Relating to the adoption tax credit available against the individual income tax

Sponsored by the House Ways and Means Committee

Topics:Taxes Income taxes Tax credits & incentives

Same legislation: HF 100

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Official bill page Lobbyist declarations One-pager to print

Where it is now

Done: IntroducedJanuary 15, 2021
Done: SubcommitteeJanuary 20, 2021
Done: House committeeFebruary 2, 2021
Done: Passes the HouseFebruary 10, 202193–1
Done: Senate committeeApril 20, 2021
Stopped: Passes the SenateDied when the General Assembly ended
Next: To the Governor
Next: Signed into law

Died when the session ended The 2022 session adjourned on May 24, 2022, the General Assembly’s last regular session. Bills that didn’t pass both chambers died. What’s a funnel?

What’s in it

This bill relates to the adoption tax credit available against the individual income tax. Currently, the adoption tax credit equals the amount of qualified adoption expenses paid or incurred by the taxpayer in connection with the adoption of a child, not to exceed $5,000 per adoption. The bill phases in an increase to the maximum amount of the adoption tax credit as follows: for the tax year beginning January 1, 2022, the maximum amount of the adoption tax credit increases from $5,000 per adoption to $7,500 per adoption; and for tax years beginning on or after January 1, 2023, the maximum amount of the tax credit increases from $7,500 per adoption to $10,000 per adoption.

Full bill text¹

Senate subcommittee

Named March 25, 2021. On April 7, 2021 it recommended passage.

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Fiscal note

Less revenue: up to $625,000 Compare with other bills

AI summary This bill increases the maximum amount of the refundable Adoption Tax Credit to $7,500 starting January 1, 2022, and to $10,000 for tax year 2023 and after. These changes are projected to reduce net General Fund revenue by $310,000 in fiscal year 2023 and by $625,000 in fiscal year 2024 and after.²

Read the fiscal note

Description

House File 369 increases the maximum amount of the existing Adoption Tax Credit in two steps, to $7,500 beginning on January 1, 2022 (TY 2022), and to $10,000 for TY 2023 and after. The existing credit maximum is $5,000 per qualified adoption. The tax credit is refundable.

Assumptions

The Adoption Tax Credit is based on the amount of unreimbursed adoption expenses paid by the taxpayer as part of a qualified adoption and is claimed through the filing of Iowa tax form IA 177.
The credit may only be claimed after a qualified adoption becomes final.
The credit limit applies per adoption (as opposed to per taxpayer or per household).
Expenses used to calculate the credit may not also be used in the calculation of Iowa’s itemized deduction for adoption expenses.
For TY 2019, 270 households claimed the credit for a total of $814,000 ($3,000 per adopting household).
Adoption costs as reported on the credit tax forms filed for TY 2019 are assumed to be the adoption costs in future years.
The number and cost of adoptions are both assumed to remain constant. This means that for this fiscal impact calculation, the increased tax credit amount is not projected to increase the number of qualified adoptions in a year and will also not result in an increase in adoption expenses.
The Department of Revenue utilized the individual income tax micromodel to calculate the tax reduction associated with the increases in the maximum amount of the credit. The fiscal impact was determined by comparing model results of tax liability under current law versus tax liability under the Bill.
The tax reduction associated with the changes to the tax credit is assumed to occur when tax returns are filed (decreased final tax payments and increased tax refunds).
Because the tax credit is refundable, the calculation of the income surtax for schools is not affected by the proposed increase in the credit.

Fiscal Impact

The proposed increases in the maximum amount of the refundable Adoption Tax Credit are projected to reduce net General Fund revenue by $310,000 in FY 2023 and $625,000 in FY 2024 and after.

Source

Department of Revenue

Adoption Tax Credit · February 8, 2021 · $625,000

Reading a fiscal note³

Iowa Code it changes

Amends§422.12A

How the Code works⁴

Lobbying

6 for · 0 against · 3 undecided · Who →

Family tree

89th General Assembly

HF 100Renumbered HF 369Passed a chamberfrom HF 100

Picked up later

HF 351Passed a chamber90th GA

Earlier and later bills are matched by wording or an identical title.

Similar bills

HF 351 Relating to the adoption tax credit available against the individual income tax
90th General Assembly · Passed House
Nearly identical

Matched by wording or an identical title.