Senate Study Bill 3038 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED GOVERNOR BILL) A BILL FOR An Act relating to state taxation and appropriations by 1 combining special purpose funds, modifying individual income 2 tax rates, placing assessment limitations for property tax 3 purposes on commercial child care facilities, and modifying 4 unemployment benefits, and including effective date and 5 retroactive applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 5398XL (9) 90 jm/jh
S.F. _____ H.F. _____ DIVISION I 1 SPECIAL PURPOSE FUNDS 2 Section 1. Section 7D.29, subsection 1, paragraphs a and b, 3 Code 2024, are amended to read as follows: 4 a. From the appropriation made from the Iowa economic 5 emergency cash reserve fund in section 8.55 8.56 for purposes 6 of paying such expenses. 7 b. To the extent the appropriation from the Iowa economic 8 emergency cash reserve fund described in paragraph a is 9 insufficient to pay such expenses, there is appropriated 10 from moneys in the general fund of the state not otherwise 11 appropriated the amount necessary to fund that deficiency. 12 Sec. 2. Section 8.22A, subsection 2, Code 2024, is amended 13 to read as follows: 14 2. The conference shall meet as often as deemed necessary, 15 but shall meet at least three times per year with at least 16 one meeting taking place each year in March. The conference 17 may use sources of information deemed appropriate. At each 18 meeting, the conference shall agree to estimates for the 19 current fiscal year and the following fiscal year for the 20 general fund of the state, lottery revenues to be available 21 for disbursement, and from gambling revenues and from interest 22 earned on the cash reserve fund and the economic emergency 23 fund to be deposited in the rebuild Iowa infrastructure fund. 24 At the meeting taking place each year in March, in addition 25 to agreeing to estimates for the current fiscal year and the 26 following fiscal year, the conference shall agree to estimates 27 for the fiscal year beginning July 1 of the following calendar 28 year. Only an estimate for the following fiscal year agreed 29 to by the conference pursuant to subsection 3, 4, or 5 , shall 30 be used for purposes of calculating the state general fund 31 expenditure limitation under section 8.54 , and any other 32 estimate agreed to shall be considered a preliminary estimate 33 that shall not be used for purposes of calculating the state 34 general fund expenditure limitation. 35 -1- LSB 5398XL (9) 90 jm/jh 1/ 28
S.F. _____ H.F. _____ Sec. 3. Section 8.22A, subsection 5, paragraph b, Code 2024, 1 is amended to read as follows: 2 b. The amount of revenue for the following fiscal year from 3 gambling revenues and from interest earned on the cash reserve 4 fund and the economic emergency fund to be deposited in the 5 rebuild Iowa infrastructure fund under section 8.56 and section 6 8.57, subsection 5 , paragraph e f . 7 Sec. 4. Section 8.54, subsection 1, unnumbered paragraph 1, 8 Code 2024, is amended to read as follows: 9 For the purposes of section 8.22A , this section , and 10 sections 8.55 through 8.56 and 8.57 : 11 Sec. 5. Section 8.54, subsection 5, paragraph a, Code 2024, 12 is amended to read as follows: 13 a. For fiscal years in which it is anticipated that the 14 distribution of moneys from the Iowa economic emergency fund 15 in accordance with section 8.55 8.57 , subsection 2 , paragraph 16 c , will result in moneys being transferred to the general 17 fund of the state, the original state general fund expenditure 18 limitation amount provided for in subsection 3 shall be 19 readjusted to include the amount of moneys anticipated to be 20 so transferred. 21 Sec. 6. Section 8.56, subsections 1 and 3, Code 2024, are 22 amended to read as follows: 23 1. A cash reserve fund is created in the state treasury. 24 The cash reserve fund shall be separate from the general fund 25 of the state and shall not be considered part of the general 26 fund of the state except in determining the cash position of 27 the state as provided in subsection 3 . The moneys in the cash 28 reserve fund are not subject to section 8.33 and shall not 29 be transferred, used, obligated, appropriated, or otherwise 30 encumbered except as provided in this section . Notwithstanding 31 section 12C.7, subsection 2 , interest or earnings on moneys 32 deposited in the cash reserve fund shall be credited to the 33 rebuild Iowa infrastructure fund created in section 8.57 . 34 Moneys in the cash reserve fund may be used for cash flow 35 -2- LSB 5398XL (9) 90 jm/jh 2/ 28
S.F. _____ H.F. _____ purposes during a fiscal year provided that any moneys so 1 allocated are returned to the cash reserve fund by the end of 2 that fiscal year. 3 3. a. The moneys in the cash reserve fund shall only be 4 used pursuant to an appropriation made by the general assembly 5 or as provided in this section . An appropriation shall be 6 made in accordance with subsection 4 only for the fiscal year 7 in which the appropriation is made. The moneys shall only be 8 appropriated by the general assembly for nonrecurring emergency 9 expenditures and shall not be appropriated for payment of 10 any collective bargaining agreement or arbitrators decision 11 negotiated or awarded under chapter 20 . Except as provided 12 in section 8.58 , the cash reserve fund shall be considered a 13 special account for the purposes of section 8.53 in determining 14 the cash position of the general fund of the state for the 15 payment of state obligations. 16 b. Moneys in the cash reserve fund may be used for cash 17 flow purposes during a fiscal year provided that any moneys so 18 allocated are returned to the cash reserve fund by the end of 19 that fiscal year. 20 c. There is appropriated from the cash reserve fund to the 21 executive council an amount sufficient to pay the expenses 22 authorized by the executive council, as specified in section 23 7D.29. 24 d. There is appropriated from the cash reserve fund to the 25 general fund of the state for the fiscal year in which moneys 26 in the fund were used for cash flow purposes, for the purposes 27 of reducing or preventing any overdraft on or deficit in the 28 general fund of the state, the amount from the cash reserve 29 fund that was used for cash flow purposes pursuant to paragraph 30 b and that was not returned to the cash reserve fund by June 31 30 of the fiscal year. The appropriation in this paragraph 32 shall not exceed one percent of the adjusted revenue estimate 33 for the fiscal year for which the appropriation is made and is 34 contingent upon all of the following having occurred: 35 -3- LSB 5398XL (9) 90 jm/jh 3/ 28
