Senate Study Bill 1064 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON VETERANS AFFAIRS BILL BY CHAIRPERSON BEALL) A BILL FOR An Act creating the hire a hero tax credit and including 1 retroactive applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1674XC (2) 85 aw/sc

S.F. _____ Section 1. NEW SECTION . 422.10A Hire a hero tax credit. 1 1. The taxes imposed under this division, less the credits 2 allowed under section 422.12, shall be reduced by a hire a hero 3 tax credit. An employer who hires and employs an eligible 4 employee is eligible to claim the tax credit. 5 2. As used in this section: 6 a. “Eligible employee” means a person who is a resident 7 of this state and a member of the national guard, reserve, or 8 regular component of the armed forces of the United States 9 employed on a permanent full-time or a permanent part-time 10 basis of at least thirty hours per week each week. A person 11 shall not be an eligible employee if the person was hired to 12 replace a different eligible employee whose employment was 13 terminated within the twelve-month period preceding the date of 14 first employment, unless the eligible employee being replaced 15 left employment voluntarily without good cause attributable to 16 the employer or was discharged for misconduct in connection 17 with the eligible employee’s employment. 18 b. “Employer” includes a self-employed person who meets the 19 definition of eligible employee. 20 c. “Military service” means federal active duty, state 21 active duty, or national guard duty, as defined in section 22 29A.1. 23 3. The allowable credit shall be an amount equal to the sum 24 of the following: 25 a. (1) One thousand dollars for each eligible employee 26 hired for employment in this state during the tax year. 27 (2) If the eligible employee was not employed by the 28 employer for the entire tax year, the amount of the credit in 29 subparagraph (1) shall be prorated and the amount of the credit 30 for the taxpayer shall equal the maximum amount of credit for 31 the tax year, divided by twelve, multiplied by the number of 32 months in the tax year that the eligible employee was employed 33 by the employer. The credit shall be rounded to the nearest 34 dollar. If the employee was employed by the employer during 35 -1- LSB 1674XC (2) 85 aw/sc 1/ 4

S.F. _____ any part of a month, the eligible employee shall be considered 1 to be employed for the entire month. 2 b. (1) Five hundred dollars for each eligible employee 3 employed in this state during a tax year subsequent to the tax 4 year that the employee was hired for employment in this state. 5 (2) If the eligible employee was not employed by the 6 employer for the entire tax year, the amount of the credit in 7 subparagraph (1) shall be prorated and the amount of the credit 8 for the taxpayer shall equal the maximum amount of credit for 9 the tax year, divided by twelve, multiplied by the number of 10 months in the tax year that the eligible employee was employed 11 by the employer. The credit shall be rounded to the nearest 12 dollar. If the employee was employed by the employer during 13 any part of a month, the eligible employee shall be considered 14 to be employed for the entire month. 15 c. In addition to the credit amount in paragraph “a” or “b” , 16 five hundred dollars for each eligible employee who performs at 17 least thirty days of military service during the tax year while 18 employed by the employer. 19 4. Any credit in excess of the tax liability shall be 20 refunded. In lieu of claiming a refund, a taxpayer may 21 elect to have the overpayment shown on the taxpayer’s final, 22 completed return credited to the tax liability for the 23 following tax year. 24 5. An individual may claim the tax credit allowed a 25 partnership, limited liability company, S corporation, estate, 26 or trust electing to have the income taxed directly to the 27 individual. The amount claimed by the individual shall be 28 based upon the pro rata share of the individual’s earnings of a 29 partnership, limited liability company, S corporation, estate, 30 or trust. 31 Sec. 2. Section 422.33, Code 2013, is amended by adding the 32 following new subsection: 33 NEW SUBSECTION . 11. The taxes imposed under this division 34 shall be reduced by a hire a hero tax credit. The taxpayer 35 -2- LSB 1674XC (2) 85 aw/sc 2/ 4

S.F. _____ shall claim the tax credit according to the same requirements 1 and calculated in the same manner as provided in section 2 422.10A. 3 Sec. 3. Section 422.60, Code 2013, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 12. The taxes imposed under this division 6 shall be reduced by a hire a hero tax credit. The taxpayer 7 shall claim the tax credit according to the same requirements 8 and calculated in the same manner as provided in section 9 422.10A. 10 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 11 retroactively to January 1, 2013, for tax years beginning on or 12 after that date and for eligible employees hired or employed 13 on or after that date. 14 EXPLANATION 15 This bill creates the hire a hero tax credit for purposes 16 of the state individual and corporate income taxes and the 17 franchise tax. The tax credit is available for employers in 18 the amount of $1,000 per eligible employee for the year in 19 which the eligible employee is hired, $500 for each year of 20 employment subsequent to the year of hiring, and $500 for each 21 year an eligible employee is called to at least 30 days of 22 military service. The annual credits for initial and continued 23 employment shall be prorated if such employment does not 24 extend through an entire tax year. Eligible employees must 25 be a resident of this state and be a member of the national 26 guard or a reserve or regular component of the armed forces 27 of the United States employed on a permanent full-time or 28 permanent part-time basis of at least 30 hours per week. The 29 bill provides that an otherwise eligible employee shall not be 30 considered an eligible employee if the eligible employee was 31 hired to replace another eligible employee whose employment 32 was terminated in the previous 12 months unless the eligible 33 employee being replaced left voluntarily or was discharged for 34 misconduct. The bill applies retroactively to January 1, 2013, 35 -3- LSB 1674XC (2) 85 aw/sc 3/ 4

S.F. _____ for tax years beginning on or after that date and for eligible 1 employees hired or employed on or after that date. 2 -4- LSB 1674XC (2) 85 aw/sc 4/ 4