Creating the taxpayers trust fund and the Iowa taxpayers trust fund tax credit, and making contingent transfers from the Iowa economic emergency fund

This bill creates the taxpayers trust fund and Iowa taxpayers trust fund tax credit, and makes contingent transfers from the Iowa economic emergency fund. The taxpayers trust fund is established in the bill as separate from the general fund of the state to be used for appropriations for tax relief.5 percent of the adjusted revenue estimate for the fiscal year, a portion of the excess may be transferred to the trust fund. The transfer amount is limited to the first $60 million of the difference between the actual net general fund revenue and the adjusted revenue estimate for the fiscal year that was used to establish the state general fund expenditure limitation. The bill creates a taxpayers trust fund tax credit and provides for the transfer of moneys from the taxpayers trust fund for purposes of the credit. The taxpayers trust fund tax credit is available to an “eligible individual”, which is defined as an individual who timely files an Iowa individual income tax return, including extensions, but not including an estate or trust. The credit is allowed for any tax year beginning January immediately preceding July of any fiscal year in which a transfer is made from the taxpayers trust fund for purposes of the credit. The credit will be equal to the amount transferred divided by the number of eligible individuals for the previous tax year, rounded down to the nearest whole dollar. The credit may be claimed against any individual income tax liability remaining after subtracting all refundable and nonrefundable credits except the credits for withheld tax and estimated tax paid. The tax credit is nonrefundable and may not be carried forward or back to a different tax year. In order to administer the credit, the bill creates an Iowa taxpayers trust fund tax credit fund within the state treasury under the control of the department of revenue. Transfers from the taxpayers trust fund for purposes of the credit are placed into this fund and used to reimburse the general fund of the state for the amount of credits claimed. Any moneys in the fund which represent unclaimed tax credits immediately revert back to the taxpayers trust fund. An “unclaimed tax credit” means the amount by which the credits that were eligible to be claimed by eligible individuals exceeds the credits actually claimed by eligible individuals. The bill provides for a transfer from the taxpayers trust fund during fiscal year 2022-2023 for purposes of the tax credit. The amount transferred shall be the ending balance of the taxpayers trust fund at the close of the fiscal year ending June 30, 2022, plus the amount transferred for that fiscal year into the taxpayers trust fund during fiscal year 2022-2023. This transfer will result in a taxpayers trust fund tax credit being allowed for the 2022 tax year. The bill requires that for fiscal year 2022-2023, and for each fiscal year thereafter, if the balance of the taxpayers trust fund equals or exceeds $30 million, the entire balance of the fund is transferred to the taxpayers trust fund tax credit fund created in the bill to be used to provide the taxpayers trust fund tax credit to eligible individuals. The bill excludes the taxpayers trust fund tax credit from the definition of “state individual income tax” for purposes of computing the emergency medical services income surtax, the instructional support income surtax, the educational improvement income surtax, and the physical plant and equipment income surtax.57E to the taxpayer trust fund at the end of the fiscal year ending June 30, 2020, and repeals the taxpayer relief fund.