House File 962 - Introduced HOUSE FILE 962 BY GRASSLEY , ANDREWS , WULF , COLLINS , KNIFF MCCULLA , RINKER , WILZ , BODEN , VONDRAN , MEGGERS , WOOD , INGELS , HORA , A. MEYER , GOLDING , BOSSMAN , BERGAN , SMITH , WELDON , JONES , DUNWELL , C. JOHNSON , YOUNG , HOLT , HENDERSON , BARKER , and NORDMAN A BILL FOR An Act modifying the child and dependent care credit available 1 against the individual income tax, and including retroactive 2 applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1908YH (4) 91 jm/jh
H.F. 962 Section 1. Section 422.12C, subsection 1, Code 2025, is 1 amended to read as follows: 2 1. The taxes imposed under this subchapter , less the amounts 3 of nonrefundable credits allowed under this subchapter , shall 4 be reduced by a child and dependent care credit equal to the 5 following percentages of the federal child and dependent care 6 credit provided in section 21 of the Internal Revenue Code, 7 without regard to whether or not the federal credit was limited 8 by the taxpayers federal tax liability: 9 a. For a taxpayer with net income of less than ten thousand 10 dollars, seventy-five percent. 11 b. For a taxpayer with net income of ten thousand dollars or 12 more but less than twenty thousand dollars, sixty-five percent. 13 c. For a taxpayer with net income of twenty thousand dollars 14 or more but less than twenty-five thousand dollars, fifty-five 15 percent. 16 d. For a taxpayer with net income of twenty-five thousand 17 dollars or more but less than thirty-five thousand dollars , 18 fifty percent. 19 e. For a taxpayer with net income of thirty-five thousand 20 dollars or more but less than forty thousand dollars, forty 21 percent. 22 f. For a taxpayer with net income of forty thousand dollars 23 or more but less than ninety thousand dollars, thirty percent. 24 g. For a taxpayer with net income of ninety thousand dollars 25 or more, zero percent. 26 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 27 retroactively to January 1, 2025, for tax years beginning on 28 or after that date. 29 EXPLANATION 30 The inclusion of this explanation does not constitute agreement with 31 the explanations substance by the members of the general assembly. 32 This bill relates to the Iowa child and dependent care credit 33 available against the individual income tax. 34 The Iowa child and dependent care credit is a refundable 35 -1- LSB 1908YH (4) 91 jm/jh 1/ 2
H.F. 962 credit calculated as a percentage of the federal child and 1 dependent care credit, depending on the Iowa net income of 2 the taxpayer. Currently, there are seven graduated Iowa net 3 income thresholds used to calculate the credit. The bill 4 reduces the number of Iowa net income thresholds from seven 5 thresholds to four thresholds, and removes the maximum Iowa 6 net income threshold amount used by the taxpayer to calculate 7 the Iowa child and dependent care tax credit. By removing 8 the maximum Iowa net income threshold amount for eligibility 9 purposes ($90,000), any taxpayer with Iowa net income equal 10 to or exceeding $25,000 is eligible to use 50 percent of the 11 federal child and dependent care credit as a refundable credit 12 against the Iowa individual income tax, regardless of whether 13 the taxpayers federal credit is limited by the taxpayers 14 federal tax liability. 15 The bill applies retroactively to tax years beginning on or 16 after January 1, 2025. 17 -2- LSB 1908YH (4) 91 jm/jh 2/ 2