S.F. _____ H.F. _____ (1) Prior to an appropriation being made pursuant to this 1 paragraph, the balance of the general fund of the state at the 2 end of the fiscal year for which the appropriation is made is 3 negative. 4 (2) The governor issues an official proclamation and 5 notifies the legislative fiscal committee and the legislative 6 services agency that the balance of the general fund is 7 negative and that an appropriation made pursuant to this 8 paragraph brings the general fund of the state into balance. 9 e. If an appropriation is made pursuant to paragraph d 10 for a fiscal year, there is appropriated from the general fund 11 of the state to the cash reserve fund for the following fiscal 12 year the amount of the appropriation made pursuant to paragraph 13 d . 14 Sec. 7. Section 8.56, subsection 4, paragraph a, unnumbered 15 paragraph 1, Code 2024, is amended to read as follows: 16 Except as provided in subsection 1 3 , an appropriation shall 17 not be made from the cash reserve fund unless the appropriation 18 is in accordance with all of the following: 19 Sec. 8. Section 8.57, subsection 1, paragraph a, Code 2024, 20 is amended to read as follows: 21 a. The cash reserve goal percentage for fiscal years 22 beginning on or after July 1, 2004 2024 , is seven twelve and 23 one-half percent of the adjusted revenue estimate. For each 24 fiscal year in which the appropriation of the surplus existing 25 in the general fund of the state at the conclusion of the prior 26 fiscal year pursuant to paragraph b was not sufficient for the 27 cash reserve fund to reach the cash reserve goal percentage for 28 the current fiscal year, there is appropriated from the general 29 fund of the state an amount to be determined as follows: 30 (1) If the balance of the cash reserve fund in the current 31 fiscal year is not more than six eleven and one-half percent of 32 the adjusted revenue estimate for the current fiscal year, the 33 amount of the appropriation under this lettered paragraph is 34 one percent of the adjusted revenue estimate for the current 35 -4- LSB 5398XL (9) 90 jm/jh 4/ 28
S.F. _____ H.F. _____ fiscal year. 1 (2) If the balance of the cash reserve fund in the current 2 fiscal year is more than six eleven and one-half percent but 3 less than seven twelve and one-half percent of the adjusted 4 revenue estimate for that fiscal year, the amount of the 5 appropriation under this lettered paragraph is the amount 6 necessary for the cash reserve fund to reach seven twelve and 7 one-half percent of the adjusted revenue estimate for the 8 current fiscal year. 9 (3) The moneys appropriated under this lettered paragraph 10 shall be credited in equal and proportionate amounts in each 11 quarter of the current fiscal year. 12 Sec. 9. Section 8.57, subsections 2 and 3, Code 2024, are 13 amended to read as follows: 14 2. a. Moneys appropriated under subsection 1 shall be first 15 credited to the cash reserve fund. To the extent that moneys 16 appropriated under subsection 1 would make the moneys in the 17 cash reserve fund exceed the cash reserve goal percentage of 18 the adjusted revenue estimate for the fiscal year, the moneys 19 are appropriated to the department of management to be spent 20 for the purpose of eliminating Iowas GAAP deficit, including 21 the payment of items budgeted in a subsequent fiscal year 22 which under generally accepted accounting principles should be 23 budgeted in the current fiscal year. These moneys shall be 24 deposited into a GAAP deficit reduction account established 25 within the department of management. 26 b. The department of management shall annually file 27 with both houses of the general assembly at the time of the 28 submission of the governors budget, a schedule of the items 29 for which moneys appropriated under this subsection for the 30 purpose of eliminating Iowas GAAP deficit, including the 31 payment of items budgeted in a subsequent fiscal year which 32 under generally accepted accounting principles should be 33 budgeted in the current fiscal year, shall be spent. The 34 schedule shall indicate the fiscal year in which the spending 35 -5- LSB 5398XL (9) 90 jm/jh 5/ 28
S.F. _____ H.F. _____ for an item is to take place and shall incorporate the items 1 detailed in 1994 Iowa Acts, ch. 1181, 17 . The schedule 2 shall list each item of expenditure and the estimated dollar 3 amount of moneys to be spent on that item for the fiscal 4 year. The department of management may submit during a 5 regular legislative session an amended schedule for legislative 6 consideration. If moneys appropriated under this subsection 7 are not enough to pay for all listed expenditures, the 8 department of management shall distribute the payments among 9 the listed expenditure items. Moneys appropriated to the 10 department of management under this subsection shall not be 11 spent on items other than those included in the filed schedule. 12 c. On September 1 following the close of a fiscal year, 13 moneys in the GAAP deficit reduction account which remain 14 unexpended for items on the filed schedule for the previous 15 fiscal year shall be credited to the Iowa economic emergency 16 fund as follows: 17 (1) The difference between the actual net revenue for the 18 general fund of the state for the fiscal year and the adjusted 19 revenue estimate for the fiscal year shall be transferred to 20 the taxpayer relief fund created in section 8.57E . 21 (2) The remainder of the excess, if any, shall be 22 transferred to the general fund of the state. 23 3. To the extent that moneys appropriated under subsection 24 subsections 1 and 2 exceed the amounts necessary for the 25 cash reserve fund to reach its maximum balance and the 26 amounts necessary to eliminate Iowas GAAP deficit, including 27 elimination of the making of any appropriation in an incorrect 28 fiscal year, the moneys shall be appropriated to the Iowa 29 economic emergency fund transferred pursuant to subsection 2, 30 paragraph c . 31 Sec. 10. Section 8.57, subsection 5, paragraph d, Code 2024, 32 is amended to read as follows: 33 d. The general assembly may provide that all or part of the 34 moneys deposited in the GAAP deficit reduction account created 35 -6- LSB 5398XL (9) 90 jm/jh 6/ 28
