Bill
Bill > HF94
IA HF94
IA HF94A bill for an act relating to individual income taxation by exempting certain amounts received from nonqualified deferred compensation plans and including retroactive applicability provisions.(See HF 961.)
summary
Introduced
01/21/2025
01/21/2025
In Committee
01/21/2025
01/21/2025
Crossed Over
Passed
Dead
Introduced Session
91st General Assembly
Bill Summary
Under current law, a taxpayer may exclude retirement income from the computation of net income for purposes of the individual income tax. In order to be eligible for the retirement income exclusion, a person must be disabled, at least 55 years of age, or be the surviving spouse of an individual or be a survivor having an insurable interest in an individual who would have qualified for the retirement income exclusion. This bill excludes up to $500,000 of nonqualified deferred compensation plan income from the computation of net income for purposes of the individual income tax under similar circumstances as the retirement income exclusion. In order to be eligible for the nonqualified deferred compensation plan income exclusion, the taxpayer must be disabled, at least 55 years of age, or be the surviving spouse of an individual or be a survivor having an insurable interest in an individual who would have qualified for the income exclusion. A nonqualified deferred compensation plan is deferred compensation with no federal legal deferral limit that is subject to tax at a later date, and is usually made available to select employees. The bill applies retroactively to January 1, 2025, for tax years beginning on or after that date.
AI Summary
This bill amends Iowa's income tax code to create a new tax exemption for nonqualified deferred compensation plans (NDCPs), which are compensation arrangements typically offered to high-level or select employees that allow them to defer income to a later date without standard federal deferral limits. The bill allows individuals who are disabled, at least 55 years old, or the surviving spouse of someone who would have qualified for the exemption to subtract up to $500,000 of NDCP income or earnings from their state income tax calculations. For married couples filing separately, the $500,000 exemption will be proportionally allocated between spouses based on their respective NDCP income. The tax provision will apply retroactively to tax years beginning on or after January 1, 2025, meaning taxpayers can claim this exemption for those future tax years. This change is designed to provide tax relief for certain individuals receiving deferred compensation, similar to existing retirement income exclusion provisions in Iowa's tax code.
Committee Categories
Budget and Finance
Sponsors (1)
Last Action
Committee report approving bill, renumbered as HF 961. (on 03/13/2025)
Official Document
bill text
bill summary
Loading...
bill summary
Loading...
bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=HF94 |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/HF94.html |
Loading...