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Senate
File
201
-
Introduced
SENATE
FILE
201
BY
ROWLEY
and
SWEENEY
(COMPANION
TO
HF
94
BY
JONES)
A
BILL
FOR
An
Act
relating
to
individual
income
taxation
by
exempting
1
certain
amounts
received
from
nonqualified
deferred
2
compensation
plans
and
including
retroactive
applicability
3
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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201
Section
1.
Section
422.7,
Code
2025,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
45.
a.
Subtract,
to
the
extent
included,
3
up
to
five
hundred
thousand
dollars
of
a
nonqualified
deferred
4
compensation
plan
or
any
earnings
attributable
to
the
5
nonqualified
deferred
compensation
plan
received
by
a
person
6
who
is
any
of
the
following:
7
(1)
Disabled.
8
(2)
Fifty-five
years
of
age
or
older.
9
(3)
The
surviving
spouse
of
an
individual
or
a
survivor
10
having
an
insurable
interest
in
an
individual
who
would
have
11
qualified
for
the
exemption
under
this
subsection
for
the
tax
12
year.
13
b.
Married
taxpayers
who
file
separate
state
income
tax
14
returns
shall
allocate
their
combined
annual
exclusion
amount
15
to
each
spouse
in
the
proportion
that
each
spouse’s
respective
16
income
received
from
a
nonqualified
deferred
compensation
plan
17
bears
to
the
total
combined
pension
or
retirement
pay
received.
18
Sec.
2.
RETROACTIVE
APPLICABILITY.
This
Act
applies
19
retroactively
to
January
1,
2025,
for
tax
years
beginning
on
20
or
after
that
date.
21
EXPLANATION
22
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
23
the
explanation’s
substance
by
the
members
of
the
general
assembly.
24
Under
current
law,
a
taxpayer
may
exclude
retirement
25
income
from
the
computation
of
net
income
for
purposes
of
26
the
individual
income
tax.
In
order
to
be
eligible
for
27
the
retirement
income
exclusion,
a
person
must
be
disabled,
28
at
least
55
years
of
age,
or
be
the
surviving
spouse
of
an
29
individual
or
be
a
survivor
having
an
insurable
interest
in
an
30
individual
who
would
have
qualified
for
the
retirement
income
31
exclusion.
32
This
bill
excludes
up
to
$500,000
of
nonqualified
deferred
33
compensation
plan
income
from
the
computation
of
net
income
34
for
purposes
of
the
individual
income
tax
under
similar
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201
circumstances
as
the
retirement
income
exclusion.
In
order
to
1
be
eligible
for
the
nonqualified
deferred
compensation
plan
2
income
exclusion,
the
taxpayer
must
be
disabled,
at
least
55
3
years
of
age,
or
be
the
surviving
spouse
of
an
individual
or
be
4
a
survivor
having
an
insurable
interest
in
an
individual
who
5
would
have
qualified
for
the
income
exclusion.
6
A
nonqualified
deferred
compensation
plan
is
deferred
7
compensation
with
no
federal
legal
deferral
limit
that
is
8
subject
to
tax
at
a
later
date,
and
is
usually
made
available
9
to
select
employees.
10
The
bill
applies
retroactively
to
January
1,
2025,
for
tax
11
years
beginning
on
or
after
that
date.
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