child

and

dependent

care

credit

33

available

against

the

individual

income

tax.

34

The

Iowa

child

and

dependent

care

credit

is

a

refundable

35

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credit

calculated

as

a

percentage

of

the

federal

child

and

1

dependent

care

credit,

depending

on

the

Iowa

net

income

of

2

the

taxpayer.

Currently,

there

are

seven

graduated

Iowa

net

3

income

thresholds

used

to

calculate

the

credit.

The

bill

4

reduces

the

number

of

Iowa

net

income

thresholds

from

seven

5

thresholds

to

four

thresholds,

and

removes

the

maximum

Iowa

6

net

income

threshold

amount

used

by

the

taxpayer

to

calculate

7

the

Iowa

child

and

dependent

care

tax

credit.

By

removing

8

the

maximum

Iowa

net

income

threshold

amount

for

eligibility

9

purposes

($90,000),

any

taxpayer

with

Iowa

net

income

equal

10

to

or

exceeding

$25,000

is

eligible

to

use

50

percent

of

the

11

federal

child

and

dependent

care

credit

as

a

refundable

credit

12

against

the

Iowa

individual

income

tax,

regardless

of

whether

13

the

taxpayer’s

federal

credit

is

limited

by

the

taxpayer’s

14

federal

tax

liability.

15

The

bill

applies

retroactively

to

tax

years

beginning

on

or

16

after

January

1,

2025.

17

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