S.F. _____ H.F. _____ in this section shall be transferred to the rebuild Iowa 1 infrastructure fund in lieu of appropriation of the moneys to 2 the Iowa economic emergency fund under subsection 2, paragraph 3 c . 4 Sec. 11. Section 8.57E, subsection 2, paragraph b, 5 subparagraph (1), Code 2024, is amended to read as follows: 6 (1) For the fiscal year beginning July 1, 2023, and for 7 each fiscal year thereafter, if the actual net revenue for the 8 general fund of the state for the fiscal year plus the amount 9 transferred to the general fund of the state under section 8.55 10 8.57 , subsection 2 , paragraph b c , for the fiscal year, if 11 any, is less than one hundred three and one-half percent of 12 the actual net revenue for the general fund of the state for 13 the prior fiscal year, there is transferred from the taxpayer 14 relief fund to the general fund of the state an amount equal to 15 the difference or the remaining balance of the taxpayer relief 16 fund, whichever is lower, subject to subparagraph (2). 17 Sec. 12. Section 8.58, Code 2024, is amended to read as 18 follows: 19 8.58 Exemption from automatic application. 20 1. To the extent that moneys appropriated under section 8.57 21 do not result in moneys being credited to the general fund of 22 the state under section 8.55 8.57 , subsection 2 , paragraph c , 23 moneys appropriated under section 8.57 and moneys contained 24 in the cash reserve fund, rebuild Iowa infrastructure fund, 25 environment first fund, Iowa economic emergency fund, taxpayer 26 relief fund, state bond repayment fund, Iowa coronavirus fiscal 27 recovery fund, and Iowa coronavirus capital projects fund 28 shall not be considered in the application of any formula, 29 index, or other statutory triggering mechanism which would 30 affect appropriations, payments, or taxation rates, contrary 31 provisions of the Code notwithstanding. 32 2. To the extent that moneys appropriated under section 8.57 33 do not result in moneys being credited to the general fund of 34 the state under section 8.55 8.57 , subsection 2 , paragraph c , 35 -7- LSB 5398XL (9) 90 jm/jh 7/ 28
S.F. _____ H.F. _____ moneys appropriated under section 8.57 and moneys contained 1 in the cash reserve fund, rebuild Iowa infrastructure fund, 2 environment first fund, Iowa economic emergency fund, taxpayer 3 relief fund, state bond repayment fund, Iowa coronavirus fiscal 4 recovery fund, and Iowa coronavirus capital projects fund shall 5 not be considered by an arbitrator or in negotiations under 6 chapter 20 . 7 Sec. 13. REPEAL. Section 8.55, Code 2024, is repealed. 8 Sec. 14. TRANSFER OF MONEYS. On the effective date of this 9 division of this Act, moneys remaining in the Iowa economic 10 emergency fund created in section 8.55, Code 2024, shall be 11 transferred as follows: 12 1. To the cash reserve fund created in section 8.56 up to 13 the maximum balance of the cash reserve fund as described in 14 sections 8.56 and 8.57, as amended by this division of this 15 Act. 16 2. If moneys remain after the transfer under subsection 1, 17 to the general fund of the state. 18 DIVISION II 19 INDIVIDUAL INCOME TAXES FUTURE INCOME TAX RATES ALTERNATE 20 TAX RATES WITHHOLDING 21 Sec. 15. Section 421.27, subsection 9, paragraph a, 22 subparagraph (3), Code 2024, is amended to read as follows: 23 (3) In the case of all other entities, including 24 corporations described in section 422.36, subsection 5 , and all 25 other entities required to file an information return under 26 section 422.15, subsection 2 , the entitys Iowa net income 27 after the application of the Iowa business activity ratio, 28 if applicable, multiplied by the top income tax rate imposed 29 under section 422.5A 422.5 for the tax year, less any Iowa tax 30 credits available to the entity. 31 Sec. 16. Section 422.5, subsection 1, paragraph a, Code 32 2024, is amended to read as follows: 33 a. A tax is imposed upon every resident and nonresident 34 of the state which tax shall be levied, collected, and paid 35 -8- LSB 5398XL (9) 90 jm/jh 8/ 28
S.F. _____ H.F. _____ annually upon and with respect to the entire taxable income 1 as defined in this subchapter at rates as provided in section 2 422.5A. the following rates: 3 (1) For the tax year beginning on or after January 1, 2024, 4 but before January 1, 2025, a rate of 3.65 percent. 5 (2) For the tax years beginning on or after January 1, 2025, 6 a rate of 3.50 percent. 7 Sec. 17. Section 422.5, subsection 2, paragraph b, Code 8 2024, is amended by striking the paragraph. 9 Sec. 18. Section 422.5, subsection 3, paragraph b, Code 10 2024, is amended by striking the paragraph. 11 Sec. 19. Section 422.5, subsection 6, Code 2024, is amended 12 by striking the subsection. 13 Sec. 20. Section 422.16, subsection 2, paragraph e, Code 14 2024, is amended to read as follows: 15 e. For the purposes of this subsection , state income tax 16 shall be withheld at the highest rate for the applicable tax 17 year described in section 422.5A 422.5 from supplemental wages 18 of an employee in those circumstances in which the employer 19 treats the supplemental wages as wholly separate from regular 20 wages for purposes of withholding and federal income tax is 21 withheld from the supplemental wages under section 3402(g) of 22 the Internal Revenue Code. 23 Sec. 21. Section 422.16B, subsection 2, paragraph a, Code 24 2024, is amended to read as follows: 25 a. (1) A pass-through entity shall file a composite return 26 on behalf of all nonresident members and shall report and pay 27 the income or franchise tax imposed under this chapter at the 28 maximum state income or franchise tax rate applicable to the 29 member under section 422.5A 422.5 , 422.33 , or 422.63 on the 30 nonresident members distributive shares of the income from the 31 pass-through entity. 32 (2) The tax rate applicable to a tiered pass-through entity 33 shall be the maximum state income tax rate under section 422.5A 34 422.5 . 35 -9- LSB 5398XL (9) 90 jm/jh 9/ 28
S.F. _____ H.F. _____ Sec. 22. Section 422.16C, subsection 4, paragraph a, Code 1 2024, is amended to read as follows: 2 a. A taxpayer making an election under this section shall 3 be subject to tax in an amount equal to the maximum rate for 4 the applicable tax year under section 422.5A 422.5 , imposed 5 against the taxable income of the taxpayer for the taxable 6 year properly determined under this chapter and allocated 7 and apportioned to the state under the rules adopted by the 8 department. The tax shall be due with the taxpayers return 9 required under this chapter . 10 Sec. 23. Section 422.16C, subsection 5, paragraph a, 11 subparagraph (2), Code 2024, is amended to read as follows: 12 (2) The difference between one hundred percent and the 13 highest individual income tax rate in effect for the tax year. 14 Sec. 24. Section 422.21, subsection 5, Code 2024, is amended 15 to read as follows: 16 5. The director shall determine for the 2023 calendar year 17 and each subsequent calendar year the annual and cumulative 18 inflation factors for each calendar year to be applied to tax 19 years beginning on or after January 1 of that calendar year. 20 The director shall compute the new dollar amounts as specified 21 to be adjusted in section 422.5 by the latest cumulative 22 inflation factor and round off the result to the nearest one 23 dollar. The annual and cumulative inflation factors determined 24 by the director are not rules as defined in section 17A.2, 25 subsection 11 . 26 Sec. 25. Section 422.25A, subsection 5, paragraph c, 27 subparagraphs (3), (4), and (5), Code 2024, are amended to read 28 as follows: 29 (3) Determine the total distributive share of all final 30 federal partnership adjustments and positive reallocation 31 adjustments as modified by this title that are reported to 32 nonresident individual partners and nonresident fiduciary 33 partners and allocate and apportion such adjustments as 34 provided in section 422.33 at the partnership or tiered partner 35 -10- LSB 5398XL (9) 90 jm/jh 10/ 28
