SSB 1125 (LSB 1461XC (12) 90)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON DAWSON)

A BILL FOR

An Act relating to state and local revenue and finances by modifying sales and use taxes, the charitable conservation contribution tax credit available against individual and corporate income taxes, the water service tax, property taxes, transit funding, and local option taxes, crediting moneys to the natural resources and outdoor recreation trust fund, making appropriations, and including effective date, retroactive applicability, and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
SALES AND USE TAX RATES AND DISTRIBUTION

    Section 1.  Section 423.2, subsection 1, unnumbered paragraph 1, Code 2023, is amended to read as follows:
   There is imposed a tax of six percent at the rate specified in subsection 12 upon the sales price of all sales of tangible personal property, sold at retail in the state to consumers or users except as otherwise provided in this subchapter.
    Sec. 2.  Section 423.2, subsections 2 and 3, Code 2023, are amended to read as follows:
   2.  A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price of the sale or furnishing of gas, electricity, water, heat, pay television service, and communication service, including the sales price from such sales by any municipal corporation or joint water utility furnishing gas, electricity, water, heat, pay television service, and communication service to the public in its proprietary capacity, except as otherwise provided in this subchapter, when sold at retail in the state to consumers or users.
   3.  A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price of all sales of tickets or admissions to places of amusement, fairs, and athletic events except those of elementary and secondary educational institutions. A tax of six percent at the rate specified in subsection 12 is imposed on the sales price of an entry fee or like charge imposed solely for the privilege of participating in an activity at a place of amusement, fair, or athletic event unless the sales price of tickets or admissions charges for observing the same activity are taxable under this subchapter. A tax of six percent at the rate specified in subsection 12 is imposed upon that part of private club membership fees or charges paid for the privilege of participating in any athletic sports provided club members.
    Sec. 3.  Section 423.2, subsection 4, paragraph a, Code 2023, is amended to read as follows:
   a.  A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price derived from the operation of all forms of amusement devices and games of skill, games of chance, raffles, and bingo games as defined in chapter 99B, and card game tournaments conducted under section 99B.27, that are operated or conducted within the state, the tax to be collected from the operator in the same manner as for the collection of taxes upon the sales price of tickets or admission as provided in this section. Nothing in this subsection shall legalize any games of skill or chance or slot-operated devices which are now prohibited by law.
    Sec. 4.  Section 423.2, subsection 5, Code 2023, is amended to read as follows:
   5.  There is imposed a tax of six percent at the rate specified in subsection 12 upon the sales price from the furnishing of services as defined in section 423.1.
    Sec. 5.  Section 423.2, subsection 7, paragraph a, unnumbered paragraph 1, Code 2023, is amended to read as follows:
   A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price from the sales, furnishing, or service of solid waste collection and disposal service.
    Sec. 6.  Section 423.2, subsection 8, paragraph a, Code 2023, is amended to read as follows:
   a.  A tax of six percent at the rate specified in subsection 12 is imposed on the sales price from sales of bundled transactions. For the purposes of this subsection, a “bundled transaction” is the retail sale of two or more distinct and identifiable products, except real property and services to real property, which are sold for one nonitemized price. A “bundled transaction” does not include the sale of any products in which the sales price varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction.
    Sec. 7.  Section 423.2, subsection 9, Code 2023, is amended to read as follows:
   9.  A tax of six percent at the rate specified in subsection 12 is imposed upon the sales price from any mobile telecommunications service, including all paging services, that this state is allowed to tax pursuant to the provisions of the federal Mobile Telecommunications Sourcing Act, Pub. L. No. 106-252, 4 U.S.C. §116 et seq. For purposes of this subsection, taxes on mobile telecommunications service, as defined under the federal Mobile Telecommunications Sourcing Act that are deemed to be provided by the customer’s home service provider, shall be paid to the taxing jurisdiction whose territorial limits encompass the customer’s place of primary use, regardless of where the mobile telecommunications service originates, terminates, or passes through and shall in all other respects be taxed in conformity with the federal Mobile Telecommunications Sourcing Act. All other provisions of the federal Mobile Telecommunications Sourcing Act are adopted by the state of Iowa and incorporated into this subsection by reference. With respect to mobile telecommunications service under the federal Mobile Telecommunications Sourcing Act, the director shall, if requested, enter into agreements consistent with the provisions of the federal Act.
    Sec. 8.  Section 423.2, subsection 10, paragraph a, Code 2023, is amended to read as follows:
   a.  A tax of six percent at the rate specified in subsection 12 is imposed on the sales price of specified digital products sold at retail in the state. The tax applies whether the purchaser obtains permanent use or less than permanent use of the specified digital product, whether the sale is conditioned or not conditioned upon continued payment from the purchaser, and whether the sale is on a subscription basis or is not on a subscription basis.
    Sec. 9.  Section 423.2, subsection 12, Code 2023, is amended by striking the subsection and inserting in lieu thereof the following:
   12.  a.  For the period beginning January 1, 2025, through December 31, 2050, the sales tax rate is seven percent.
   b.  Beginning January 1, 2051, the sales tax rate is six percent.
    Sec. 10.  Section 423.2A, subsection 2, paragraphs a, b, and c, Code 2023, are amended to read as follows:
   a.  (1)  Transfer For the period beginning January 1, 2025, through December 31, 2027, transfer twenty-eight one-hundred-fortieths of the revenues collected under deposited into the general fund of the state under subsection 1 to the appropriate county accounts under  chapter 423B for the counties from which the tax was collected.
   (2)  For the period beginning January 1, 2028, through December 31, 2028, transfer twenty-seven one-hundred-fortieths of the revenues deposited into the general fund of the state under subsection 1 to the appropriate county accounts under chapter 423B for the counties from which the tax was collected.
   (3)  For the period beginning January 1, 2029, through December 31, 2029, transfer twenty-six one-hundred-fortieths of the revenues deposited into the general fund of the state under subsection 1 to the appropriate county accounts under chapter 423B for the counties from which the tax was collected.
   (4)  For the period beginning January 1, 2030, through December 31, 2050, transfer twenty-five one-hundred-fortieths of the revenues deposited into the general fund of the state under subsection 1 to the appropriate county accounts under chapter 423B for the counties from which the tax was collected.
   (5)  Beginning January 1, 2051, transfer five twenty-fourths of the revenues deposited into the general fund of the state under subsection 1 to the appropriate county accounts under chapter 423B for the counties from which the tax was collected.
   b.  Transfer from the remaining revenues the amounts required under Article VII, section 10, of the Constitution of the State of Iowa to the natural resources and outdoor recreation trust fund created in section 461.31, if applicable.
   c.  Transfer one-sixth of from the remaining revenues an amount equal to one-seventh of the revenues deposited into the general fund of the state under subsection 1 to the secure an advanced vision for education fund created in section 423F.2. This paragraph “c” is repealed January 1, 2051.
    Sec. 11.  Section 423.5, subsection 1, unnumbered paragraph 1, Code 2023, is amended to read as follows:
   Except as provided in paragraph “b”, an excise tax at the rate of six percent specified in subsection 4 of the purchase price or installed purchase price is imposed on the following:
    Sec. 12.  Section 423.5, subsection 4, Code 2023, is amended by striking the subsection and inserting in lieu thereof the following:
   4.  a.  For the period beginning January 1, 2025, through December 31, 2050, the use tax rate is seven percent.
   b.  Beginning January 1, 2051, the use tax rate is six percent.
