House Study Bill 225 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act relating to the school tuition organization tax credit 1 by allowing the tax credit for contributions made by 2 certain entities, increasing the amount of total approved 3 tax credits, and including effective date and retroactive 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 2259HC (2) 85 mm/sc

H.F. _____ Section 1. Section 422.11S, Code 2013, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 4A. An individual may claim the tax 3 credit allowed a partnership, limited liability company, S 4 corporation, estate, or trust electing to have the income 5 taxed directly to the individual. The amount claimed by the 6 individual shall be based upon the pro rata share of the 7 individual’s earnings of the partnership, limited liability 8 company, S corporation, estate, or trust. 9 Sec. 2. Section 422.11S, subsection 7, paragraph a, 10 subparagraph (2), Code 2013, is amended to read as follows: 11 (2) “Total approved tax credits” means for the tax year 12 beginning in the 2006 calendar year, two million five hundred 13 thousand dollars, for the tax year beginning in the 2007 14 calendar year, five million dollars, and for tax years 15 beginning on or after January 1, 2008, but before January 1, 16 2012, seven million five hundred thousand dollars . However , 17 for tax years beginning on or after January 1, 2012, “total 18 approved tax credits” means but before January 1, 2014, eight 19 million seven hundred fifty thousand dollars , and for tax years 20 beginning on or after January 1, 2014, twelve million dollars . 21 Sec. 3. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 22 immediate importance, takes effect upon enactment. 23 Sec. 4. RETROACTIVE APPLICABILITY. The section of this Act 24 enacting section 422.11S, subsection 4A, applies retroactively 25 to January 1, 2013, for tax years beginning on or after that 26 date. 27 EXPLANATION 28 This bill amends the school tuition organization tax 29 credit to allow a contribution made by a partnership, limited 30 liability company, S corporation, estate, or trust electing to 31 have the income taxed directly to the individual to qualify for 32 the tax credit. The amount claimed by the individual shall 33 be based upon the pro rata share of the individual’s earnings 34 of the partnership, limited liability company, S corporation, 35 -1- LSB 2259HC (2) 85 mm/sc 1/ 2

H.F. _____ estate, or trust. This provision of the bill applies 1 retroactively to January 1, 2013, for tax years beginning on 2 or after that date. 3 The bill also increases the total approved tax credits per 4 year to $12 million from $8.75 million for tax years beginning 5 on or after January 1, 2014. 6 The school tuition organization tax credit is an income 7 tax credit allowed for voluntary contributions to certain 8 private nonprofit school tuition organizations that award 9 tuition scholarships to eligible students to attend accredited 10 nonpublic elementary or secondary schools in this state. 11 The bill takes effect upon enactment. 12 -2- LSB 2259HC (2) 85 mm/sc 2/ 2