S.F. _____ H.F. _____ level, and multiply the resulting amount by the maximum highest 1 individual income tax rate pursuant to section 422.5A for the 2 reviewed year. 3 (4) For the total distributive share of all final federal 4 partnership adjustments and positive reallocation adjustments 5 as modified by this title that are reported to tiered partners: 6 (a) Determine the amount of such adjustments which are of a 7 type that would be subject to sourcing to Iowa under section 8 422.8, subsection 2 , paragraph a , as a nonresident, and then 9 determine the portion of this amount that would be sourced to 10 Iowa under those provisions as if the tiered partner were a 11 nonresident. 12 (b) Determine the amount of such adjustments which are of 13 a type that would not be subject to sourcing to Iowa under 14 section 422.8, subsection 2 , paragraph a , as a nonresident. 15 (c) Determine the portion of the amount in subparagraph 16 division (b) that can be established, as prescribed by the 17 department by rule, to be properly allocable to indirect 18 partners that are nonresident partners or other partners not 19 subject to tax on the adjustments. 20 (d) Multiply the total of the amounts determined in 21 subparagraph divisions (a) and (b), reduced by any amount 22 determined in subparagraph division (c), by the highest 23 individual income tax rate pursuant to section 422.5A for the 24 reviewed year. 25 (5) For the total distributive share of all final federal 26 partnership adjustments and positive reallocation adjustments 27 as modified by this title that are reported to resident 28 individual partners and resident fiduciary partners, multiply 29 that amount by the highest individual income tax rate pursuant 30 to section 422.5A for the reviewed year. 31 Sec. 26. REPEAL. 2022 Iowa Acts, chapter 1002, sections 19, 32 20, 21, 22, 23, and 24, are repealed. 33 Sec. 27. REPEAL. 2023 Iowa Acts, chapter 115, sections 20 34 and 21, are repealed. 35 -11- LSB 5398XL (9) 90 jm/jh 11/ 28
S.F. _____ H.F. _____ Sec. 28. REPEAL. Section 422.5A, Code 2024, is repealed. 1 Sec. 29. RATE OF WITHHOLDING. Notwithstanding any other 2 provision of law to the contrary, for tax years beginning on 3 or after January 1, 2024, any required rate of withholding 4 shall not be higher than the rate for the applicable tax year 5 pursuant to section 422.5 as amended by this division of this 6 Act. 7 Sec. 30. EFFECTIVE DATE. This division of this Act, being 8 deemed of immediate importance, takes effect upon enactment. 9 Sec. 31. RETROACTIVE APPLICABILITY. This division of this 10 Act applies retroactively to January 1, 2024, for tax years 11 beginning on or after that date. 12 DIVISION III 13 PENALTY FOR OVERWITHHOLDING 14 Sec. 32. Section 422.16, Code 2024, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION . 16. a. A withholding agent required to 17 deduct and withhold individual income tax under this section 18 shall adjust the rate of withholding for each payee to the 19 individual income tax rate applicable to the payee within sixty 20 days of a change to the individual income tax rate in section 21 422.5. 22 b. Any withholding agent that is in violation of paragraph 23 a shall pay a penalty of one hundred dollars for each payees 24 withholding that is not adjusted per payroll period. 25 c. The penalty shall not apply if the overwithholding 26 resulted from one or more of the following circumstances: 27 (1) A payee has requested additional withholding above the 28 individual income tax rate pursuant to section 422.5. 29 (2) A withholding agent is overwithholding to correct 30 erroneous underwithholding within the same calendar year. 31 (3) A withholding agent makes a clerical or mathematical 32 error that results in the amount of withholding for a payee 33 being within one percent or twenty dollars of the correct 34 amount of withholding, whichever is greater. 35 -12- LSB 5398XL (9) 90 jm/jh 12/ 28
S.F. _____ H.F. _____ d. Any penalty imposed under this subsection shall be in 1 addition to any other penalty provided by law. 2 e. Any penalty imposed pursuant to this subsection is not 3 subject to waiver. 4 Sec. 33. EFFECTIVE DATE. This division of this Act, being 5 deemed of immediate importance, takes effect upon enactment. 6 DIVISION IV 7 ESTIMATED TAX THRESHOLD 8 Sec. 34. Section 422.16, subsection 12, paragraph a, 9 subparagraph (1), Code 2024, is amended to read as follows: 10 (1) Taxpayers filing a return shall make estimated tax 11 payments if their Iowa income tax liability can reasonably be 12 expected to amount to two hundred one thousand dollars or more 13 for the year. 14 Sec. 35. EFFECTIVE DATE. This division of this Act takes 15 effect January 1, 2025. 16 Sec. 36. APPLICABILITY. This division of this Act applies 17 to tax years beginning on or after January 1, 2025. 18 DIVISION V 19 LUMP SUM DISTRIBUTION OF RETIREMENT INCOME 20 Sec. 37. Section 422.5, subsection 8, Code 2024, is amended 21 to read as follows: 22 8. a. In addition to the other taxes imposed by this 23 section , a tax is imposed , except under paragraph b , on the 24 amount of a lump sum distribution for which the taxpayer has 25 elected under section 402(e) of the Internal Revenue Code to 26 be separately taxed for federal income tax purposes for the 27 tax year. The rate of tax is equal to twenty-five percent of 28 the separate federal tax imposed on the amount of the lump 29 sum distribution. A nonresident is liable for this tax only 30 on that portion of the lump sum distribution allocable to 31 Iowa. The total amount of the lump sum distribution subject 32 to separate federal tax shall be included in net income for 33 purposes of determining eligibility under subsections 2 and 3 , 34 as applicable , except the amount of the lump sum distribution 35 -13- LSB 5398XL (9) 90 jm/jh 13/ 28