    Sec. 13.  Section 423.43, subsection 1, paragraph b, Code 2023, is amended by striking the paragraph and inserting in lieu thereof the following:
   b.  Subsequent to the deposit into the general fund of the state the department shall do the following in the order prescribed:
   (1)  (a)  For the period beginning January 1, 2025, through December 31, 2043, transfer one-seventh of such revenues to the local use tax supplement fund, under section 423B.1A.
   (b)  For the period beginning January 1, 2044, through December 31, 2050, transfer one-seventh of such revenues to the appropriate county accounts under chapter 423B for the counties from which the tax was paid.
   (c)  Beginning January 1, 2051, transfer one-sixth of such revenues to the appropriate county accounts under chapter 423B for the counties from which the tax was paid.
   (2)  Transfer one-sixth of such remaining revenues to the secure an advanced vision for education fund created in section 423F.2. This subparagraph is repealed January 1, 2051.
    Sec. 14.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2025.
DIVISION II
WATER SERVICE TAX

    Sec. 15.  Section 423G.3, Code 2023, is amended to read as follows:
   423G.3  Water service tax. 
   An excise tax at the a rate of six percent equal to the rate being imposed under section 423.2, subsection 12, is imposed on the sales price from the sale or furnishing by a water utility of a water service in the state to consumers or users.
    Sec. 16.  Section 423G.6, subsection 2, Code 2023, is amended by striking the subsection.
    Sec. 17.  REPEAL.  Chapter 423G.7, Code 2023, is repealed.
    Sec. 18.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2025.
DIVISION III
LOCAL OPTION TAXES

    Sec. 19.  Section 15J.7, subsection 2, Code 2023, is amended to read as follows:
   2.  In addition to the moneys received pursuant to section 15J.6, a municipality may deposit in the reinvestment project fund any other moneys lawfully at the municipality’s disposal, including but not limited to local sales and services tax receipts collected revenues received under chapter 423B if such use is a purpose authorized for the municipality under chapter 423B.
    Sec. 20.  Section 28A.17, Code 2023, is amended to read as follows:
   28A.17  Local sales and services tax.
   1.  If an authority is established as provided in section 28A.6 and after approval of a referendum by a simple majority of votes cast in each metropolitan area in favor of the sales and services tax, the governing board of a county in this state within a metropolitan area which is part of the authority shall impose, at the request of the authority, a local sales and services tax at the rate of one-fourth of one percent on the sales price taxed by this state under section 423.2, within the metropolitan area located in this state. The referendum shall be called by resolution of the board and shall be held as provided in section 28A.6 to the extent applicable. The ballot proposition shall contain a statement as to the specific purpose or purposes for which the revenues shall be expended and the date of expiration of the tax. The local sales and services tax shall be imposed on the same basis, with the same exceptions, and following the same administrative procedures as provided for a county under sections 423B.5 and 423B.6, Code 2023. The amount of the sale, for the purposes of determining the amount of the local sales and services tax under this section, does not include the amount of any local sales and services tax imposed under sections 423B.5 and 423B.6, Code 2023.
   2.  The treasurer of state shall credit the local sales and services tax receipts and interest and penalties to the authority’s account. Moneys in this account shall be remitted quarterly to the authority. The proceeds of the tax imposed under this section shall be used only for the construction, reconstruction, or repair of metropolitan facilities as specified in the referendum. The local sales and services tax imposed under this section may be suspended for not less than a fiscal quarter or more than one year by action of the board. The suspension may be renewed or continued by the board, but the board shall act on the suspension at least annually. The local sales and services tax may also be repealed by a petition and favorable referendum following the procedures and requirements of sections 28A.5 and 28A.6 as applicable. The board shall give the department of revenue at least forty days’ notice of the repeal, suspension, or reinstatement of the tax and the effective dates for imposition, suspension, or repeal of the tax shall be as provided in section 423B.6, Code 2023.
   3.  A local sales and services tax authorized under this section shall not be imposed or collected on or after January 1, 2025.
    Sec. 21.  Section 76.4, Code 2023, is amended to read as follows:
   76.4  Permissive application of funds.
   Whenever the governing authority of such political subdivision shall have on hand funds derived from any other source than taxation which may be appropriated to the payment either of interest or principal, or both principal and interest of such bonds, such funds may be so appropriated and used and the levy for the payment of the bonds correspondingly reduced. This section shall not restrict the authority of a political subdivision to apply sales and services tax receipts collected received pursuant to chapter 423B for such purpose. Notwithstanding section 423F.3, a school district may apply tax receipts received pursuant to chapter 423F for the purposes of this section.
    Sec. 22.  Section 99B.1, subsection 23, Code 2023, is amended to read as follows:
   23.  “Net receipts” means gross receipts less amounts awarded as prizes and less state and local sales tax paid upon the gross receipts. 
    Sec. 23.  Section 99B.14, subsection 1, Code 2023, is amended to read as follows:
   1.  A licensed qualified organization shall certify that the receipts from all charitable gambling conducted by the organization under this chapter, less reasonable expenses, charges, fees, taxes, and deductions, either will be distributed as prizes to participants or will be dedicated and distributed for educational, civic, public, charitable, patriotic, or religious uses. Reasonable expenses, charges, fees, taxes other than the state and local sales tax, and deductions allowed by the department shall not exceed forty percent of net receipts.
    Sec. 24.  Section 99G.4, subsection 2, Code 2023, is amended to read as follows:
   2.  The income and property of the authority shall be exempt from all state and local taxes, and the sale of lottery tickets and shares issued and sold by the authority and its retail licensees shall be exempt from all state and local sales taxes.
    Sec. 25.  Section 99G.30A, subsection 2, paragraph a, Code 2023, is amended to read as follows:
   a.  The director of revenue shall administer the monitor vending machine excise tax as nearly as possible in conjunction with the administration of state sales tax laws. The director shall provide appropriate forms or provide appropriate entries on the regular state tax forms for reporting local sales and services tax liability.
    Sec. 26.  Section 279.63, subsection 2, paragraph a, Code 2023, is amended to read as follows:
   a.  All property tax levies, and income surtaxes, and local option sales taxes in place in the school district, listed by type of levy, rate, amount, duration, and notification of the maximum rate and amount limitations permitted by statute.
    Sec. 27.  Section 321.40, subsection 5, Code 2023, is amended by striking the subsection.
    Sec. 28.  Section 321.130, Code 2023, is amended to read as follows:
   321.130  Fees in lieu of taxes.
   The registration fees imposed by this chapter upon private passenger motor vehicles or semitrailers are in lieu of all state and local taxes, except local vehicle taxes, to which motor vehicles or semitrailers are subject.
    Sec. 29.  Section 418.13, subsection 2, Code 2023, is amended to read as follows:
   2.  In addition to the moneys received pursuant to section 418.10 or 418.12, a governmental entity may deposit in the flood project fund any other moneys lawfully received by the governmental entity, including but not limited to local sales and services tax receipts collected amounts received under chapter 423B.
