Introduced Version
HOUSE BILL No. 1526
_____
DIGEST OF INTRODUCED BILL
Citations Affected:
IC 6-3-1-3.5; IC 6-3-2-3.7
;
IC 6-3-2-4
.
Synopsis: Pension and annuity income tax deduction. Provides a
deduction from adjusted gross income for certain pension and annuity
income and IRA distributions received by an individual. Makes
conforming amendments to eliminate restrictions on the amount of the
deduction that may be taken.
Effective: January 1, 2004.
Kuzman
January 16, 2003, read first time and referred to Committee on Ways and Means.
Introduced
First Regular Session 113th General Assembly (2003)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
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Additions: Whenever a new statutory provision is being enacted (or a new constitutional
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NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in
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between statutes enacted by the 2002 Regular or Special Session of the General Assembly.
HOUSE BILL No. 1526
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 6-3-1-3.5; (03)IN1526.1.1. -->
SECTION 1.
IC 6-3-1-3.5
, AS AMENDED BY P.L.192-2002(ss),
SECTION 67, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2004]: Sec. 3.5. When used in this article, the term
"adjusted gross income" shall mean the following:
(a) In the case of all individuals, "adjusted gross income" (as
defined in Section 62 of the Internal Revenue Code), modified as
follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction or deductions allowed
or allowable pursuant to Section 62 of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
level by any state of the United States.
(3) Subtract one thousand dollars ($1,000), or in the case of a
joint return filed by a husband and wife, subtract for each spouse
one thousand dollars ($1,000).
(4) Subtract one thousand dollars ($1,000) for:
(A) each of the exemptions provided by Section 151(c) of the
Internal Revenue Code;
(B) each additional amount allowable under Section 63(f) of
the Internal Revenue Code; and
(C) the spouse of the taxpayer if a separate return is made by
the taxpayer and if the spouse, for the calendar year in which
the taxable year of the taxpayer begins, has no gross income
and is not the dependent of another taxpayer.
(5) Subtract:
(A) one thousand five hundred dollars ($1,500) for each of the
exemptions allowed under Section 151(c)(1)(B) of the Internal
Revenue Code for taxable years beginning after December 31,
1996; and
(B) five hundred dollars ($500) for each additional amount
allowable under Section 63(f)(1) of the Internal Revenue Code
if the adjusted gross income of the taxpayer, or the taxpayer
and the taxpayer's spouse in the case of a joint return, is less
than forty thousand dollars ($40,000).
This amount is in addition to the amount subtracted under
subdivision (4).
(6) Subtract an amount equal to the lesser of:
(A) that part of the individual's adjusted gross income (as
defined in Section 62 of the Internal Revenue Code) for that
taxable year that is subject to a tax that is imposed by a
political subdivision of another state and that is imposed on or
measured by income; or
(B) two thousand dollars ($2,000).
(7) Add an amount equal to the total capital gain portion of a
lump sum distribution (as defined in Section 402(e)(4)(D) of the
Internal Revenue Code) if the lump sum distribution is received
by the individual during the taxable year and if the capital gain
portion of the distribution is taxed in the manner provided in
Section 402 of the Internal Revenue Code.
(8) Subtract any amounts included in federal adjusted gross
income under Section 111 of the Internal Revenue Code as a
recovery of items previously deducted as an itemized deduction
from adjusted gross income.
(9) Subtract any amounts included in federal adjusted gross
income under the Internal Revenue Code which amounts were
received by the individual as supplemental railroad retirement
annuities under 45 U.S.C. 231 and which are not deductible under
subdivision (1).
(10) Add an amount equal to the deduction allowed under Section
221 of the Internal Revenue Code for married couples filing joint
returns if the taxable year began before January 1, 1987.
(11) Add an amount equal to the interest excluded from federal
gross income by the individual for the taxable year under Section
128 of the Internal Revenue Code if the taxable year began before
January 1, 1985.
(12) Subtract an amount equal to the amount of federal Social
Security and Railroad Retirement benefits included in a taxpayer's
federal gross income by Section 86 of the Internal Revenue Code.
(13) In the case of a nonresident taxpayer or a resident taxpayer
residing in Indiana for a period of less than the taxpayer's entire
taxable year, the total amount of the deductions allowed pursuant
to subdivisions (3), (4), (5), and (6) shall be reduced to an amount
which bears the same ratio to the total as the taxpayer's income
taxable in Indiana bears to the taxpayer's total income.
