Bill
Bill > HF961
IA HF961
IA HF961A bill for an act relating to individual income taxation by exempting certain amounts received from nonqualified deferred compensation plans and including retroactive applicability provisions.(Formerly HF 94.)
summary
Introduced
03/13/2025
03/13/2025
In Committee
05/15/2025
05/15/2025
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 provide a tax exemption for certain nonqualified deferred compensation plan payments. Specifically, individuals who are disabled, 55 years or older, or the surviving spouse of someone who would have qualified for the exemption can subtract up to $500,000 of income from such a plan from their state income taxes. A nonqualified deferred compensation plan is typically a type of compensation arrangement that allows employees to defer receiving a portion of their income until a later date, often for tax planning purposes. For married couples filing separate tax returns, the $500,000 exemption will be proportionally allocated between spouses based on the amount of retirement pay each receives from the plan. The bill is retroactively applicable to tax years beginning on or after January 1, 2025, meaning taxpayers can claim this exemption for those future tax years, even if the bill is passed in an earlier year. This provision aims to provide tax relief for older, disabled, or surviving workers who receive deferred compensation.
Committee Categories
Budget and Finance
Sponsors (0)
No sponsors listed
Other Sponsors (1)
Ways and Means (House)
Last Action
Rereferred to Ways and Means. H.J. 1221. (on 05/15/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=HF961 |
| Fiscal Note - Nonqualified Deferred Compensation Plans, Income Tax Exclusion | https://www.legis.iowa.gov/docs/publications/FN/1524645.pdf |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/HF961.html |
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