    Sec. 30.  Section 421.26, Code 2023, is amended to read as follows:
   421.26  Personal liability for tax due.
   If a licensee or other person under section 452A.65, a retailer or purchaser under chapter 423A, 423B, 423C, 423D, or 423E, or  section 423.14, 423.14A, 423.29, 423.31, or 423.33, or a user under section 423.34, or a permit holder or licensee under section 453A.13, 453A.16, or 453A.44 fails to pay a tax under those sections when due, an officer of a corporation or association, notwithstanding section 489.304, a member or manager of a limited liability company, or a partner of a partnership, having control or supervision of or the authority for remitting the tax payments and having a substantial legal or equitable interest in the ownership of the corporation, association, limited liability company, or partnership, who has intentionally failed to pay the tax is personally liable for the payment of the tax, interest, and penalty due and unpaid. However, this section shall not apply to taxes on accounts receivable. The dissolution of a corporation, association, limited liability company, or partnership shall not discharge a person’s liability for failure to remit the tax due.
    Sec. 31.  Section 421.28, Code 2023, is amended to read as follows:
   421.28  Exceptions to successor liability.
   The immediate successor to a licensee’s or retailer’s business or stock of goods under chapter 423A or 423B, or section 423.33 or 452A.65, is not personally liable for the amount of delinquent tax, interest, or penalty due and unpaid if the immediate successor shows that the purchase of the business or stock of goods was made in good faith that no delinquent tax, interest, or penalty was due and unpaid. For purposes of this section the immediate successor shows good faith by evidence that the department had provided the immediate successor with a certified statement that no delinquent tax, interest, or penalty is unpaid, or that the immediate successor had taken in good faith a certified statement from the licensee, retailer, or seller that no delinquent tax, interest, or penalty is unpaid. When requested to do so by a person with whom the licensee or retailer is negotiating the sale of the business or stock of goods, the director of revenue shall, upon being satisfied that such a situation exists, inform that person as to the amount of unpaid delinquent tax, interest, or penalty due by the licensee or the retailer. The giving of the information under this circumstance is not a violation of section 422.20, 422.72, or 452A.63.
    Sec. 32.  Section 421.60, subsection 2, paragraph m, subparagraphs (1) and (2), Code 2023, are amended to read as follows:
   (1)  The director may abate unpaid state sales and use taxes and local sales and services taxes owed by a retailer in the event that the retailer failed to collect tax from the purchaser as a result of erroneous written advice issued by the department that was specially directed to the retailer by the department and the retailer is unable to collect the tax, interest, or penalties from the purchaser. Before the tax, interest, and penalties shall be abated on the basis of erroneous written advice, the retailer must present a copy of the retailer’s request for written advice to the department and a copy of the department’s reply. The department shall not maintain a position against the retailer that is inconsistent with the erroneous written advice, except on the basis of subsequent written advice sent by the department to that retailer, or a change in state or federal law, a reported court case to the contrary, a contrary rule adopted by the department, a change in material facts or circumstances relating to the retailer, or the retailer’s misrepresentation or incomplete or inadequate representation of material facts and circumstances in requesting the written advice.
   (2)  (a)  The director shall abate the unpaid state sales and use taxes and any local sales and services taxes owed by a retailer where the retailer failed to collect the tax from the purchaser on the charges paid for access to on-line computer services as a result of erroneous written advice issued by the department regarding the taxability of charges paid for access to on-line computer services. To qualify for the abatement under this subparagraph, the erroneous written advice shall have been issued by the department prior to July 1, 1999, and shall have been specially directed to the retailer by the department.
   (b)  If an abatement of unpaid state sales and use taxes and any local sales and services taxes is granted to the retailer by the director pursuant to this subparagraph, the department is precluded from collecting from the purchaser any unpaid state sales and use taxes and any local sales and services taxes which were abated.
    Sec. 33.  Section 422.72, subsection 6, paragraph a, Code 2023, is amended to read as follows:
   a.  The department may enter into a written informational exchange agreement for tax administration purposes with a city or county which is entitled to receive funds due to a local hotel and motel tax or a local sales and services tax. The written informational exchange agreement shall designate no more than two paid city or county employees that have access to actual return information relating to that city’s or county’s receipts from a local hotel and motel tax or a local sales and services tax.
    Sec. 34.  Section 423.4, subsection 2, paragraph d, Code 2023, is amended by striking the paragraph.
    Sec. 35.  Section 423.4, subsection 5, paragraph f, Code 2023, is amended to read as follows:
   f.  Notwithstanding the state sales tax imposed in section 423.2, a rebate issued pursuant to this subsection shall not exceed an amount equal to five percent of the sales price of the tangible personal property or services furnished to purchasers at the automobile racetrack facility. Any local option taxes paid and collected shall not be subject to rebate under this subsection.
    Sec. 36.  Section 423.4, subsection 7, paragraph f, Code 2023, is amended to read as follows:
   f.  The refund in this subsection applies only to state sales and use tax paid and does not apply to local option sales and services taxes imposed pursuant to chapter 423B. Notwithstanding the state sales tax imposed in section 423.2, a refund issued pursuant to this section shall not exceed an amount equal to five percent of the sales price of the fuel used to create heat, power, and steam for processing or generating electrical current or from the sale price of electricity consumed by computers, machinery, or other equipment for operation of the data center business facility.
    Sec. 37.  Section 423.4, subsection 8, paragraph g, Code 2023, is amended to read as follows:
   g.  The refund in this subsection applies only to state sales and use tax paid and does not apply to local option sales and services taxes imposed pursuant to chapter 423B. Notwithstanding the state sales tax imposed in section 423.2, a refund issued pursuant to this section shall not exceed an amount equal to five percent of the sales price of the items listed in paragraph “a”, subparagraphs (1), (2), and (3).
    Sec. 38.  Section 423.14A, subsection 2, Code 2023, is amended to read as follows:
   2.  In addition to and not in lieu of any application of this chapter to sellers who are retailers and sellers who are retailers maintaining a place of business in this state, any person described in subsection 3, or the person’s agents, shall be considered a retailer in this state and a retailer maintaining a place of business in this state for purposes of this chapter on or after January 1, 2019, and shall be subject to all requirements of this chapter imposed on retailers and retailers maintaining a place of business in this state, including but not limited to the requirement to collect and remit sales and use taxes pursuant to sections 423.14 and 423.29, and local option taxes under chapter 423B.
    Sec. 39.  Section 423.33, subsection 1, paragraph c, Code 2023, is amended to read as follows:
   c.  If the retailer fails to collect sales tax at the time of the transaction, the retailer shall thereafter remit the applicable sales tax, or the purchaser thereafter shall remit the applicable use tax. If the purchaser remits all applicable use tax, the retailer remains liable for any local sales and services tax under chapter 423B that the retailer failed to collect.
    Sec. 40.  Section 423.34A, unnumbered paragraph 1, Code 2023, is amended to read as follows:
   A purchaser is relieved of liability for payment of state sales or use tax, for payment of any local option sales tax, for payment of interest, or for payment of any penalty for nonpayment of tax which nonpayment is not fraudulent, willful, or intentional, under the following circumstances:
    Sec. 41.  Section 423.36, subsection 9, paragraph a, Code 2023, is amended to read as follows:
   a.  Except as provided in paragraph “b”, purchasers, users, and consumers of tangible personal property, specified digital products, or enumerated services taxed pursuant to subchapter II or III of this chapter or chapter 423B may be authorized, pursuant to rules adopted by the director, to remit tax owed directly to the department instead of the tax being collected and paid by the seller. To qualify for a direct pay tax permit, the purchaser, user, or consumer must accrue a tax liability of more than four thousand dollars in tax under subchapters II and III in a semimonthly period and make deposits and file returns pursuant to section 423.31. This authority shall not be granted or exercised except upon application to the director and then only after issuance by the director of a direct pay tax permit.