(14) In the case of an individual who is a recipient of assistance
under
IC 12-10-6-1
,
IC 12-10-6-2
,
IC 12-15-2-2
, or
IC 12-15-7
,
subtract an amount equal to that portion of the individual's
adjusted gross income with respect to which the individual is not
allowed under federal law to retain an amount to pay state and
local income taxes.
(15) In the case of an eligible individual, subtract the amount of
a Holocaust victim's settlement payment included in the
individual's federal adjusted gross income.
(16) For taxable years beginning after December 31, 1999,
subtract an amount equal to the portion of any premiums paid
during the taxable year by the taxpayer for a qualified long term
care policy (as defined in
IC 12-15-39.6-5
) for the taxpayer or the
taxpayer's spouse, or both.
(17) Subtract an amount equal to the lesser of:
(A) two thousand five hundred dollars ($2,500); or
(B) the amount of property taxes that are paid during the
taxable year in Indiana by the individual on the individual's
principal place of residence.
(18) Subtract an amount equal to the amount of a September 11
terrorist attack settlement payment included in the individual's
federal adjusted gross income.
(19) Subtract the amount that is included in adjusted gross
income under Section 62 of the Internal Revenue Code and
reported by the individual as:
(A) pension and annuity income; or
(B) for an individual who is at least fifty-nine and one-half
(59 1/2) years of age, individual retirement account (IRA)
distributions;
on the individual's federal income tax return.
(b) In the case of corporations, the same as "taxable income" (as
defined in Section 63 of the Internal Revenue Code) adjusted as
follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction or deductions allowed
or allowable pursuant to Section 170 of the Internal Revenue
Code.
(3) Add an amount equal to any deduction or deductions allowed
or allowable pursuant to Section 63 of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
level by any state of the United States.
(4) Subtract an amount equal to the amount included in the
corporation's taxable income under Section 78 of the Internal
Revenue Code.
(c) In the case of life insurance companies (as defined in Section
816(a) of the Internal Revenue Code) that are organized under Indiana
law, the same as "life insurance company taxable income" (as defined
in Section 801 of the Internal Revenue Code), adjusted as follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction allowed or allowable
under Section 170 of the Internal Revenue Code.
(3) Add an amount equal to a deduction allowed or allowable
under Section 805 or Section 831(c) of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
level by any state.
(4) Subtract an amount equal to the amount included in the
company's taxable income under Section 78 of the Internal
Revenue Code.
(d) In the case of insurance companies subject to tax under Section
831 of the Internal Revenue Code and organized under Indiana law, the
same as "taxable income" (as defined in Section 832 of the Internal
Revenue Code), adjusted as follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction allowed or allowable
under Section 170 of the Internal Revenue Code.
(3) Add an amount equal to a deduction allowed or allowable
under Section 805 or Section 831(c) of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
level by any state.
(4) Subtract an amount equal to the amount included in the
company's taxable income under Section 78 of the Internal
Revenue Code.
(e) In the case of trusts and estates, "taxable income" (as defined for
trusts and estates in Section 641(b) of the Internal Revenue Code)
reduced by:
(1) income that is exempt from taxation under this article by the
Constitution and statutes of the United States; and
(2) an amount equal to the amount of a September 11 terrorist
attack settlement payment included in the federal adjusted gross
income of the estate of a victim of the September 11 terrorist
attack or a trust to the extent the trust benefits a victim of the
September 11 terrorist attack.
SOURCE: IC 6-3-2-4; (03)IN1526.1.2. -->
SECTION 2.
IC 6-3-2-4
IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2004]: Sec. 4. Each taxable year, an
individual, or the individual's surviving spouse, is entitled to an
adjusted gross income tax deduction for the first two thousand dollars
($2,000) of income, including excluding retirement or survivor's
benefits, received during the taxable year by the individual, or the
individual's surviving spouse, for the individual's service in an active
or reserve component of the armed forces of the United States,
including the army, navy, air force, coast guard, marine corps,
merchant marine, Indiana army national guard, or Indiana air national
guard. However, a person who is less than sixty (60) years of age on the
last day of the person's taxable year, is not, for that taxable year,
entitled to a deduction under this section for retirement or survivor's
benefits.
SOURCE: IC 6-3-2-3.7; (03)IN1526.1.3. -->
SECTION 3.
IC 6-3-2-3.7
IS REPEALED [EFFECTIVE JANUARY
1, 2004].
SOURCE: ; (03)IN1526.1.4. -->
SECTION 4. [EFFECTIVE JANUARY 1, 2004]
IC 6-3-1-3.5
(a)(19) and
IC 6-3-2-4
, both as amended by this act,
and the repeal of
IC 6-3-2-3.7
by this act apply only to taxable
years beginning after December 31, 2003.