Senate File 490 - Introduced
SENATE FILE 490
BY COMMITTEE ON LABOR AND
BUSINESS RELATIONS
(SUCCESSOR TO SSB 1033)
A BILL FOR
1 An Act creating a new resident tax credit available against
2 the individual income tax, and including applicability
3 provisions.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 Section 1. NEW SECTION. 422.12O New resident tax credit.
2 1. For purposes of this section, “new resident” means an
3 individual who establishes residency in this state on or after
4 January 1, 2022, is employed by an employer located in this
5 state, and who has not been a resident of this state at any
6 time during the previous two tax years prior to establishing
7 residency in this state.
8 2. a. The taxes imposed under this subchapter less the
9 credits allowed under section 422.12 shall be reduced by a new
10 resident tax credit equal to a percent of the taxes imposed
11 under this subchapter less the amounts of credits allowed under
12 this subchapter, as determined as follows:
13 (1) For the first year, twenty percent.
14 (2) For the second year, forty percent.
15 (3) For the third year, sixty percent.
16 (4) For the fourth year, eighty percent.
17 (5) For the fifth year, one hundred percent.
18 b. A new resident may begin to claim the credit in the first
19 year of residency or begin to claim the credit in the following
20 year after residency has been established.
21 c. Except for the first year of residency, a new resident
22 must be a resident of this state for the entire tax year for
23 each tax year that the new resident claims the credit. If the
24 new resident does not maintain residency in this state during
25 such time, the new resident is disqualified from claiming the
26 credit in that tax year and all future years.
27 d. An individual may establish residency in this state
28 for purposes of the credit only one time in the individual’s
29 lifetime.
30 3. Married taxpayers electing to file separate returns or
31 filing separately on a combined return may avail themselves
32 of the new resident tax credit by allocating the new resident
33 tax credit to each spouse in the proportion that each spouse’s
34 respective earned income bears to the total combined earned
35 income.
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 S.F. 490
1 4. The department shall adopt rules pursuant to chapter 17A
2 to administer this section.
3 Sec. 2. APPLICABILITY. This Act applies to tax years
4 beginning on or after January 1, 2022.
5 EXPLANATION
6 The inclusion of this explanation does not constitute agreement with
7 the explanation’s substance by the members of the general assembly.
8 This bill creates a new resident tax credit available
9 against the individual income tax.
10 The bill defines “new resident” to mean an individual who
11 establishes residency in this state on or after January 1,
12 2022, is employed by an employer in this state, and who has not
13 been a resident of this state at any time during the previous
14 two tax years prior to establishing residency.
15 The credit authorized in the bill is available to a new
16 resident for the five consecutive tax years following the
17 establishment of residency in this state. A new resident may
18 begin to claim the credit in the first year of residency or
19 begin to claim the credit in the following year after residency
20 has been established.
21 Except for the first year of residency, the bill requires a
22 new resident to remain a resident of this state for each year
23 the credit is claimed. If the new resident does not maintain
24 residency, the new resident is disqualified from claiming
25 the tax credit in that tax year and future tax years. An
26 individual may establish residency in this state for purposes
27 of the credit only one time in the individual’s lifetime.
28 The amount of the credit is equal to a percent of the income
29 tax imposed, determined as follows: for the first year, 20
30 percent; for the second year, 40 percent; for the third year,
31 60 percent; for the fourth year, 80 percent; and for the fifth
32 year, 100 percent.
33 The bill requires the department of revenue to adopt rules
34 to administer the bill.
35 The bill applies to tax years beginning on or after January
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1 1, 2022.
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