    Sec. 42.  Section 423B.1, Code 2023, is amended by striking the section and inserting in lieu thereof the following:
   423B.1  Use of revenues deposited in the local sales and use tax fund —— revenue purpose statement.
   1.  a.  Revenues credited to and deposited in each county’s account within the local sales and use tax fund shall be expended by each recipient county and city as required by the revenue purpose statement, subject to the requirements of section 423B.7, subsection 7, and approved under this section for the city or for the county for the unincorporated areas of the county, or as required by subsection 3.
   b.  A revenue purpose statement for the use of local option sales and services tax revenue under this chapter approved at election prior to January 1, 2025, and in effect on or set to take effect on or after January 1, 2025, and the use of revenues received under this chapter for purposes authorized under section 423B.10 for ordinances in effect and approved before January 1, 2025, shall continue in effect for revenues received under this chapter until the expiration of the revenue purpose statement or ordinance, if applicable, or until the county board of supervisors or city council, as applicable, adopts a new revenue purpose statement under subsection 2 or repeals or amends the ordinance for the use of revenues under section 423B.10.
   2.  The board of supervisors of each county and the city council of each city may adopt by resolution a revenue purpose statement for the expenditure of funds received under this chapter.
   3.  Each city and county without a valid revenue purpose statement shall expend the revenues received for the following purposes in the order prescribed in this subsection, except that the payment of bonds for which the revenues have been pledged shall be paid first:
   a.  Reduction of the county’s basic levies under section 331.423 or reduction of the city general fund levy under section 384.1, as applicable.
   b.  Reduction of any debt service levy of the county or city, as applicable.
   c.  Reduction of the city’s additional taxes levied under section 384.12 or the county’s supplemental levies under section 331.424, as applicable.
   d.  Reduction of any other property tax levy of the county or city, as applicable.
    Sec. 43.  NEW SECTION.  423B.1A  Local use tax supplement fund.
   1.  A local use tax supplement fund is created in the state treasury under the control of the department of revenue. The fund shall consist of all moneys transferred under section 423.43, subsection 1, paragraph “b”, subparagraph (1), subparagraph division (a), and moneys appropriated to the fund.
   2.  Moneys in the local use tax supplement fund are annually appropriated to the department of revenue and shall be used for supplement payments to cities and counties under this section.
   3.  For each year during the period beginning January 1, 2025, through December 31, 2043, each city or county for the unincorporated portion of the county, shall receive a local use tax supplement payment equal to the difference, but not less than zero between the amount of revenue received by the city or county under section 423B.7, Code 2023, for the period beginning January 1, 2024, and ending December 31, 2024, minus the amount that would have been received by that city or county for that period if all cities and the county were eligible for distributions of such revenues under section 423B.7, Code 2023. If moneys in the fund are insufficient to pay all supplement amounts for the year, the director of revenue shall prorate the payment of the supplement payments and shall notify the cities and counties of the pro rata percentage.
   4.  The supplement payment calculated under subsection 3 shall be paid to each city or county for the unincorporated area of the county and shall be combined with and be used in the same manner and be subject to the same requirements as moneys received by the city or county under section 423B.7 for that year.
   5.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys deposited in the local use tax supplement fund shall be credited to the local use tax supplement fund. Notwithstanding section 8.33, moneys credited to the local use tax supplement fund shall not revert at the close of a fiscal year.
   6.  This section is repealed January 1, 2044. Moneys in the fund upon the repeal of this section shall be transferred to the appropriate county accounts under section 423B.7 for the counties from which the tax was paid. 
    Sec. 44.  Section 423B.7, subsection 1, Code 2023, is amended to read as follows:
   1.  a.  Except as provided in paragraphs paragraph “b” and “c”, the director shall credit the local sales and services tax receipts and interest and penalties from a county-imposed tax as specified in section 423.2A, subsection 2, paragraph “a”, including any interest and penalties, to the county’s account in the local sales and services use tax fund for the county in from which the tax was collected. The director shall credit the use tax receipts as specified in section 423.43, subsection 1, paragraph “b”, subparagraph (1), subparagraph divisions (b) and (c), including any interest and penalties, to the county’s account in the local sales and use tax fund for the county from which the use tax was paid.  If the director is unable to determine from which county any of the receipts were collected or paid, as applicable, those receipts shall be allocated among the possible counties based on allocation rules adopted by the director.
   b.  The director shall credit the designated amount of the increase in local sales and services tax receipts, as computed in section 423B.10, collected in an urban renewal area of an eligible city that has adopted an ordinance pursuant to section 423B.10, subsection 2, into a special city account in the local sales and services use tax fund.
   c.  The director shall credit the local sales and services tax receipts and interest and penalties from a city-imposed tax under section 423B.1, subsection 2, to the city’s account in the local sales and services tax fund.
    Sec. 45.  Section 423B.7, subsections 2, 3, and 4, Code 2023, are amended to read as follows:
   2.  The director of revenue by the last day of each month shall transfer to each city or county where the local option tax is imposed the amount of tax moneys remitted to the department attributable to each city or county from the preceding month.
   3.  Seventy-five percent of each county’s account shall be remitted on the basis of the county’s population residing in the unincorporated area where the tax was imposed and those the incorporated areas where the tax was imposed as follows:
   a.  To the board of supervisors a pro rata share based upon the percentage of the above population of the county residing in the unincorporated area of the county where the tax was imposed according to the most recent certified federal census.
   b.  To each city in the county where the tax was imposed a pro rata share based upon the percentage of the city’s population residing in the county to the above population of the county according to the most recent certified federal census.
   c.  If a subsequent certified census exists which modifies that most recent certified federal census for a participating jurisdiction under paragraphs “a” and “b”, the computations under paragraphs “a” and “b” shall utilize the subsequent certified census in the distribution formula under rules established by the director of revenue.
   4.  Twenty-five percent of each county’s account shall be remitted based on the sum of property tax dollars levied by the board of supervisors if the tax was imposed in the unincorporated areas and by each city in the county where the tax was imposed during the three-year period beginning July 1, 1982, and ending June 30, 1985, as follows:
   a.  To the board of supervisors a pro rata share based upon the percentage of the total property tax dollars levied by the board of supervisors during the above three-year period.
   b.  To each city council where the tax was imposed a pro rata share based upon the percentage of property tax dollars levied by the city during the above three-year period of the above total property tax dollars levied by the board of supervisors and each city where the tax was imposed during the above three-year period.
    Sec. 46.  Section 423B.7, subsection 5, Code 2023, is amended by striking the subsection.
    Sec. 47.  Section 423B.7, subsections 6 and 7, Code 2023, are amended to read as follows:
   6.  From each special city account under subsection 1, paragraph “b”, the sales and services tax revenues shall be remitted to the city council for deposit in the special fund created in section 403.19, subsection 2, to be used by the city as provided in section 423B.10. The distribution from the special city account is not subject to the distribution formula provided in subsections 3, and 4, and 5.