S.F. _____ H.F. _____ exempt from state tax in paragraph b shall not be included . 1 b. The amount of a lump sum distribution that is received 2 from a governmental or other pension or retirement plan, 3 including defined benefit or defined contribution plans, 4 annuities, individual retirement accounts, plans maintained or 5 contributed to by an employer, or maintained or contributed 6 to by a self-employed person as an employer, and deferred 7 compensation plans or any earnings attributable to the deferred 8 compensation plans is exempt from state tax imposed under 9 paragraph a if received by a person who is disabled, or is 10 fifty-five years of age or older, or is the surviving spouse of 11 an individual or is a survivor having an insurable interest in 12 an individual who would have qualified for the exemption under 13 this subsection for the tax year. 14 Sec. 38. EFFECTIVE DATE. This division of this Act, being 15 deemed of immediate importance, takes effect upon enactment. 16 Sec. 39. RETROACTIVE APPLICABILITY. This division of this 17 Act applies retroactively to January 1, 2024, for tax years 18 beginning on or after that date. 19 DIVISION VI 20 CHILD CARE FACILITY PROPERTY TAX ASSESSMENT LIMITATION 21 Sec. 40. Section 441.21, subsection 5, paragraph b, 22 subparagraph (2), unnumbered paragraph 1, Code 2024, is amended 23 to read as follows: 24 For Except as prescribed for property subject to 25 subparagraph (3), for valuations established for the assessment 26 year beginning January 1, 2022, and each assessment year 27 thereafter, the portion of actual value at which each property 28 unit of commercial property shall be assessed shall be the sum 29 of the following: 30 Sec. 41. Section 441.21, subsection 5, paragraph b, Code 31 2024, is amended by adding the following new subparagraph: 32 NEW SUBPARAGRAPH . (3) (a) For valuations established 33 for the assessment year beginning January 1, 2024, and each 34 assessment year thereafter, the portion of actual value at 35 -14- LSB 5398XL (9) 90 jm/jh 14/ 28
S.F. _____ H.F. _____ which each portion of a property unit of commercial property 1 that is primarily used as a child care facility as defined 2 in section 237A.1, and for which an application has been 3 allowed under this subparagraph, shall be assessed at an amount 4 equal to the product of the assessment limitation percentage 5 applicable to residential property under subsection 4 for that 6 assessment year multiplied by the actual value of the property. 7 (b) Applications to qualify a child care facility for the 8 assessment limitation allowed under this subparagraph shall be 9 filed with the assessor not later than July 1 of the assessment 10 year for which the person is requesting the assessment 11 limitation. The application shall be on forms prescribed by 12 the department of revenue and must include all of the following 13 information: 14 (i) A description of the property, including the propertys 15 location. 16 (ii) A copy of the license to operate as a child care 17 facility issued by the department of health and human services, 18 or other proof of eligibility as set forth by the department 19 of revenue by rule. 20 (iii) Any other information as required by the department 21 of revenue. 22 (c) Upon allowance of the application, the assessment 23 limitation shall be applied on the portion of the property 24 unit of commercial property that is primarily used as a child 25 care facility for successive years without further filing as 26 long as the property continues to be classified as commercial 27 property and is used for the purposes specified in the original 28 application for assessment limitation. 29 (d) No later than July 6 of each year, the assessor shall 30 remit the applications for assessment limitation to the county 31 auditor with the assessors recommendation for allowance or 32 disallowance of the assessment limitation. If the assessor 33 recommends disallowance, the assessor shall submit the reasons 34 for the recommendation in writing to the county auditor. 35 -15- LSB 5398XL (9) 90 jm/jh 15/ 28
S.F. _____ H.F. _____ (e) No later than July 15 of each year, the county auditor 1 shall forward the applications for assessment limitation to 2 the board of supervisors. The board shall determine the 3 eligibility for each application on or before September 1 of 4 each year. 5 (i) If the board disallows a claim, the board shall send 6 written notice by mail to the applicant at the applicants 7 last-known address. The notice shall state the reasons for 8 disallowing the application and shall state the applicants 9 right to appeal the boards action to the district court. An 10 applicant may appeal the boards decision to the district court 11 of the county in which the property is located within thirty 12 days of the date of the notice of disallowance. 13 (ii) No later than October 1 of each year, the board of 14 supervisors shall certify all allowed assessment limitations 15 received for that year with the county auditor. 16 (f) If a property that has been granted an assessment 17 limitation ceases to be used as a child care facility, the 18 owner of the child care facility shall give written notice to 19 the assessor by the July 1 following the date the property 20 ceased to be used as a child care facility. 21 (g) (i) If the board determines at any time within 22 thirty-six months of allowing an assessment limitation that the 23 assessment limitation was allowed in error, the board shall 24 notify the property owner by mail and conduct a hearing on the 25 matter. 26 (ii) If, after a hearing required by subparagraph 27 subdivision (i), the board determines the assessment limitation 28 was allowed in error and the assessment limitation should be 29 disallowed, the treasurer shall collect from the property owner 30 the amount of tax that would have been assessed on the property 31 if there had been no allowance of the assessment limitation 32 under this subparagraph (3). The amount due shall become a 33 lien on the property that received the assessment limitation 34 and shall be collected by the county treasurer in the same 35 -16- LSB 5398XL (9) 90 jm/jh 16/ 28
S.F. _____ H.F. _____ manner as other taxes. 1 (h) The assessor shall retain a permanent file of properties 2 that have approved assessment limitations pursuant to this 3 subparagraph. If the assessor receives notice of a title 4 transfer pursuant to subparagraph division (i), then the 5 assessor shall file a notice of transfer of property. 6 (i) The county recorder shall give notice to the assessor 7 of each transfer of title filed in the recorders office for a 8 property which has an allowed assessment limitation pursuant to 9 this subparagraph. The notice from the county recorder shall 10 describe the property transferred, the name of the person who 11 transferred title, and the name of the person to whom title is 12 transferred. 13 (j) The department of revenue shall adopt rules to implement 14 and administer this subparagraph. 15 Sec. 42. Section 441.21, subsection 5, paragraph e, 16 subparagraphs (1) and (3), Code 2024, are amended to read as 17 follows: 18 (1) For the fiscal year beginning July 1, 2023, there 19 is appropriated from the general fund of the state to the 20 department of revenue the sum of one hundred twenty-two million 21 three hundred fifty thousand dollars to be used for payments 22 under this paragraph calculated as a result of the assessment 23 limitations imposed under paragraph b , subparagraph (2), 24 subparagraph division (a), and paragraph c , subparagraph (2), 25 subparagraph division (a). For each fiscal year beginning on 26 or after July 1, 2024, there is appropriated from the general 27 fund of the state to the department of revenue the sum of one 28 hundred twenty-five million dollars to be used for payments 29 under this paragraph calculated as a result of the assessment 30 limitations imposed under paragraph b , subparagraph (2), 31 subparagraph division (a), and paragraph c , subparagraph (2), 32 subparagraph division (a) , and paragraph b , subparagraph (3), 33 for the portion of the actual value of the property unit equal 34 to or less than one hundred fifty thousand dollars . 35 -17- LSB 5398XL (9) 90 jm/jh 17/ 28
