Iowa 2025-2026 Regular Session

Iowa House Bill HF622

Introduced
2/27/25  

Caption

A bill for an act creating a catastrophic savings account and modifying individual income taxes for account holders and including applicability provisions.(Formerly HSB 149; See HF 988.)

Impact

The bill also modifies state income tax laws, allowing account holders to deduct contributions made to their catastrophic savings accounts from their taxable income. Additionally, interest accrued in these accounts will be exempt from state income tax. The legislation stipulates various contribution limits based on homeowners' insurance premiums, which varies depending on the coverage and circumstances of the individual account holder. However, nonqualified withdrawals will incur a penalty, fostering a responsible approach towards the intended use of the funds.

Summary

House File 622 introduces a new financial tool in the form of a catastrophic savings account, aimed at helping individuals manage the costs associated with catastrophic events such as natural disasters. This savings account allows residents to save funds specifically for qualified catastrophic expenses, which includes paying deductibles for homeowners' insurance policies covering such events. With the permission to open these interest-bearing accounts from state or federally chartered institutions, the bill seeks to bolster residents' financial preparedness for emergencies while providing them with beneficial tax incentives.

Contention

While sponsors of the bill argue that these measures will enhance fiscal responsibility and protect citizens from the financial fallout of catastrophic events, there could be concerns regarding the implications for low-income families or those without proper insurance coverage. Specifically, the strict guidelines about qualifying expenses and penalties for nonqualified withdrawals might pose barriers for some individuals. Moreover, the requirement for detailed reporting may create additional administrative burdens for both the account holders and the financial institutions managing these accounts.

Companion Bills

IA HSB149

Related A bill for an act creating a catastrophic savings account and modifying individual income taxes for account holders and including applicability provisions.(See HF 622, HF 988.)

IA HF988

Similar To A bill for an act creating a catastrophic savings account and modifying individual income taxes for account holders and including applicability provisions.(Formerly HF 622, HSB 149.)

Previously Filed As

IA HF2638

A bill for an act excluding nonqualified deferred compensation income from the individual income tax, and including retroactive applicability provisions.(Formerly HF 2105.)

IA HF2160

A bill for an act excluding from the individual income tax certain direct trustee-to-trustee transfers from educational savings plan trust accounts to Roth individual retirement accounts, and including retroactive applicability provisions.

IA HF715

A bill for an act relating to state and local finance and the administration of the tax and related laws by the department of revenue, and including effective date, applicability, and retroactive applicability provisions.(Formerly HSB 187.)

IA SF552

A bill for an act relating to individual and corporate income taxes, the insurance premium tax, and including the contingent repeal of the individual income tax, and including retroactive applicability and effective date provisions.(Formerly SSB 1126.)

IA HF2537

A bill for an act relating to the treasurer of state's duties, including Iowa educational savings plan trust and Iowa ABLE savings plan trust requirements and disposition of unclaimed property, and including retroactive applicability provisions.(Formerly HSB 626; See HF 2667.)

IA SF2398

A bill for an act relating to state taxation by modifying alternate and individual income tax rates, and including effective date and retroactive applicability provisions.(Formerly SSB 3038.)

IA HF659

A bill for an act modifying the computation of net income for the individual income tax related to the capital gain or loss from the sale of bullion, coins, and currency, and including applicability provisions.(Formerly HF 208; See HF 2626.)

IA HSB720

A bill for an act relating to state taxation by modifying future individual income tax rates, creating processes for reducing the individual income tax rate to zero, reducing future contingent corporate income tax rates, making appropriations, and including effective date, applicability, and retroactive applicability provisions.

IA HF2637

A bill for an act relating to the adoption tax credit available against the individual income tax, and including effective date and retroactive applicability provisions.(Formerly HF 2243.)

IA HF2667

A bill for an act relating to the treasurer of state's duties, including Iowa educational savings plan trust and Iowa ABLE savings plan trust requirements and disposition of unclaimed property, and including retroactive applicability provisions. (Formerly HF 2537, HSB 626.) Effective date: 07/01/2024. Applicability date: 01/01/2024.

Similar Bills

IA HF988

A bill for an act creating a catastrophic savings account and modifying individual income taxes for account holders and including applicability provisions.(Formerly HF 622, HSB 149.)

IA HSB149

A bill for an act creating a catastrophic savings account and modifying individual income taxes for account holders and including applicability provisions.(See HF 622, HF 988.)

MS HB888

Insurance mitigation; revise various provisions related to.

LA HB126

Authorizes individual income tax deductions for contributions to catastrophe savings accounts (OR DECREASE GF RV See Note)

LA HB382

Authorizes establishment of tax-advantaged catastrophe savings accounts to cover losses from damage to taxpayers' primary residences and commercial property (OR DECREASE GF RV See Note)

AL HB106

Relating to Catastrophe Savings Accounts; expands allowable expenses

AL SB73

Relating to Catastrophe Savings Accounts; expands allowable expenses

MS SB2782

The Mississippi Comprehensive Hurricane And Wind Damage Mitigation Program; create and set provisions related thereto.