   7.  a.  Subject to the requirement of paragraph “b” and the requirements under section 423B.1, subsection 3, local sales and services tax moneys amounts received by a city or county under this chapter may be expended for any lawful purpose of the city or county, including but not limited to expenses related to providing emergency medical services within the applicable city or county.
   b.  Each city located in whole or in part in a qualified county and each qualified county for the unincorporated area for which the imposition of the local sales and services tax in the city or portion thereof or the unincorporated area, as applicable, was revenue purpose statement approved at election on or after January 1, 2019 2025, shall require the use of not less than fifty percent of the moneys received from the qualified county’s account in the local sales and services tax fund applicable county under this chapter for property tax relief.  However, for a county with a population of four hundred thousand or more, a revenue purpose statement governing the use of revenues for the unincorporated area of the county approved on or after January 1, 2025, shall require the use of seventy-five percent of the moneys received by the county under this chapter for property tax relief.
   c.  For purposes of this subsection, property tax relief includes payments under a chapter 28E agreement for purposes of a regional transit district if such payments are used to reduce the regional transit district levy under section 28M.5. For a city located in whole or in part in a county with a population of four hundred thousand or more, the use of revenues received under this chapter for the purposes of this paragraph shall not exceed ten percent of the amount received and for a county with a population of four hundred thousand or more, for the unincorporated area, shall not exceed twenty-five percent of the amount received under this chapter.
    Sec. 48.  Section 423B.9, subsection 1, paragraphs b and c, Code 2023, are amended to read as follows:
   b.  “Designated portion” means the portion of the local option sales and services tax revenues received under this chapter which is authorized to be expended for one or a combination of purposes under an adopted public measure.
   c.  “Secondary recipient” means a political subdivision of the state which is to receive revenues amounts from a local option sales and services tax revenues under this chapter over a period of years pursuant to the terms of a chapter 28E agreement with one or more cities or counties.
    Sec. 49.  Section 423B.9, subsections 2 and 3, Code 2023, are amended to read as follows:
   2.  An issuer of public bonds which is a recipient of revenues from a local option sales and services tax imposed pursuant to this chapter may issue bonds in anticipation of the collection of one or more designated portions of the local option sales and services tax such revenues and may pledge irrevocably an amount of the revenue derived from the designated portions for each of the years the bonds remain outstanding to the payment of the bonds. Bonds may be issued only for one or more of the purposes set forth on the ballot proposition concerning the imposition of the local option sales and services tax in the revenue purpose statement, except bonds shall not be issued which are payable from that portion of tax revenues designated for property tax relief. The bonds may be issued in accordance with the procedures set forth in either subsection 3 or 4.
   3.  The governing body of an issuer may authorize the issuance of bonds which are payable from the designated portion of the revenues of the local option sales and services tax received under this chapter, and not from property tax, by following the authorization procedures set forth for cities in section 384.83. Bonds may be issued for the purpose of refunding outstanding and previously issued bonds under this subsection without otherwise complying with the provisions of this subsection.
    Sec. 50.  Section 423B.9, subsection 4, paragraph b, Code 2023, is amended to read as follows:
   b.  The provisions of chapter 76 apply to the bonds payable as provided in this subsection, except that the mandatory levy to be assessed pursuant to section 76.2 shall be at a rate to generate an amount which together with the receipts from the pledged designated portion of the local option sales and services tax revenues received under this chapter is sufficient to pay the interest and principal on the bonds. All amounts collected as a result of the levy assessed pursuant to section 76.2 and paid out in the first instance for bond principal and interest shall be repaid to the bond issuer which levied the tax from the first available designated portion of local option sales and services tax collections revenues received under this chapter in excess of the requirement for the payment of the principal and interest of the bonds and when repaid shall be applied in reduction of property taxes. The amount of bonds which may be issued under section 76.3 shall be the amount which could be retired from the actual collections of the designated portions of the local option sales and services tax revenues received under this chapter for the last four calendar quarters, as certified by the director of revenue. The amount of tax revenues pledged jointly by other cities or counties may be considered for the purpose of determining the amount of bonds which may be issued. If the local option sales and services tax has been in effect revenues have been received under this chapter for less than four calendar quarters, the tax collected revenues received within the shorter period may be adjusted to project the collections amount of the designated portion for the full year for the purpose of determining the amount of the bonds which may be issued. The provisions of this section constitute separate authorization for the issuance of bonds and shall prevail in the event of conflict with any other provision of the Code limiting the amount of bonds which may be issued or the source of payment of the bonds. Bonds issued under this section shall not limit or restrict the authority of the bond issuer to issue bonds under other provisions of the Code.
    Sec. 51.  Section 423B.9, subsection 5, Code 2023, is amended to read as follows:
   5.  A city or county, jointly with one or more other political subdivisions as provided in chapter 28E, may pledge irrevocably any amount derived from the designated portions of the revenues of the local option sales and services tax received under this chapter to the support or payment of bonds of an issuer, issued for one or more purposes set forth on the ballot proposition concerning the imposition of the local option sales and services tax in the revenue purpose statement or a political subdivision may apply the proceeds of its bonds to the support of any such purpose.
    Sec. 52.  Section 423B.10, subsection 1, paragraph b, Code 2023, is amended to read as follows:
   b.  “Eligible city” means a city in which a local sales and services tax imposed by the county applies or a city described in section 423B.1, subsection 2, paragraph “a”, and in which an urban renewal area has been designated.
    Sec. 53.  Section 423B.10, subsections 2, 3, 5, and 6, Code 2023, are amended to read as follows:
   2.  a.   Upon approval by the board of supervisors of each applicable county pursuant to paragraph “b”, an eligible city may by ordinance of the city council provide for the use of a designated amount of the increased local sales and services tax revenues collected received under this chapter which are attributable to retail establishments in an urban renewal area to fund urban renewal projects located in the area. The designated amount may be all or a portion of such increased revenues.
   b.  A city shall not adopt an ordinance under paragraph “a” unless the board of supervisors of each county where the urban renewal area from which such local sales and services tax revenues are to be collected and used to fund urban renewal projects is located first adopts a resolution approving the collection and use of such local sales and services tax revenues.
   3.  To determine the revenue increase for purposes of subsection 2, revenue amounts shall be calculated by the department of revenue as follows:
   a.  Determine the amount of local sales and services tax revenue collected and attributable to a one percent sales and services tax from retail establishments located in the area comprising the urban renewal area during the base year.
   b.  Determine the current year one percent sales and services tax revenue amount for each fiscal year following the base year in the manner specified in paragraph “a”.
   c.  The excess of the amount determined in paragraph “b” over the base year revenue amount determined in paragraph “a” is the increase in the local sales and services tax revenues of which the designated amount is to be deposited in the special city account created in section 423B.7, subsection 6.
   5.  In addition to the moneys received pursuant to the ordinance authorized under subsection 2, an eligible city may deposit any other local sales and services tax revenues received by it the city pursuant to the distribution formula in section 423B.7, subsections 3, 4, and 5, to the special fund described in section 403.19, subsection 2.
   6.  For purposes of this section, the eligible city shall assist the department of revenue in identifying retail establishments in the urban renewal area that are collecting the local sales and services tax. This process shall be ongoing until the ordinance is repealed.
    Sec. 54.  REPEAL.  Sections 423B.2, 423B.3, 423B.4, 423B.5, 423B.6, and 423B.8, Code 2023, are repealed.
    Sec. 55.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2025.
DIVISION IV
HOMESTEAD PROPERTY TAX CREDIT

    Sec. 56.  Section 2.48, subsection 3, paragraph f, subparagraph (1), Code 2023, is amended to read as follows:
   (1)  The homestead tax exemption and credit under chapter 425.
    Sec. 57.  Section 25B.7, subsection 2, paragraph a, Code 2023, is amended by striking the paragraph.
