This bill establishes a Catastrophic Savings Account (CSA) program in Iowa, allowing residents to open interest-bearing savings accounts specifically for covering qualified catastrophic expenses, such as homeowners' insurance deductibles related to catastrophic events. The bill outlines the process for account establishment, requiring individuals to submit forms to the Department of Revenue by April 30 of the year following the account's opening. It sets contribution limits based on the account holder's homeowners insurance premium, with specific caps for those who are self-insured or unable to obtain insurance. Additionally, the bill mandates that account holders submit annual reports and transaction reports to the Department.

The bill also introduces tax incentives for CSA account holders, allowing them to deduct contributions from their individual income tax up to specified lifetime limits and exempting interest earned on the accounts from taxation. However, it stipulates that any withdrawals not used for qualified expenses will be subject to taxation and a penalty. Furthermore, the bill includes provisions regarding the tax implications upon the account holder's death or the sale of their homestead. Overall, the legislation aims to provide financial support for individuals facing catastrophic losses while ensuring compliance with tax regulations.

Statutes affected:
Introduced: 422.7