This bill modifies the Iowa child and dependent care credit available against the individual income tax by amending the existing law to reduce the number of income thresholds used to calculate the credit from seven to four. Specifically, it eliminates the maximum income threshold of $90,000, allowing any taxpayer with an Iowa net income of $25,000 or more to claim 50 percent of the federal child and dependent care credit as a refundable credit, regardless of whether their federal credit is limited by their federal tax liability. The previous income brackets for lower percentages of the credit have also been adjusted, with the highest percentage now applicable to those earning less than $10,000.

Additionally, the bill includes a retroactive applicability provision, meaning that these changes will take effect for tax years beginning on or after January 1, 2025. This retroactive application ensures that taxpayers can benefit from the revised credit structure as soon as the new law is enacted.

Statutes affected:
Introduced: 422.12C