    Sec. 58.  Section 100.18, subsection 2, paragraph b, Code 2023, is amended to read as follows:
   b.  The rules shall require the installation of smoke detectors in existing single-family rental units and multiple-unit residential buildings. Existing single-family dwelling units shall be equipped with approved smoke detectors. A person who files for a homestead tax exemption and credit pursuant to chapter 425 shall certify that the single-family dwelling unit for which the credit is filed has a smoke detector installed in compliance with this section, or that one will be installed within thirty days of the date the filing for the credit is made. The state fire marshal shall adopt rules and establish appropriate procedures to administer this subsection.
    Sec. 59.  Section 100.18, subsection 3, paragraph b, Code 2023, is amended to read as follows:
   b.  The rules shall require the installation of carbon monoxide alarms in existing single-family rental units and multiple-unit residential buildings that have a fuel-fired heater or appliance, a fireplace, or an attached garage. Existing single-family dwellings that have a fuel-fired heater or appliance, a fireplace, or an attached garage shall be equipped with approved carbon monoxide alarms. For purposes of this paragraph, “approved carbon monoxide alarm” means a carbon monoxide alarm that meets the standards established by the underwriters’ laboratories or is approved by the state fire marshal as established by rule under subsection 5. A person who files for a homestead tax exemption and credit pursuant to chapter 425 shall certify that the single-family dwelling for which the credit is filed and that has a fuel-fired heater or appliance, a fireplace, or an attached garage, has carbon monoxide alarms installed in compliance with this section, or that such alarms will be installed within thirty days of the date the filing for the credit is made. The state fire marshal shall adopt rules and establish appropriate procedures to administer this subsection.
    Sec. 60.  Section 103.22, subsection 7, Code 2023, is amended to read as follows:
   7.  Prohibit an owner of property from performing work on the owner’s principal residence, if such residence is an existing dwelling rather than new construction and is not an apartment that is attached to any other apartment or building, as those terms are defined in section 499B.2, and is not larger than a single-family dwelling, or require such owner to be licensed under this chapter. In order to qualify for inapplicability pursuant to this subsection, a residence shall qualify for the homestead tax exemption and credit.
    Sec. 61.  Section 105.11, subsection 3, Code 2023, is amended to read as follows:
   3.  Prohibit an owner of property from performing work on the owner’s principal residence, if such residence is an existing dwelling rather than new construction and is not larger than a single-family dwelling, or farm property, excluding commercial or industrial installations or installations in public use buildings or facilities, or require such owner to be licensed under this chapter. In order to qualify for inapplicability pursuant to this subsection, a residence shall qualify for the homestead tax exemption and credit.
    Sec. 62.  Section 216.12, subsection 1, paragraph e, Code 2023, is amended to read as follows:
   e.  The rental or leasing of a housing accommodation in a building which contains housing accommodations for not more than four families living independently of each other, if the owner resides in one of the housing accommodations for which the owner qualifies for the homestead tax exemption and credit under section 425.1.
    Sec. 63.  Section 321.1, subsection 6C, Code 2023, is amended to read as follows:
   6C.  “Bona fide residence” or “bona fide address” means the current street or highway address of an individual’s residence. The bona fide residence of a person with more than one dwelling is the dwelling for which the person claims a homestead tax exemption and credit under chapter 425, if applicable. The bona fide residence of a homeless person is a primary nighttime residence meeting one of the criteria listed in section 48A.2, subsection 3.
    Sec. 64.  Section 321.1A, subsection 1, paragraph a, Code 2023, is amended to read as follows:
   a.  The person has filed for a homestead tax exemption and credit on property in this state.
    Sec. 65.  Section 331.401, subsection 1, paragraphs e and f, Code 2023, are amended to read as follows:
   e.  Adopt resolutions authorizing the county assessor to provide forms for homestead tax exemption and credit claimants as provided in section 425.2 and military service tax exemptions as provided in section 426A.14.
   f.  Examine and allow or disallow claims for homestead tax exemption and credit in accordance with section 425.3 and claims for military service tax exemption in accordance with chapter 426A. The board, by a single resolution, may allow or disallow the exemptions recommended by the assessor.
    Sec. 66.  Section 331.512, subsection 3, Code 2023, is amended to read as follows:
   3.  Carry out duties relating to the homestead tax exemption and credit and agricultural land tax credit as provided in chapters 425 and 426.
    Sec. 67.  Section 331.559, subsection 12, Code 2023, is amended to read as follows:
   12.  Carry out duties relating to the administration of the homestead tax exemption and credit and other credits as provided in sections 425.4, 425.5, 425.7, 425.9, 425.10, and 425.25.
    Sec. 68.  Section 404.3, subsection 1, Code 2023, is amended to read as follows:
   1.  All qualified real estate assessed as residential property is eligible to receive an exemption from taxation based on the actual value added by the improvements. The exemption is for a period of ten years. The amount of the exemption is equal to a percent of the actual value added by the improvements, determined as follows:  One hundred fifteen percent of the value added by the improvements. However, the amount of the actual value added by the improvements which shall be used to compute the exemption shall not exceed twenty thousand dollars and the granting of the exemption shall not result in the actual value of the qualified real estate being reduced below the actual value on which the homestead credit exemption is computed under section 425.1.
    Sec. 69.  Section 425.1, subsection 1, paragraph a, Code 2023, is amended to read as follows:
   a.  A homestead credit fund is created. There For fiscal years beginning before July 1, 2028, there is appropriated annually from the general fund of the state to the department of revenue to be credited to the homestead credit fund, an amount sufficient to implement this subchapter.
    Sec. 70.  Section 425.1, subsection 1, Code 2023, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  All moneys in the homestead credit fund at the end of the fiscal year beginning July 1, 2028, shall be transferred by the department of revenue for deposit in the general fund of the state.
    Sec. 71.  Section 425.1, subsections 2, 4, and 5, Code 2023, are amended to read as follows:
   2.  a.  For fiscal years beginning before July 1, 2028, the moneys in the homestead credit fund shall be apportioned each year so as to give a credit against the tax on each eligible homestead in the state, but not more than the amount under paragraph “b”.
   b.  (1)  The For assessment years beginning before July 1, 2025, the homestead credit fund shall be apportioned each year so as to give a credit against the tax on each eligible homestead in the state in an amount equal to the actual levy on the first four thousand eight hundred fifty dollars of actual value for each homestead.
   (2)  For property taxes due and payable in the fiscal year beginning July 1, 2025, the homestead credit fund shall be apportioned each year so as to give a credit against the tax on each eligible homestead in the state in an amount equal to the actual levy on the first three thousand six hundred forty dollars of actual value for each homestead exempted under section 425.1A.
   (3)  For property taxes due and payable in the fiscal year beginning July 1, 2026, the homestead credit fund shall be apportioned each year so as to give a credit against the tax on each eligible homestead in the state in an amount equal to the actual levy on the first two thousand four hundred thirty dollars of actual value for each homestead exempted under section 425.1A.
   (4)  For property taxes due and payable in the fiscal year beginning July 1, 2027, the homestead credit fund shall be apportioned each year so as to give a credit against the tax on each eligible homestead in the state in an amount equal to the actual levy on the first one thousand two hundred twenty dollars of actual value for each homestead exempted under section 425.1A.
