H.F. _____ Section 1. Section 262.9, Code 2014, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 38. a. Calculate for each calendar 3 year the average resident undergraduate tuition to attend 4 institutions listed in section 262.7, subsections 1, 2, and 3, 5 and notify the director of the department of revenue of that 6 amount by January 31 of the succeeding year. 7 b. This subsection is repealed January 1, 2024. 8 Sec. 2. NEW SECTION . 422.11C Student loan tax credit. 9 1. For purposes of this section: 10 a. “Approved postsecondary educational institution” means any 11 of the following: 12 (1) A community college established under chapter 260C. 13 (2) An institution of higher learning under the control of 14 the state board of regents. 15 (3) A nonprofit accredited private institution in this 16 state that meets the requirements in section 261.9, subsection 17 1, and the requirements of the provisions of the federal Higher 18 Education Act of 1965, as amended, for student participation in 19 the federal interest subsidy program. 20 b. “Average Iowa tuition” means the average resident 21 undergraduate tuition determined under section 262.9, 22 subsection 38, for the calendar year immediately preceding the 23 tax year for which the credit under this section is claimed. 24 c. “Qualified student loan” means any loan that is made, 25 insured, or guaranteed under Tit. IV of the federal Higher 26 Education Act of 1965, as amended, directly to the taxpayer 27 for attendance at an approved postsecondary educational 28 institution. 29 d. “Qualified taxpayer” means a taxpayer who meets all of 30 the following requirements: 31 (1) The taxpayer attended an approved postsecondary 32 educational institution and received a bachelor’s degree 33 from an approved postsecondary educational institution after 34 December 31, 2013. 35 -1- LSB 5575YC (2) 85 mm/sc 1/ 4

H.F. _____ (2) The taxpayer is a resident of this state for the entire 1 tax year. 2 (3) The taxpayer is employed in this state. If the taxpayer 3 is employed in this state during any part of the month, the 4 taxpayer shall be considered employed in this state for the 5 entire month. 6 2. The taxes imposed under this division, less the credits 7 allowed under section 422.12, shall be reduced by a student 8 loan tax credit equal to fifty percent of the amount paid on a 9 qualified student loan by a qualified taxpayer during the tax 10 year, not to exceed an amount equal to twenty percent of the 11 average Iowa tuition per tax year. 12 3. If the taxpayer is not a qualified taxpayer for the 13 entire tax year, the maximum amount of the credit shall be 14 prorated and the amount of credit for the taxpayer shall equal 15 the maximum amount of credit for the tax year, divided by 16 twelve, multiplied by the number of months in the tax year the 17 taxpayer was a qualified taxpayer. 18 4. A qualified taxpayer may claim the credit allowed under 19 this section for not more than five tax years from the date 20 the qualified taxpayer received a bachelor’s degree from an 21 approved postsecondary educational institution. 22 5. Any credit in excess of the taxpayer’s liability for the 23 tax year is not refundable and shall not be credited to the tax 24 liability for any following year. 25 6. In order to be eligible for the credit under this 26 section, the qualified taxpayer shall provide the department 27 with proof of residency and proof of employment in this state, 28 in the manner and form prescribed by the department. The 29 department may also require documentation from the qualified 30 taxpayer supporting any payments claimed to be for a qualified 31 student loan. 32 7. This section is repealed January 1, 2024. 33 Sec. 3. IMPLEMENTATION. Notwithstanding section 262.9, 34 subsection 38, paragraph “a”, the state board of regents shall 35 -2- LSB 5575YC (2) 85 mm/sc 2/ 4

H.F. _____ notify the director of the department of revenue of the average 1 resident undergraduate tuition, as calculated in section 262.9, 2 subsection 38, paragraph “a”, for the 2013 calendar within 3 thirty days of the effective date of this Act. 4 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 5 retroactively to January 1, 2014, for tax years beginning on 6 or after that date. 7 EXPLANATION 8 The inclusion of this explanation does not constitute agreement with 9 the explanation’s substance by the members of the general assembly. 10 This bill creates a student loan tax credit available 11 against the state individual income tax. 12 The tax credit equals 50 percent of the amount paid on a 13 qualified student loan by a qualified taxpayer during a tax 14 year, not to exceed 20 percent of the average Iowa tuition 15 each year. “Average Iowa tuition” equals the average resident 16 undergraduate tuition to attend the university of Iowa, Iowa 17 state university, or the university of northern Iowa. The 18 state board of regents is required to calculate the average 19 Iowa tuition each year and certify the amount to the director 20 of revenue by January 31 of the following year. 21 “Qualified student loan” is defined in the bill as any 22 loan made, insured, or guaranteed under Title IV of the 23 federal Higher Education Act of 1965 directly to the taxpayer 24 for attendance at an approved postsecondary educational 25 institution. 26 “Approved postsecondary educational institution” means an 27 Iowa community college, an institution of higher learning under 28 the control of the state board of regents, or a nonprofit 29 accredited private institution in this state that meets certain 30 requirements specified in the bill. 31 “Qualified taxpayer” is defined in the bill as a taxpayer 32 that attended an approved postsecondary educational 33 institution, received a bachelor’s degree from an approved 34 postsecondary educational institution after December 31, 2013, 35 -3- LSB 5575YC (2) 85 mm/sc 3/ 4

H.F. _____ is a resident of Iowa for the entire tax year, and is employed 1 in Iowa. A taxpayer shall be considered employed for an entire 2 month if the taxpayer was employed during any part of the 3 month. 4 If a taxpayer is not a qualified taxpayer for the entire tax 5 year, the maximum amount of the credit is prorated based on 6 the number of months the taxpayer was a qualified taxpayer. A 7 qualified taxpayer is not allowed to claim the credit for more 8 than five tax years after the taxpayer receives a bachelor’s 9 degree. Any credit in excess of the taxpayer’s tax liability 10 is not refundable and shall not be carried forward to any 11 succeeding tax year. 12 A qualified taxpayer is required to provide the department 13 of revenue with proof of residence and employment in 14 this state. The department of revenue may also require 15 documentation to support payments claimed to be for a qualified 16 student loan. The student loan tax credit is repealed January 17 1, 2024. 18 The bill applies retroactively to January 1, 2014, for tax 19 years beginning on or after that date. 20 -4- LSB 5575YC (2) 85 mm/sc 4/ 4