HOUSE REPUBLICAN STAFF ANALYSIS Bill: Committee: Floor Manager: Date: Staff:
House File 2468 Ways and Means Rep. Baltimore End of Session Kristi L. Kielhorn (2-5290)
House Ways and Means: House Floor: Senate Floor: Governor:
PASSED April 9 PASSED April 15 PASSED April 28
(23-1) (95-1) (48-0)
Adoption Tax Credit House File 2468 creates a refundable income tax credit equal to qualified adoption expenses up to $2,500. Fiscal Note – This bill will have a fiscal impact of approximately $1 million in FY 15.
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Section by Section Analysis Section 1 – Adoption Tax Credit This section creates an individual income tax credit for qualified adoption expenses paid or incurred in connection with the adoption of a child (an individual under the age of 18). The tax credit cannot exceed $2,500. The adoption qualifies for the tax credit if the adoption is completed by the Department of Human Services, a licensed agency, or a person petitioning for an independent placement. Qualifying expenses are expenses that are incurred by the taxpayer during the tax year, are not otherwise reimbursed, and are connected with the adoption. These expenses can include medical and hospital expenses of the biological mother which are incidental to the birth of the adopted child, adoption agency and legal fees, and all other fees and costs relating to the adoption. These expenses cannot include expenses paid or incurred in violation of state or federal law. Any credit in excess of the taxpayer’s liability is refundable or may be carried forward one tax year. Section 2 – Deductions from Net Income Under Iowa law, a taxpayer may claim an itemized deduction for the amount of certain adoption expenses that exceed 3 percent of net income. This section provides that taxpayers who claim the itemized deduction are required to reduce that deduction by the amount of expenses used to calculate the adoption tax credit. Section 3 – Retroactive Applicability This section makes the bill applicable to tax years beginning on or after January 1, 2014.
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