SSB 3116

48% The individual tax rates listed above apply for all tax years beginning on or after January 1, 2021, until such time as a different tax rate takes effect as described in division III. DIVISION II —— CONTINGENT EFFECTIVE DATE IN 2018 IOWA ACTS —— NET GENERAL FUND REVENUES CALCULATION. _____ net general fund revenues for FY 2021; or if the previous conditions are not satisfied, on or after the January following the first fiscal year for which the net general fund revenues equal or exceed $8,314,600,000, and also equal or exceed 104 percent of the net general fund revenues for the fiscal year immediately preceding that fiscal year. The bill strikes the above-mentioned condition relating to net general fund revenues exceeding 104 percent of the net general fund revenues for the preceding fiscal year. Therefore, the “trigger year” occurs when net general fund revenues equal or exceed $8,314,600,000 during FY 2022 or any fiscal year thereafter, and the contingent individual income tax changes described in division III of the bill become effective as well as other tax changes in 2018 Iowa Acts, chapter 1161, sections through 134. DIVISION III —— FUTURE CONTINGENT INDIVIDUAL INCOME TAXES BEGINNING IN 2023 TAX YEAR. Commencing with the tax year beginning January 1, 2023, the bill reduces the number of individual income tax brackets to four and reduces the tax rates in the aggregate if certain net tax receipt revenue targets are met or exceeded as described in division II of the bill. For a married couple filing a joint return, the taxable income amounts in each individual bracket are doubled. The taxable income amounts in each tax bracket are indexed to inflation and increased each year.50% Current Iowa law allows married persons to file separately on a combined return so there are no separate tax brackets for a married couple filing a joint return. However, the ability for married persons to file separately on a combined return is repealed in the “trigger year” in 2018 Iowa Acts, chapter 1161, due to the starting point to calculate Iowa income taxes moving from federal adjusted gross income to federal taxable income, and federal law does not permit married persons to file separately on a combined return. DIVISION IV —— CHILD AND DEPENDENT CARE AND EARLY CHILDHOOD TAX CREDITS. Currently, an individual may claim percent of the federal child and dependent care credit provided in section of the Internal Revenue Code against the individual income tax if the individual’s net income is less than $45,000. Under the bill, an individual may claim percent of the federal child and dependent care credit provided in section of the Internal Revenue Code against the individual income tax if the individual’s net income is less than $90,000. The bill also increases the income threshold determining the eligibility of a taxpayer for the early childhood development tax credit. The bill increases the eligibility threshold from a taxpayer whose net income is less than $45,000 per year to less than $90,000 per year. By increasing the eligibility threshold, taxpayers whose net income is less than $90,000 are now eligible to take the early childhood development tax credit equaling percent of the first $1,000 which the taxpayer has paid to others for early childhood development expenses for each dependent ages three through five. _____ or after January 1, 2021. DIVISION V —— PRECEPTOR TAX CREDIT. The bill establishes a preceptor tax credit to be administered by the department of public health and the department of revenue. The bill defines “preceptor” to mean a licensed practicing physician who provides on-site education to a medical student or resident at a hospital or medical clinic in a rural area. The bill defines “rural area” to mean any county in the state other than the largest counties according to the most recent federal decennial census. The bill allows a tax credit against the taxes imposed in Code chapter 422, division II (personal income tax), equal to $1,000 per medical student or resident supervised by the preceptor up to a maximum of $10,000 per year. Any tax credit in excess of the preceptor’s tax liability for the tax year is not refundable and shall not be credited to the tax liability for any following year. The credits shall be issued annually on a first-come, first-served basis and shall not exceed $100,000 in cumulative value. The bill specifies that the department of public health in collaboration with the department of revenue shall develop a system for the application, review, and authorization of the issuance of the preceptor tax credit. The bill requires the department of public health and the department of revenue to adopt rules to administer the tax credit. The tax credit applies to tax years beginning on or after January 1, 2021. DIVISION VI —— SALES AND USE TAX. _____ and wildlife habitat, and conserving agricultural soils in the state (article VII, section 10).31.375 percent would generate. The state sales tax rate has not been increased since the effective date of the constitutional amendment, so no amounts have been credited to the fund. The bill increases the sales tax rate and the use tax rate from percent to percent on January 1, 2021. The bill allocates the moneys from the natural resources and outdoor recreation trust fund in another part of the bill.43 to ensure that SAVE receives the same amount of sales and use tax revenues as it did prior to the sales and use tax increases provided in the bill. DIVISION VII —— WATER SERVICE TAX REPEAL. Currently, an excise tax at the rate of percent is imposed on the sales price from the sale or furnishing by a water utility of a water service in the state to consumers or users.7 and provides that the water service tax is repealed January 1, 2021.71 specifies that the applicable law related to a private cause of action associated with the collection of the water service tax remains in the 2020 Code, despite the repeal of the water service tax in the bill. DIVISION VIII —— SALES AND USE TAX EXEMPTIONS. Beginning January 1, 2021, the bill exempts the sale of feminine hygiene products as defined in the bill from the sales tax. _____ January 1, 2021, whether cloth or disposable.3(68)(c)(1)(a) by striking a reference to child and adult diapers that relate to the tax-free holiday.5. DIVISION IX —— JUVENILE COURT EXPENSES.11.141(3).141(3), therefore allowing most juvenile court expenses to be paid from the indigent defense fund without the county paying some expenses based upon the formula. DIVISION X —— MENTAL HEALTH REGION FUNDING.7A containing the mental health and disability regional services fund and replaces that Code section