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House
File
496
-
Introduced
HOUSE
FILE
496
BY
JACOBY
A
BILL
FOR
An
Act
modifying
the
individual
and
alternate
income
tax
rates,
1
and
including
applicability
provisions.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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496
Section
1.
Section
422.5,
subsection
1,
paragraph
a,
Code
1
2025,
is
amended
to
read
as
follows:
2
a.
A
tax
is
imposed
upon
every
resident
and
nonresident
3
of
the
state
which
tax
shall
be
levied,
collected,
and
paid
4
annually
upon
and
with
respect
to
the
entire
taxable
income
as
5
defined
in
this
subchapter
at
a
rate
of
three
and
eight-tenths
6
two
and
one-half
percent.
7
Sec.
2.
Section
422.5,
subsection
2,
paragraph
b,
Code
2025,
8
is
amended
to
read
as
follows:
9
b.
In
lieu
of
the
computation
in
subsection
1
,
or
in
10
paragraph
“a”
of
this
subsection
,
if
the
married
persons’
11
filing
jointly,
head
of
household’s,
or
surviving
spouse’s
12
net
income
exceeds
thirteen
thousand
five
hundred
dollars,
13
the
regular
tax
imposed
under
this
subchapter
shall
be
the
14
lesser
of
the
alternate
state
individual
income
tax
rate
of
15
four
and
three-tenths
three
percent
times
the
portion
of
the
16
net
income
in
excess
of
thirteen
thousand
five
hundred
dollars
17
or
the
regular
tax
liability
computed
without
regard
to
this
18
sentence.
Taxpayers
electing
to
file
separately
shall
compute
19
the
alternate
tax
described
in
this
paragraph
using
the
total
20
net
income
of
the
spouses.
The
alternate
tax
described
in
this
21
paragraph
does
not
apply
if
one
spouse
elects
to
carry
back
22
or
carry
forward
a
net
operating
loss
as
provided
under
the
23
Internal
Revenue
Code
or
in
section
422.9
.
24
Sec.
3.
Section
422.5,
subsection
3,
paragraph
b,
Code
2025,
25
is
amended
to
read
as
follows:
26
b.
In
lieu
of
the
computation
in
subsection
1
or
2
,
if
27
the
married
persons’
filing
jointly,
head
of
household’s,
or
28
surviving
spouse’s
net
income
exceeds
thirty-two
thousand
29
dollars,
the
regular
tax
imposed
under
this
subchapter
shall
30
be
the
lesser
of
the
alternate
state
individual
income
tax
31
rate
of
four
and
three-tenths
three
percent
times
the
portion
32
of
the
net
income
in
excess
of
thirty-two
thousand
dollars
33
or
the
regular
tax
liability
computed
without
regard
to
this
34
sentence.
Taxpayers
electing
to
file
separately
shall
compute
35
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the
alternate
tax
described
in
this
paragraph
using
the
total
1
net
income
of
the
spouses.
The
alternate
tax
described
in
this
2
paragraph
does
not
apply
if
one
spouse
elects
to
carry
back
3
or
carry
forward
a
net
operating
loss
as
provided
under
the
4
Internal
Revenue
Code
or
in
section
422.9
.
5
Sec.
4.
APPLICABILITY.
This
Act
applies
to
tax
years
6
beginning
on
or
after
January
1,
2026.
7
EXPLANATION
8
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
9
the
explanation’s
substance
by
the
members
of
the
general
assembly.
10
This
bill
decreases
the
individual
income
tax
rate
11
on
taxable
income
from
3.8
percent
to
2.5
percent,
and
12
correspondingly
reduces
the
alternate
income
tax
rate
from
4.3
13
percent
to
3.0
percent.
14
The
bill
applies
to
tax
years
beginning
on
or
after
January
15
1,
2026.
16
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