   4.  Annually For fiscal years beginning before July 1, 2028, annually the department of revenue shall certify to the county auditor of each county the credit and its amount in dollars. Each county auditor shall then enter the credit against the tax levied on each eligible homestead in each county payable during the ensuing year, designating on the tax lists the credit as being from the homestead credit fund, and credit shall then be given to the several taxing districts in which eligible homesteads are located in an amount equal to the credits allowed on the taxes of the homesteads. The amount of credits shall be apportioned by each county treasurer to the several taxing districts as provided by law, in the same manner as though the amount of the credit had been paid by the owners of the homesteads. However, the several taxing districts shall not draw the funds so credited until after the semiannual allocations have been received by the county treasurer, as provided in this subchapter. Each county treasurer shall show on each tax receipt the amount of credit received from the homestead credit fund.
   5.  If For property taxes due and payable in fiscal years beginning before July 1, 2028, if the homestead tax credit computed under this section is less than sixty-two dollars and fifty cents, the amount of homestead tax credit on that eligible homestead shall be sixty-two dollars and fifty cents subject to the limitation imposed in this section.
    Sec. 72.  NEW SECTION.  425.1A  Homestead tax exemption.
   The following exemptions from taxation shall be allowed:
   1.  For the assessment year beginning January 1, 2024, the eligible homestead, not to exceed two thousand five hundred dollars in actual value.
   2.  For the assessment year beginning January 1, 2025, the eligible homestead, not to exceed five thousand dollars in actual value.
   3.  For the assessment year beginning January 1, 2026, the eligible homestead, not to exceed seven thousand five hundred dollars in actual value.
   4.  For the assessment year beginning January 1, 2027, and each succeeding assessment year, the eligible homestead, not to exceed ten thousand dollars in actual value.
    Sec. 73.  Section 425.2, subsections 1, 2, 4, and 5, Code 2023, are amended to read as follows:
   1.  A person who wishes to qualify for the homestead exemption and credit allowed under this subchapter shall obtain the appropriate forms for filing for the exemption and credit from the assessor. The person claiming the exemption and credit shall file a verified statement and designation of homestead with the assessor for the year for which the person is first claiming the exemption and credit. The claim shall be filed not later than July 1 of the year for which the person is claiming the exemption and credit. A claim filed after July 1 of the year for which the person is claiming the exemption and credit shall be considered as a claim filed for the following year.
   2.  Upon the filing and allowance of the claim, the claim shall be allowed on that homestead for successive years without further filing as long as the property is legally or equitably owned and used as a homestead by that person or that person’s spouse on July 1 of each of those successive years, and the owner of the property being claimed as a homestead declares residency in Iowa for purposes of income taxation, and the property is occupied by that person or that person’s spouse for at least six months in each of those calendar years in which the fiscal year begins. When the property is sold or transferred, the buyer or transferee who wishes to qualify shall refile for the exemption and credit. However, when the property is transferred as part of a distribution made pursuant to chapter 598, the transferee who is the spouse retaining ownership of the property is not required to refile for the exemption and credit. Property divided pursuant to chapter 598 shall not be modified following the division of the property. An owner who ceases to use a property for a homestead or intends not to use it as a homestead for at least six months in a calendar year shall provide written notice to the assessor by July 1 following the date on which the use is changed. A person who sells or transfers a homestead or the personal representative of a deceased person who had a homestead at the time of death, shall provide written notice to the assessor that the property is no longer the homestead of the former claimant.
   4.  Any person sixty-five years of age or older or any person who is disabled may request, in writing, from the appropriate assessor forms for filing for homestead tax exemption and credit. Any person sixty-five years of age or older or who is disabled may complete the form, which shall include a statement of homestead, and mail or return it to the appropriate assessor. The signature of the claimant on the statement shall be considered the claimant’s acknowledgment that all statements and facts entered on the form are correct to the best of the claimant’s knowledge.
   5.  Upon adoption of a resolution by the county board of supervisors, any person may request, in writing, from the appropriate assessor forms for the filing for homestead tax exemption and credit. The person may complete the form, which shall include a statement of homestead, and mail or return it to the appropriate assessor. The signature of the claimant on the statement of homestead shall be considered the claimant’s acknowledgment that all statements and facts entered on the form are correct to the best of the claimant’s knowledge.
    Sec. 74.  Section 425.3, subsection 4, Code 2023, is amended to read as follows:
   4.  The county auditor shall forward the claims to the board of supervisors. The board shall allow or disallow the claims. If the board disallows a claim, it shall send written notice, by mail, to the claimant at the claimant’s last known address. The notice shall state the reasons for disallowing the claim for the credit. The board is not required to send notice that a claim is disallowed if the claimant voluntarily withdraws the claim.
    Sec. 75.  Section 425.4, Code 2023, is amended to read as follows:
   425.4  Certification to treasurer.
   All claims which have been allowed by the board of supervisors shall be certified on or before August 1, in each year, by the county auditor to the county treasurer, which certificates shall list the total amount of dollars, listed by taxing district in the county, due for homestead tax exemptions and credits claimed and allowed. The county treasurer shall forthwith then certify to the department of revenue the total amount of dollars, listed by taxing district in the county, due for homestead tax exemptions and credits claimed and allowed.
    Sec. 76.  Section 425.6, Code 2023, is amended to read as follows:
   425.6  Waiver by neglect.
   If a person fails to file a claim or to have a claim on file with the assessor for the credits provided in this subchapter, the person is deemed to have waived the homestead exemption and credit for the year in which the person failed to file the claim or to have a claim on file with the assessor.
    Sec. 77.  Section 425.7, subsection 3, Code 2023, is amended to read as follows:
   3.  a.  If the department of revenue determines that a claim for homestead exemption and credit has been allowed by the board of supervisors which is not justifiable under the law and not substantiated by proper facts, the department may, at any time within thirty-six months from July 1 of the year in which the claim is allowed, set aside the allowance. Notice of the disallowance shall be given to the county auditor of the county in which the claim has been improperly granted and a written notice of the disallowance shall also be addressed to the claimant at the claimant’s last known address. The claimant or board of supervisors may appeal to the director of revenue within thirty days from the date of the notice of disallowance. The director shall grant a hearing and if, upon the hearing, the director determines that the disallowance was incorrect, the director shall set aside the disallowance. The director shall notify the claimant and the board of supervisors of the result of the hearing. The claimant or the board of supervisors may seek judicial review of the action of the director of revenue in accordance with chapter 17A.
   b.  If a claim is disallowed by the department of revenue and not appealed to the director of revenue or appealed to the director of revenue and thereafter upheld upon final resolution, including any judicial review, any amounts of exemptions allowed and credits allowed and paid from the homestead credit fund including the penalty, if any, become a lien upon the property on which the exemption and credit was originally granted, if still in the hands of the claimant, and not in the hands of a bona fide purchaser, and any amount so erroneously paid including the penalty, if any, shall be collected by the county treasurer in the same manner as other taxes and the collections shall be returned to the department of revenue and credited to the homestead credit fund. The director of revenue may institute legal proceedings against a homestead credit claimant for the collection of payments made on disallowed credits and the penalty, if any. If a person makes a false claim or affidavit with fraudulent intent to obtain the homestead exemption and credit, the person is guilty of a fraudulent practice and the claim shall be disallowed in full. If the credit has been paid, the amount of the credit plus a penalty equal to twenty-five percent of the amount of credit plus interest, at the rate in effect under section 421.7, from the time of payment shall be collected by the county treasurer in the same manner as other property taxes, penalty, and interest are collected and when collected shall be paid to the director of revenue. If a homestead exemption and credit is disallowed and the claimant failed to give written notice to the assessor as required by section 425.2 when the property ceased to be used as a homestead by the claimant, a civil penalty equal to five percent of the amount of the disallowed exemption or credit is assessed against the claimant.