S.F. _____ H.F. _____ (3) On or before July 1 of each fiscal year, the assessor 1 shall report to the county auditor that portion of the total 2 actual value of all commercial property and industrial property 3 in the county that is subject to the assessment limitations 4 imposed under paragraph b , subparagraph (2), subparagraph 5 division (a), and paragraph c , subparagraph (2), subparagraph 6 division (a), and paragraph b , subparagraph (3), for the 7 portion of the actual value of the property unit equal to 8 or less than one hundred fifty thousand dollars, for the 9 assessment year used to calculate the taxes due and payable in 10 that fiscal year. 11 Sec. 43. Section 441.21, subsection 5, paragraph e, 12 subparagraph (4), subparagraph division (a), Code 2024, is 13 amended to read as follows: 14 (a) The product of the portion of the total actual value 15 of all commercial property, industrial property, and property 16 valued by the department under chapter 434 in the county 17 that is subject to the assessment limitations imposed under 18 paragraph b , subparagraph (2), subparagraph division (a) ; , 19 and paragraph c , subparagraph (2), subparagraph division 20 (a) , ; and paragraph b , subparagraph (3), for the portion of 21 the actual value of the property unit equal to or less than one 22 hundred fifty thousand dollars, for the applicable assessment 23 year used to calculate taxes which are due and payable in the 24 applicable fiscal year multiplied by the difference, stated 25 as a percentage, between ninety percent and the assessment 26 limitation percentage applicable to residential property under 27 subsection 4 for the applicable assessment year. 28 Sec. 44. RETROACTIVE APPLICABILITY. The following apply 29 retroactively to assessment years beginning on or after January 30 1, 2024: 31 1. The section of this division of this Act amending 32 section 441.21, subsection 5, paragraph b, subparagraph (2), 33 unnumbered paragraph 1. 34 2. The section of this division of this Act enacting section 35 -18- LSB 5398XL (9) 90 jm/jh 18/ 28
S.F. _____ H.F. _____ 441.21, subsection 5, paragraph b, subparagraph (3). 1 Sec. 45. APPLICABILITY. The following apply to fiscal years 2 beginning on or after July 1, 2025, for payments pursuant to 3 section 441.21, subsection 5, paragraph e: 4 1. The section of this division of this Act amending section 5 441.21, subsection 5, paragraph e, subparagraphs (1) and (3). 6 2. The section of this division of this Act amending 7 section 441.21, subsection 5, paragraph e, subparagraph (4), 8 subparagraph division (a). 9 Sec. 46. EFFECTIVE DATE. This division of this Act, being 10 deemed of immediate importance, takes effect upon enactment. 11 DIVISION VII 12 UNEMPLOYMENT BENEFITS 13 Sec. 47. Section 96.1A, subsection 36, Code 2024, is amended 14 to read as follows: 15 36. Taxable wages means an amount of wages upon which an 16 employer is required to contribute based upon wages which have 17 been paid in this state during a calendar year to an individual 18 by an employer or the employers predecessor , in this state or 19 another state which extends a like comity to this state, with 20 respect to employment , upon which the employer is required to 21 contribute, which equals the greater of the following: 22 a. Sixty-six and two-thirds Thirty-three and one-third 23 percent of the statewide average weekly wage which was used 24 during the previous calendar year to determine maximum weekly 25 benefit amounts, multiplied by fifty-two and rounded to the 26 next highest multiple of one hundred dollars. 27 b. That portion of wages subject to a tax under a federal 28 law imposing a tax against which credit may be taken for 29 contributions required to be paid into a state unemployment 30 compensation fund. 31 Sec. 48. Section 96.7, subsection 2, paragraph c, 32 subparagraphs (1) and (2), Code 2024, are amended to read as 33 follows: 34 (1) A nonconstruction contributory employer newly subject 35 -19- LSB 5398XL (9) 90 jm/jh 19/ 28
S.F. _____ H.F. _____ to this chapter shall pay contributions at the rate specified 1 in the twelfth fourth benefit ratio rank but not less than 2 one percent until the end of the calendar year in which the 3 employers account has been chargeable with benefits for 4 twelve consecutive calendar quarters immediately preceding the 5 computation date. 6 (2) A construction or landscaping contributory employer, 7 as defined under rules adopted by the department pursuant to 8 chapter 17A , which is newly subject to this chapter shall pay 9 contributions at the rate specified in the twenty-first ninth 10 benefit ratio rank until the end of the calendar year in which 11 the employers account has been chargeable with benefits for 12 twelve consecutive calendar quarters. 13 Sec. 49. Section 96.7, subsection 2, paragraph d, 14 subparagraph (1), Code 2024, is amended to read as follows: 15 (1) The current reserve fund ratio is computed by dividing 16 the total funds available for payment of benefits, on the 17 computation date or on August 15 following the computation 18 date if the total funds available for payment of benefits is a 19 higher amount on August 15, by the total wages paid in covered 20 employment excluding reimbursable employment wages during the 21 first four calendar quarters of the five calendar quarters 22 year immediately preceding the computation date. However, 23 in computing the current reserve fund ratio, beginning July 24 1, 2007, one hundred fifty million dollars shall be added to 25 the total funds available for payment of benefits on each 26 computation date. 27 Sec. 50. Section 96.7, subsection 2, paragraph d, 28 subparagraph (2), subparagraph division (a), Code 2024, is 29 amended by striking the subparagraph division. 30 Sec. 51. Section 96.7, subsection 2, paragraph d, 31 subparagraph (2), subparagraph division (b), Code 2024, is 32 amended by striking the subparagraph division and inserting in 33 lieu thereof the following: 34 (b) If the current reserve fund ratio: 35 -20- LSB 5398XL (9) 90 jm/jh 20/ 28
