Bills › 89th General Assembly
Relating to the individual income tax credits for volunteer fire fighters, volunteer emergency medical services personnel members, and reserve peace officers by increasing the amounts of the credits, and including retroactive applicability provisions
Topics:Public safety & emergenciesTaxesIncome taxesTax credits & incentives
Same legislation: HF 563
Where it is now
- Done: IntroducedJanuary 21, 2021
- Done: SubcommitteeJanuary 25, 2021
- Done: House committeeFebruary 15, 2021
- Skipped: Passes the HouseContinued as HF 563
- Next: Senate committee
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Became HF 563 → Its progress continues under the new number. Go to HF 563 What’s a funnel?
What’s in it
This bill relates to the individual income tax credits available to volunteer fire fighters, volunteer emergency medical services personnel members, and reserve peace officers. The bill increases to $200 from $100 the maximum amount per individual of the income tax credits for services performed during the year. The tax credit increase applies retroactively to tax years beginning on or after January 1, 2021.
House subcommittee
Named January 25, 2021. On February 15, 2021 it recommended passage. Vote Total: 3-0.
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Fiscal note
Less revenue: up to $35,000 Compare with other bills
AI summary This bill increases the tax credit for volunteer firefighters, emergency medical services personnel, and reserve peace officers from $100 to $200. It is projected to reduce net General Fund revenue by $1.2 million per fiscal year beginning in fiscal year 2022. The change will also reduce annual revenue from local option income surtaxes by approximately $35,000.2
Read the fiscal note
Description
House File 563 increases the Volunteer Fire Fighter and Volunteer Emergency Medical Services Personnel Member Credit and the Reserve Peace Officer Credit from $100 to $200. The change is effective beginning tax year 2021.
Background
The Volunteer Fire Fighter and Volunteer Emergency Medical Services Personnel Member Credit and the Reserve Peace Officer Credit are established in Iowa Code section 422.12. Each credit has a maximum of $100 per taxpayer per year. If a taxpayer is a qualified volunteer for more than one position, the tax credit may only be earned for one position. If the taxpayer is not a qualified volunteer for the full tax year, the $100 credit is prorated. The credit is not refundable or transferable, and unused credits may not be carried forward to a future tax year. The Iowa Department of Revenue Tax Credits Contingent Liabilities Report lists the total tax credit redemptions under the two tax credits as $1.3 million per year. This equates to 13,000 to 14,000 taxpayers claiming the credits per year.
Assumptions
Since the $100 income tax credit is not refundable, a small percentage of the claimants are not able to benefit from the full $100 annual tax credit as they do not have $100 in Iowa income tax liability for that tax year. Raising the annual tax credit to $200 will increase the percentage of claimants who cannot fully benefit. Therefore, doubling the maximum credit will not result in a doubling of the $1.3 million current annual tax reduction associated with the two tax credits. As a nonrefundable tax credit, the State income tax reduction will also reduce the statewide amount of revenue raised through any local option income surtax by approximately 3.0% of the State income tax revenue reduction.
Fiscal Impact
Increasing the Volunteer Fire Fighter and Volunteer Emergency Medical Services Personnel Member Credit and the Reserve Peace Officer Credit from $100 to $200 is projected to reduce net General Fund revenue by $1.2 million per fiscal year, beginning with FY 2022. The tax credit increase will also reduce annual revenue raised by local option income surtaxes by approximately $35,000 annually.
Source
- Iowa Department of Revenue
- Fire/EMS/Reserve Peace Officer Tax Credit · February 18, 2021 · $35,000
- Fire/EMS/Reserve Peace Officer Tax Credit · February 15, 2021 · $35,000
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Tried before
89th General Assembly
Earlier and later bills are matched by wording or an identical title.
Tried before
This idea has been filed in an earlier General Assembly. None got through a chamber.
- HF 2005 Relating to the individual income tax credits for volunteer fire fighters, volunteer emerg…88th General Assembly · Approved by committee · same titleCleared committee
- HF 2609 Relating to the individual income tax credits for volunteer fire fighters, volunteer emerg…88th General Assembly · In committee · same titleCleared committee
- HF 2280 Relating to the individual income tax credits for volunteer fire fighters, volunteer emerg…88th General Assembly · In committee · same titleCleared committee
Matched by wording or an identical title.