Text: HF729            Text: HF731
Complete Bill History


House File 730

HOUSE FILE BY KAUFMANN, WIENCEK, and PETTENGILL Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the providing of income tax, premium tax, and 2 moneys and credits tax credits for employers paying part of 3 their employees' student loans and including a retroactive 4 applicability date provision. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1766YH 82 7 mg/es/88 PAG LIN 1 1 Section 1. NEW SECTION. 261.130 DEFINITIONS. 1 2 As used in this division, unless the context otherwise 1 3 requires: 1 4 1. "Accredited higher education institution" means an 1 5 institution of higher education as defined in section 261.92. 1 6 2. "Commission" means the college student aid commission 1 7 created in section 261.1. 1 8 3. "Qualified undergraduate loan" means a federally 1 9 guaranteed student loan authorized under the federal Higher 1 10 Education Act of 1965, 20 U.S.C. } 1071 et seq., or a loan 1 11 originated by banks, savings and loans, or credit unions 1 12 located in Iowa for purposes of attending an accredited higher 1 13 education institution. 1 14 Sec. 2. NEW SECTION. 261.131 STUDENT LOAN REPAYMENT TAX 1 15 CREDIT PROGRAM. 1 16 1. The commission shall establish a student loan repayment 1 17 tax credit program for employers who repay qualified 1 18 undergraduate loans of students employed in this state by the 1 19 employer. Under the program eligible employers shall be 1 20 entitled to a tax credit to be allowed against the taxes 1 21 imposed under chapter 422, division II, III, or V, or chapter 1 22 432, or against the moneys and credits tax imposed in section 1 23 533.24. 1 24 2. An eligible employer shall receive a credit equal to 1 25 thirty percent of the amount of the qualified undergraduate 1 26 loan repaid by the employer for an employee in the tax year. 1 27 However, in computing the amount of the tax credit only the 1 28 following repayment amount shall be used in the computation: 1 29 a. For the first tax year, not more than twenty percent of 1 30 the maximum qualified undergraduate loan. 1 31 b. For the second tax year, not more than thirty percent 1 32 of the maximum qualified undergraduate loan. 1 33 c. For the third tax year, not more than fifty percent of 1 34 the maximum qualified undergraduate loan. 1 35 For purposes of the computation of the tax credit pursuant 2 1 to this subsection, "maximum qualified undergraduate loan" 2 2 equals twenty=five thousand dollars. 2 3 3. To qualify as an eligible employer for purposes of the 2 4 tax credit under subsection 2, an employer shall meet all of 2 5 the following: 2 6 a. Pay the employee for whom the loan repayment is to be 2 7 made an annualized salary or wage of at least twenty=five 2 8 thousand dollars. 2 9 b. Employ the individual primarily in this state. 2 10 c. Begin repayment of the qualified undergraduate loan 2 11 within six months of the initial hiring date of the employee. 2 12 For purposes of this paragraph, an employee who is already 2 13 employed by the employer as of July 1, 2007, shall be 2 14 considered to be initially hired as of that date. 2 15 4. If the employer is a partnership, S corporation, 2 16 limited liability company, estate, or trust electing to have 2 17 the income taxed directly to the individual, an individual may 2 18 claim the tax credit allowed. The amount claimed by the 2 19 individual shall be based upon the pro rata share of the 2 20 individual's earnings of the partnership, S corporation, 2 21 limited liability company, estate, or trust. 2 22 5. Any credit in excess of the tax liability for the tax 2 23 year shall be refunded with interest computed under section 2 24 422.25. In lieu of claiming a refund, a taxpayer may elect to 2 25 have the overpayment shown on its final, completed return 2 26 credited to the tax liability for the following tax year. 2 27 Sec. 3. NEW SECTION. 261.132 TAX CREDIT CERTIFICATE 2 28 PROCEDURE. 2 29 1. An employer seeking the student loan repayment tax 2 30 credit under this division shall apply to the commission on 2 31 the form prescribed by the commission, provide verification 2 32 that the employer is eligible as required under section 2 33 261.131, subsection 3, and any other information required by 2 34 the commission or the department of revenue. 2 35 2. After verifying the eligibility for the tax credit, the 3 1 commission, in consultation with the department of revenue, 3 2 shall issue a student loan repayment tax credit certificate to 3 3 be attached to the person's tax return. The tax credit 3 4 certificate shall contain the taxpayer's name, address, tax 3 5 identification number, the dates of loan repayment, the amount 3 6 of credit, and other information required by the department of 3 7 revenue. 3 8 Sec. 4. NEW SECTION. 422.11T STUDENT LOAN REPAYMENT TAX 3 9 CREDIT. 3 10 The taxes imposed under this division, less the credits 3 11 allowed under sections 422.12 and 422.12B, shall be reduced by 3 12 a student loan repayment tax credit authorized pursuant to 3 13 sections 261.130 through 261.132. 3 14 Sec. 5. Section 422.33, Code 2007, is amended by adding 3 15 the following new subsection: 3 16 NEW SUBSECTION. 24. The taxes imposed under this division 3 17 shall be reduced by a student loan repayment tax credit 3 18 authorized pursuant to sections 261.130 through 261.132. 3 19 Sec. 6. Section 422.60, Code 2007, is amended by adding 3 20 the following new subsection: 3 21 NEW SUBSECTION. 13. The taxes imposed under this division 3 22 shall be reduced by a student loan repayment tax credit 3 23 authorized pursuant to sections 261.130 through 261.132. 3 24 Sec. 7. NEW SECTION. 432.12J STUDENT LOAN REPAYMENT TAX 3 25 CREDIT. 3 26 The taxes imposed under this chapter shall be reduced by a 3 27 student loan repayment tax credit authorized pursuant to 3 28 sections 261.130 through 261.132. 3 29 Sec. 8. Section 533.24, Code 2007, is amended by adding 3 30 the following new subsection: 3 31 NEW SUBSECTION. 11. The moneys and credits tax imposed 3 32 under this section shall be reduced by a student loan 3 33 repayment tax credit authorized pursuant to sections 261.130 3 34 through 261.132. 3 35 Sec. 9. RETROACTIVE APPLICABILITY DATE. This Act applies 4 1 retroactively to January 1, 2007, for tax years beginning on 4 2 or after that date. 4 3 EXPLANATION 4 4 This bill provides a tax credit for an employer who repays 4 5 any portion of an employee's undergraduate student loan. The 4 6 tax credits are allowable under the individual and corporate 4 7 income taxes, franchise tax, insurance premiums tax, and 4 8 moneys and credits tax of credit unions. 4 9 To be eligible for the tax credit the employer must pay an 4 10 annualized salary or wage of at least $25,000, employ the 4 11 person in this state, and begin repayment of the student loan 4 12 within six months of the hiring date. However, the bill 4 13 provides that the hiring date for an employee already employed 4 14 as of July 1, 2007, shall be considered July 1, 2007. 4 15 The amount of the tax credit equals 30 percent of the 4 16 amount of the loan repaid not to exceed a certain percentage 4 17 of the first $25,000 of the student loan. This percentage 4 18 equals 20 percent for the first tax year, 30 percent for the 4 19 second tax year, and 50 percent for the third tax year. 4 20 The bill applies retroactively to January 1, 2007, for tax 4 21 years beginning on or after that date. 4 22 LSB 1766YH 82 4 23 mg:rj/es/88
Text: HF729            Text: HF731 Complete Bill History