S.F. _____ H.F. _____ Equals or But is The contribution rate 1 exceeds less than table in effect shall be 2 _______________________________________________________________ 3 0.50 A 4 0.50 0.90 B 5 0.90 1.30 C 6 1.30 D 7 Sec. 52. Section 96.7, subsection 2, paragraph d, 8 subparagraph (2), subparagraph division (d), Code 2024, is 9 amended by striking the subparagraph division and inserting in 10 lieu thereof the following: 11 (d) Each employer qualified for an experience rating 12 shall be assigned a contribution rate for each rate year 13 that corresponds to the employers benefit ratio rank in the 14 contribution rate table effective for the rate year from the 15 following contribution rate tables. Each employers benefit 16 ratio rank shall be computed by listing all the employers by 17 increasing benefit ratios, from the lowest benefit ratio to the 18 highest benefit ratio and grouping the employers so listed into 19 nine separate ranks containing as nearly as possible fourteen 20 and twenty-nine hundredths percent of the total taxable wages, 21 excluding reimbursable employment wages, in the first six 22 ranks, and four and seventy-six hundredths percent of the total 23 taxable wages, excluding reimbursable employment wages, in 24 ranks seven, eight, and nine, paid in covered employment during 25 the four completed calendar quarters immediately preceding the 26 computation date. If an employers taxable wages qualify the 27 employer for two separate benefit ratio ranks the employer 28 shall be afforded the benefit ratio rank assigned the lower 29 contribution rate. Employers with identical benefit ratios 30 shall be assigned to the same benefit ratio rank. 31 Approximate Contribution Rate Tables 32 Benefit Cumulative 33 Ratio Taxable 34 Rank Payroll Limit A B C D 35 -21- LSB 5398XL (9) 90 jm/jh 21/ 28
S.F. _____ H.F. _____ __________________________________________________________ 1 1 14.29% 0.00 0.00 0.00 0.00 2 2 28.58% 0.40 0.30 0.10 0.10 3 3 42.87% 1.20 0.80 0.40 0.20 4 4 57.16% 2.10 1.40 0.60 0.30 5 5 71.45% 3.60 2.40 1.10 0.50 6 6 85.74% 5.40 4.10 1.90 0.90 7 7 90.50% 5.40 5.40 4.20 2.00 8 8 95.26% 5.40 5.40 5.40 2.80 9 9 100.00% 5.40 5.40 5.40 5.40 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanations substance by the members of the general assembly. 13 This bill relates to state taxation and appropriations by 14 combining special purpose funds, modifying individual income 15 tax rates, placing assessment limitations for property taxation 16 purposes on commercial child care facilities, and modifying 17 unemployment benefits. 18 DIVISION I SPECIAL PURPOSE FUNDS. The bill combines 19 the Iowa economic emergency fund (EEF) and the cash reserve 20 fund (CRF) by (1) eliminating the EEF, (2) increasing the 21 maximum balance of the CRF from 7.5 percent of the adjusted 22 revenue estimate to 12.5 percent of the adjusted revenue 23 estimate, and (3) authorizing moneys in the CRF to be used for 24 purposes previously authorized for moneys in the EEF. These 25 authorizations include (1) support of the executive council, 26 (2) appropriations to the general fund of the state (GF) under 27 emergency circumstances when the balance of the GF is negative, 28 and (3) transfers of a budget surplus to the taxpayer relief 29 fund and to the GF, as applicable. Upon the elimination of 30 the EEF, remaining EEF moneys are transferred to the taxpayer 31 relief fund and then remainder of the excess, if any, to the 32 GF. 33 DIVISION II INDIVIDUAL INCOME TAXES FUTURE TAX RATES 34 ALTERNATE TAX RATES. 35 -22- LSB 5398XL (9) 90 jm/jh 22/ 28
S.F. _____ H.F. _____ FUTURE INDIVIDUAL INCOME TAX RATES. The bill strikes the 1 graduated individual income tax rates that go into effect in 2 tax years 2024 and 2025, and establishes new individual income 3 tax flat rates beginning in tax years on or after January 1, 4 2024. 5 The bill establishes the individual income tax flat rate for 6 the tax year beginning January 1, 2024, but before January 1, 7 2025, at 3.65 percent. 8 The bill establishes the individual income tax flat rate for 9 the tax years beginning on or after January 1, 2025, at 3.50 10 percent. Under current law, the individual income tax flat 11 rate of 3.90 percent goes into effect for tax years beginning 12 on or after January 1, 2026. 13 The bill strikes references to calculating the latest 14 cumulative inflation factor in Code section 422.5(6) and Code 15 section 422.21(5) due to removing income tax brackets and 16 establishing the individual income tax flat rate commencing 17 with tax years beginning on or after January 1, 2024. 18 ALTERNATE INDIVIDUAL INCOME TAX RATES. The bill repeals the 19 alternate individual income tax rates. The alternate income 20 tax rate is available for a taxpayer whose income marginally 21 exceeds the individual income tax filing thresholds in Code 22 sections 422.5(2) and (3), and is used to calculate income tax 23 owed. 24 EFFECTIVE DATE AND APPLICABILITY. The division takes effect 25 upon enactment and applies retroactively to tax years beginning 26 on or after January 1, 2024. 27 DIVISION III PENALTY FOR OVERWITHHOLDING. The bill 28 requires a withholding agent to adjust the rate of withholding 29 for each payee (taxpayer) to the individual income tax rate 30 applicable to the payee within 60 days of a change to the 31 individual income tax rate. The term withholding agent is 32 defined in Code section 422.16(1). 33 A withholding agent who knowingly does not adjust the rate 34 of withholding to the individual income tax rate applicable to 35 -23- LSB 5398XL (9) 90 jm/jh 23/ 28
S.F. _____ H.F. _____ the payee within 60 days of a change to the individual income 1 tax rate is required to pay a penalty of $100 for each payees 2 withholding that is not adjusted per payroll period. 3 The overwithholding penalty does not apply if the 4 overwithholding resulted because a payee has requested 5 additional withholding above the individual income tax rate; 6 the withholding agent is overwithholding to correct erroneous 7 underwithholding; or the withholding agent makes a clerical or 8 mathematical error in the amount of withholding that is within 9 1 percent or $20 of the correct amount, whichever is greater. 10 The overwithholding penalty imposed pursuant to the bill is 11 not subject to waiver. 12 The division takes effect upon enactment. 13 DIVISION IV ESTIMATED TAX THRESHOLD. Under the bill, 14 a taxpayer filing a return is required to make estimated 15 tax payments if Iowa income tax liability can reasonably be 16 expected to exceed $1,000 or more. Under current law, such 17 a taxpayer filing a return is required to make estimated 18 tax payments if Iowa income tax liability can reasonably be 19 expected to exceed $200 or more. 20 The division takes effect January 1, 2025, and applies to tax 21 years on or after that date. 22 DIVISION V LUMP SUM DISTRIBUTION OF RETIREMENT INCOME. 23 Under current law, commencing with tax years beginning on or 24 after January 1, 2023, retirement income is not subject to 25 Iowa individual income tax. However, under current law a lump 26 sum distribution from a retirement account is subject to Iowa 27 income tax under Code section 422.5(8) at a rate of 25 percent 28 of the federal tax rate imposed on the amount of the lump sum 29 distribution. 30 The bill provides that the taxation of a lump sum 31 distribution from a retirement account is also exempt from 32 state taxation by exempting the lump sum distribution for a 33 person who is disabled, or 55 years of age or older, or who is 34 the surviving spouse of an individual or is a survivor having 35 -24- LSB 5398XL (9) 90 jm/jh 24/ 28
