Read the full stored bill text
House
File
566
-
Introduced
HOUSE
FILE
566
BY
WHEELER
A
BILL
FOR
An
Act
modifying
individual
income
tax
rates
and
providing
tax
1
credits
for
certain
married
persons
filing
a
joint
return,
2
and
including
effective
date
and
retroactive
applicability
3
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
TLSB
2504YH
(3)
91
jm/jh
H.F.
566
Section
1.
Section
421.27,
subsection
9,
paragraph
a,
1
subparagraph
(3),
Code
2025,
is
amended
to
read
as
follows:
2
(3)
In
the
case
of
all
other
entities,
including
3
corporations
described
in
section
422.36,
subsection
5
,
and
all
4
other
entities
required
to
file
an
information
return
under
5
section
422.15,
subsection
2
,
the
entity’s
Iowa
net
income
6
after
the
application
of
the
Iowa
business
activity
ratio,
if
7
applicable,
multiplied
by
the
highest
income
tax
rate
imposed
8
under
section
422.5
for
the
tax
year,
less
any
Iowa
tax
credits
9
available
to
the
entity.
10
Sec.
2.
Section
422.5,
subsection
1,
paragraph
a,
Code
2025,
11
is
amended
to
read
as
follows:
12
a.
A
tax
is
imposed
upon
every
resident
and
nonresident
13
of
the
state
which
tax
shall
be
levied,
collected,
and
paid
14
annually
upon
and
with
respect
to
the
entire
taxable
income
as
15
defined
in
this
subchapter
at
a
rate
of
three
and
eight-tenths
16
percent.
the
following
rates:
17
(1)
In
the
case
of
married
persons
filing
jointly
with
five
18
or
more
dependents
under
the
age
of
eighteen,
zero
percent.
19
(2)
In
the
case
of
married
persons
filing
jointly
for
the
20
first
or
second
time
in
their
lifetimes,
zero
percent.
21
(3)
In
the
case
of
any
other
taxpayer
other
than
described
22
in
subparagraphs
(1)
and
(2),
three
and
eight-tenths
percent.
23
Sec.
3.
NEW
SECTION
.
422.10C
Additional
dependent
tax
24
credit.
25
1.
For
married
persons
filing
a
joint
return
the
taxes
26
imposed
under
this
subchapter
less
the
credits
allowed
under
27
section
422.12
shall
be
reduced
by
an
additional
dependent
28
tax
credit
equal
to
the
product
of
the
number
of
dependents
29
exceeding
five
but
not
more
than
ten
that
are
under
the
age
of
30
eighteen
multiplied
by
one
thousand
dollars.
31
2.
Any
credit
in
excess
of
the
tax
liability
is
refundable.
32
In
lieu
of
claiming
a
refund,
the
taxpayer
may
elect
to
have
33
the
overpayment
shown
on
the
taxpayer’s
final,
completed
return
34
credited
to
the
tax
liability
for
the
following
five
years
35
-1-
LSB
2504YH
(3)
91
jm/jh
1/
3
H.F.
566
until
depleted,
whichever
is
earlier.
1
3.
The
director
of
revenue
shall
adopt
rules
to
implement
2
this
section.
3
Sec.
4.
Section
422.16,
subsection
2,
paragraph
e,
Code
4
2025,
is
amended
to
read
as
follows:
5
e.
For
the
purposes
of
this
subsection
,
state
income
6
tax
shall
be
withheld
at
the
highest
rate
described
in
7
section
422.5
from
supplemental
wages
of
an
employee
in
those
8
circumstances
in
which
the
employer
treats
the
supplemental
9
wages
as
wholly
separate
from
regular
wages
for
purposes
10
of
withholding
and
federal
income
tax
is
withheld
from
the
11
supplemental
wages
under
section
3402(g)
of
the
Internal
12
Revenue
Code.
13
Sec.
5.
Section
422.16B,
subsection
2,
paragraph
a,
14
subparagraph
(2),
Code
2025,
is
amended
to
read
as
follows:
15
(2)
The
tax
rate
applicable
to
a
tiered
pass-through
entity
16
shall
be
the
highest
state
income
tax
rate
under
section
422.5
.
17
Sec.
6.
Section
422.16C,
subsection
4,
paragraph
a,
Code
18
2025,
is
amended
to
read
as
follows:
19
a.
A
taxpayer
making
an
election
under
this
section
shall
20
be
subject
to
tax
in
an
amount
equal
to
the
maximum
rate
under
21
section
422.5
,
imposed
against
the
taxable
income
of
the
22
taxpayer
for
the
taxable
year
properly
determined
under
this
23
chapter
and
allocated
and
apportioned
to
the
state
under
the
24
rules
adopted
by
the
department.
The
tax
shall
be
due
with
the
25
taxpayer’s
return
required
under
this
chapter
.
26
Sec.
7.
Section
422.16C,
subsection
5,
paragraph
a,
27
subparagraph
(2),
Code
2025,
is
amended
to
read
as
follows:
28
(2)
The
difference
between
one
hundred
percent
and
the
29
highest
individual
income
tax
rate
in
effect
for
the
tax
year.
30
Sec.
8.
EFFECTIVE
DATE.
This
Act,
being
deemed
of
immediate
31
importance,
takes
effect
upon
enactment.
32
Sec.
9.
RETROACTIVE
APPLICABILITY.
This
Act
applies
33
retroactively
to
January
1,
2025,
for
tax
years
beginning
on
34
or
after
that
date.
35
-2-
LSB
2504YH
(3)
91
jm/jh
2/
3
H.F.
566
EXPLANATION
1
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
2
the
explanation’s
substance
by
the
members
of
the
general
assembly.
3
This
bill
modifies
individual
income
tax
rates
and
provides
4
tax
credits
for
certain
married
persons
filing
a
joint
return.
5
The
bill
decreases
the
income
tax
rate
on
taxable
income
for
6
married
persons
filing
jointly
from
3.8
percent
to
0
percent,
7
if
such
married
persons
have
5
or
more
dependents
under
the
8
age
of
18.
The
bill
decreases
the
income
tax
rate
on
taxable
9
income
for
married
persons
filing
jointly
from
3.8
percent
to
10
0
percent,
if
such
married
persons
are
filing
jointly
for
the
11
first
or
second
time
in
their
lifetimes.
12
The
bill
also
creates
an
additional
dependent
credit
for
13
married
persons
filing
a
joint
return
equal
to
the
product
of
14
the
number
of
dependents
exceeding
5
but
not
more
than
10
that
15
are
under
the
age
of
18
multiplied
by
$1,000.
16
Any
credit
in
excess
of
the
tax
liability
is
refundable.
In
17
lieu
of
claiming
a
refund,
the
taxpayer
may
elect
to
have
the
18
overpayment
shown
on
the
taxpayer’s
final,
completed
return
19
credited
to
the
tax
liability
for
the
following
five
years
20
until
depleted,
whichever
is
earlier.
21
The
bill
takes
effect
upon
enactment
and
applies
22
retroactively
to
tax
years
beginning
on
or
after
January
1,
23
2025.
24
-3-
LSB
2504YH
(3)
91
jm/jh
3/
3