by establishing a mental health and disability services state supplement fund under the authority of the department of human services. Moneys in the fund shall be used solely for purposes of making state supplement payments under the Code section. For each fiscal year beginning on or after July 1, 2020, the moneys available in a fiscal year in the mental health and disability services state supplement fund are appropriated to the department of human services and shall be distributed to each county on a per capita basis. _____ services on or before a date established by the department by rule.397A(4). If the county is not in substantial compliance with the required core service domains and has failed to comply with a corrective action plan required by the department of human services, the department shall reduce the amount of the state supplement payment by an amount commensurate with the level of noncompliance, not to exceed percent of the state supplement payment amount.424A and used solely for payment of services provided under the regional service system management plan.424A(6) establishes the amount certified for levy by the county each fiscal year to raise funds for mental health and disability services under the regional service system. Revenues from taxes imposed by the county credited to the county mental health and disability services fund shall not exceed an amount equal to the county budgeted amount, which is the amount necessary to meet the county’s financial obligations for the payment of services provided under the regional service system management plan, not to exceed an amount equal to the product of the regional per capita expenditure target amount multiplied by the county’s population, and, for fiscal years beginning on or after July 1, 2023, reduced by the amount of the county’s cash flow reduction amount. The bill modifies the county budgeted amount that may be certified for levy by the county for such services.393, not to exceed an amount equal to the product of the statewide per capita expenditure target amount multiplied by the county’s population, and, for fiscal years beginning on or after July 1, 2023, reduced by the amount of the county’s cash flow reduction amount, if applicable.50. If division X of the bill takes effect on or after March 31, 2020, a county may recertify the county’s budget for the fiscal year beginning July 1, 2020, as necessary to implement the provisions of division X of the bill. Similarly, to the extent necessary to implement the provisions of division X of the bill, a mental health and disability services region may amend the region’s regional service system management plan or annual service and budget plan for the fiscal year beginning July 1, 2020, and the department of management may, for the fiscal year beginning July 1, 2020, certify the taxes back to the applicable county auditor after June 15. Division X of the bill authorizes the department of human services to adopt emergency rules to implement the provisions of division X of the bill and the rules shall be effective immediately upon filing unless a later date is specified in the rules.4. The division takes effect upon enactment and applies July 1, 2020, for fiscal years beginning on or after that date. DIVISION XI —— CONSTITUTIONAL IMPLEMENTATION. The bill amends provisions in Code chapter 461 (the natural resources and outdoor recreation Act) that is to implement Article VII, section 10, of the Constitution of the State of Iowa when the sales tax is increased. _____ the natural resources and outdoor recreation trust fund (trust fund) and associated accounts (renamed trust accounts) supported by a portion of state revenue generated by an increase in the state’s sales tax. The purpose of the constitutional provision is to protect and enhance water quality and natural areas, including parks, trails, and fish and wildlife habitat, and conserve agricultural soils in this state. ALLOCATIONS OF TRUST FUND MONEYS. The bill alters the percentage of moneys to be allocated from the trust fund (trust fund moneys) to its trust accounts, including the natural resources trust account administered by the department of natural resources (DNR), the soil conservation and water protection trust account (renamed the soil conservation and nonpoint source water protection trust account) administered by the department of agriculture and land stewardship (DALS), the watershed protection trust account administered by DNR in cooperation with DALS, the local conservation partnership trust account administered by DNR, the trails trust account (renamed the water and land trails trust account) administered by DOT in cooperation with DNR, and the lake restoration trust account (renamed the lake and stream restoration trust account) administered by DNR. It also reduces the allocations of trust fund moneys to the Iowa resources enhancement and protection (REAP) fund administered by DNR. _____ DALS). The bill revises provisions in the local conservation partnership trust account as a program to be administered by DNR. The bill provides that trust fund moneys may be transferred from the renamed soil conservation and nonpoint source water protection trust account to the water quality infrastructure fund and from the watershed protection trust account to the water quality financial assistance fund upon direction by the custodial department. The bill eliminates current funding sources, including the annual appropriation to the REAP fund from the general fund which is due to expire on June 30, 2021, and both a tax on the sales price on water service, which another division of this bill repeals, and the use of wagering tax receipts, which would otherwise expire on July 1, 2029. ADMINISTRATION. The bill provides that the legislative council is to appoint a committee to review the trust fund and its allocations. The bill requires the economic development authority to be involved in decisions that use trust fund moneys to support initiatives with a recreational purpose. In making decisions to expend trust fund moneys, a higher priority is given to supporting an initiative that furthers a goal of the Iowa nutrient reduction strategy. A higher priority is provided to maintaining or preserving existing public use lands rather than acquiring new land. Several provisions place restrictions upon the use of trust fund moneys for support relating to certain initiatives, including athletic fields or facilities. Trust fund moneys cannot be used to support an exercise of eminent domain powers. REPEAL. Code chapter 461 is repealed December 31, 2050. EFFECTIVE DATE. The division of the bill takes effect January 1, 2021.