S.F. _____ H.F. _____ an insurable interest in an individual who would have qualified 1 for the exemption for the tax year. 2 The bill excludes the lump sum distribution exempt from 3 state taxation from being included in calculating the 4 individual income tax filing thresholds in Code section 5 422.5(2) and (3). 6 The division takes effect upon enactment and applies 7 retroactively to tax years beginning on or after January 1, 8 2024. 9 DIVISION VI CHILD CARE FACILITY PROPERTY TAX ASSESSMENT 10 LIMITATION. This division of the bill relates to assessment 11 limitations for property taxation purposes for commercial child 12 care facilities, and includes applicability and effective date 13 provisions. 14 Code section 441.21(5) determines the amount of actual value 15 of commercial property that is subject to property tax. The 16 amount is the sum of the residential assessment limitation 17 to the portion of the propertys value that does not exceed 18 $150,000 plus 90 percent of the propertys value in excess of 19 $150,000. 20 The bill division excludes property that is primarily used 21 as a child care facility from the calculation of the actual 22 value of the property. The bill instead specifies that for 23 assessment years beginning on or after January 1, 2024, the 24 amount of actual value used as child care facilities that 25 is subject to tax is equal to the product of the assessment 26 limitation percentage applicable to residential property 27 multiplied by the actual value of the property provided that 28 the property owner has applied for the assessment limitation 29 and the county board of supervisors has allowed such an 30 assessment limitation. 31 The division establishes application procedures, approval 32 procedures, and recordkeeping procedures for the assessment 33 limitation. 34 The division makes conforming changes to reflect the child 35 -25- LSB 5398XL (9) 90 jm/jh 25/ 28
S.F. _____ H.F. _____ care facility assessment limitation. 1 The division applies retroactively to assessment years 2 beginning on or after January 1, 2024, and applies to payments 3 to local governments for fiscal years beginning on or after 4 July 1, 2025. 5 The division takes effect upon enactment. 6 DIVISION VII UNEMPLOYMENT BENEFITS. The bill modifies 7 the definition of taxable wages by eliminating the wages 8 paid to an employee from another state from the calculation 9 of wages upon which an employer is required to contribute to 10 the unemployment compensation fund (fund) when the other state 11 extends a like comity (reciprocity) to Iowa for employment 12 purposes. 13 Under current law, the calculation of taxable wages upon 14 which an employer is required to contribute to the fund is 15 the greater amount of the two amounts calculated pursuant to 16 paragraphs a and b under Code section 96.1A(36). The bill 17 changes the calculation of one these amounts under paragraph 18 a by reducing the percentage of statewide average weekly wage 19 used in the calculation from 66.66 percent to 33.33 percent 20 of the statewide average weekly wage used during the previous 21 calendar year which is then multiplied by 52 and rounded to the 22 nearest $100 to determine maximum weekly benefit amounts. 23 The amount in paragraph a as calculated under the bill 24 would be the amount used to calculate taxable wages upon which 25 an employer is required to contribute to the fund if that 26 amount exceeds the amount in paragraph b under Code section 27 96.1A(36). 28 The calculation of the unemployment contribution rate each 29 year is a dynamic calculation dependent upon the calculation 30 of the current reserve ratio, the benefit ratio rank, and 31 the contribution rate table in effect for the rate year. 32 The bill changes the current reserve ratio calculation, the 33 number of benefit ratio ranks, the contribution rates, and the 34 contribution rate table. 35 -26- LSB 5398XL (9) 90 jm/jh 26/ 28
S.F. _____ H.F. _____ The current reserve ratio (calculation of available benefit 1 amount in fund) determines the contribution rate table in 2 effect for the rate year following the computation date. The 3 bill changes the computation of the current reserve fund 4 ratio in Code section 96.7(2)(d)(1) by basing the calculation 5 of the ratio on the preceding year rather than the previous 6 five calendar quarters, and strikes the requirement that $150 7 million be added on the reserve ratio computation date to the 8 total funds available for benefits. The bill also strikes the 9 computation of the highest cost-benefit ratio and removes the 10 ratio from the computation of the current reserve ratio. 11 The bill modifies the contribution rate table by reducing 12 the number of possible rate tables that could be in effect 13 for the rate year from eight contribution rate tables to four 14 contribution rate tables. Under the bill and current law, only 15 one contribution rate table may be in effect per rate year. In 16 reducing the number of possible contribution rates tables from 17 eight to four, the bill also changes the numbered contribution 18 rate designations to lettered contribution rate designations. 19 Under current law, there are 21 benefit ratio ranks in the 20 contribution table. The benefit ratio is a calculation based 21 upon the average number of unemployment benefits charged to 22 an employer over previous calendar quarters. The higher the 23 benefits charged to an employer, the higher the benefit ratio 24 rank the employer receives. The bill reduces the number of 25 benefit ratio ranks from 21 to 9. 26 Under current law, each of the 21 benefit ratio rank 27 constitutes 4.76 percent of total taxable wages. The bill 28 groups the benefit ratio ranks differently by separating each 29 of the first six benefit ratio ranks by 14.29 percent of total 30 taxable wages, and separates the last three benefit ratio ranks 31 by 4.76 percent of total taxable wages. 32 Under current law, the highest contribution rate that 33 corresponds with the highest benefit ratio rank is 9.0 percent. 34 Under the bill, the highest contribution rate that corresponds 35 -27- LSB 5398XL (9) 90 jm/jh 27/ 28
S.F. _____ H.F. _____ with the highest benefit ratio rank is 5.40 percent. 1 As a result of the bill, each employer will be assigned one 2 of the nine new benefit ratio ranks that corresponds with one 3 of the four new lettered contribution rate designations in 4 effect for the rate year to determine the contribution rate for 5 the year. 6 -28- LSB 5398XL (9) 90 jm/jh 28/ 28