    Sec. 78.  Section 425.8, subsection 1, Code 2023, is amended to read as follows:
   1.  The director of revenue shall prescribe the form for the making of a verified statement and designation of homestead, the form for the supporting affidavits required herein, and such other forms as may be necessary for the proper administration of this subchapter. Whenever necessary, the department of revenue shall forward to the county auditors of the several counties in the state the prescribed sample forms, and the county auditors shall furnish blank forms prepared in accordance therewith with the assessment rolls, books, and supplies delivered to the assessors. The department of revenue shall prescribe and the county auditors shall provide on the forms for claiming the homestead exemption and credit a statement to the effect that the owner realizes that the owner must give written notice to the assessor when the owner changes the use of the property.
    Sec. 79.  Section 425.9, subsections 2, 3, and 4, Code 2023, are amended to read as follows:
   2.  If any claim for exemption and credit made hereunder has been denied by the board of supervisors, and such action is subsequently reversed on appeal, the exemption and credit shall be allowed on the homestead involved in said appeal, and the director of revenue, the county auditor, and the county treasurer shall make such exemption and credit and change their books and records accordingly.
   3.  In the event the appealing taxpayer has paid one or both of the installments of the tax payable in the year or years in question on such homestead valuation, remittance shall be made to such taxpayer of the amount of such credit or exemption.
   4.  The amount of such credit shall be allocated and paid from the surplus redeposited in the homestead credit fund provided for in subsection 1.  The amount of such exemption not covered by the credit shall be allowed as a credit on future taxes due and payable.
    Sec. 80.  Section 425.10, Code 2023, is amended to read as follows:
   425.10  Reversal of allowed claim.
   In the event any claim is allowed, and subsequently reversed on appeal, any exemption and credit made under the claim shall be void. The amount of the erroneous exemption and credit shall be charged against the property in question, and the director of revenue, the county auditor, and the county treasurer are authorized and directed to correct their books and records accordingly. The amount of the erroneous credit, when collected, shall be returned by the county treasurer to the homestead credit fund to be reallocated the following year as provided in this subchapter.
    Sec. 81.  Section 425.11, subsection 1, paragraph d, subparagraph (1), unnumbered paragraph 1, Code 2023, is amended to read as follows:
   The homestead includes the dwelling house which the owner, in good faith, is occupying as a home on July 1 of the year for which the exemption and credit is claimed and occupies as a home for at least six months during the calendar year in which the fiscal year begins, except as otherwise provided.
    Sec. 82.  Section 425.11, subsection 1, paragraph d, subparagraph (3), Code 2023, is amended to read as follows:
   (3)  It must not embrace more than one dwelling house, but where a homestead has more than one dwelling house situated thereon, the exemption and credit provided for in this subchapter shall apply to the home and buildings used by the owner, but shall not apply to any other dwelling house and buildings appurtenant.
    Sec. 83.  Section 425.11, subsection 1, paragraph e, Code 2023, is amended to read as follows:
   e.  “Owner” means the person who holds the fee simple title to the homestead, and in addition shall mean the person occupying as a surviving spouse or the person occupying under a contract of purchase which contract has been recorded in the office of the county recorder of the county in which the property is located; or the person occupying the homestead under devise or by operation of the inheritance laws where the whole interest passes or where the divided interest is shared only by persons related or formerly related to each other by blood, marriage or adoption; or the person occupying the homestead is a shareholder of a family farm corporation that owns the property; or the person occupying the homestead under a deed which conveys a divided interest where the divided interest is shared only by persons related or formerly related to each other by blood, marriage or adoption; or where the person occupying the homestead holds a life estate with the reversion interest held by a nonprofit corporation organized under chapter 504, provided that the holder of the life estate is liable for and pays property tax on the homestead; or where the person occupying the homestead holds an interest in a horizontal property regime under chapter 499B, regardless of whether the underlying land committed to the horizontal property regime is in fee or as a leasehold interest, provided that the holder of the interest in the horizontal property regime is liable for and pays property tax on the homestead; or where the person occupying the homestead is a member of a community land trust as defined in 42 U.S.C. §12773, regardless of whether the underlying land is in fee or as a leasehold interest, provided that the member of the community land trust is occupying the homestead and is liable for and pays property tax on the homestead. For the purpose of this subchapter, the word “owner” shall be construed to mean a bona fide owner and not one for the purpose only of availing the person of the benefits of this subchapter. In order to qualify for the homestead tax exemption and credit, evidence of ownership shall be on file in the office of the clerk of the district court or recorded in the office of the county recorder at the time the owner files with the assessor a verified statement of the homestead claimed by the owner as provided in section 425.2.
    Sec. 84.  Section 425.12, Code 2023, is amended to read as follows:
   425.12  Indian land.
   Each forty acres of land, or fraction thereof, occupied by a member or members of the Sac and Fox Indians in Tama county, which land is held in trust by the secretary of the interior of the United States for said Indians, shall be given a homestead tax exemption and credit within the meaning and under the provisions of this subchapter. Application for such homestead tax exemption and credit shall be made to the county auditor of Tama county and may be made by a representative of the tribal council.
    Sec. 85.  Section 425.13, Code 2023, is amended to read as follows:
   425.13  Conspiracy to defraud.
   If any two or more persons conspire and confederate together with fraudulent intent to obtain the exemption and credit provided for under the terms of this subchapter by making a false deed, or a false contract of purchase, they are guilty of a fraudulent practice.
    Sec. 86.  Section 425.15, subsection 1, unnumbered paragraph 1, Code 2023, is amended to read as follows:
   If the owner of a homestead allowed a an exemption and credit under this subchapter is any of the following, the exemption shall be the total actual value of the homestead and, for fiscal years for which credits are paid, the credit allowed on the homestead from the homestead credit fund shall be the entire amount of the tax levied on the homestead: 
    Sec. 87.  Section 425.15, subsections 2, 3, and 4, Code 2023, are amended to read as follows:
   2.  a.  For an owner described in subsection 1, paragraph “a”, “b”, or “c”, the exemption and credit allowed shall be continued to the estate of an owner who is deceased or the surviving spouse and any child, as defined in section 234.1, who are the beneficiaries of a deceased owner, so long as the surviving spouse remains unmarried. 
   b.  An individual described in subsection 1, paragraph “d”, is no longer eligible for the exemption and credit upon termination of dependency and indemnity compensation under 38 U.S.C. §1301 et seq.
   3.  An owner or a beneficiary of an owner who elects to secure the exemption and credit provided in this section is not eligible for any other real property tax exemption provided by law for veterans of military service.
   4.  If an owner acquires a different homestead, the exemption and credit allowed under this section may be claimed on the new homestead unless the owner fails to meet the other requirements of this section.
    Sec. 88.  Section 425.15, subsection 5, paragraph a, Code 2023, is amended to read as follows:
   a.  Except as provided in paragraph “b”, the list of the names and addresses of individuals allowed a an exemption and credit under this section and maintained by the county recorder, county treasurer, county assessor, city assessor, or other government body is confidential information and shall not be disseminated to any person unless otherwise ordered by a court or released by the lawful custodian of the records pursuant to state or federal law. The county recorder, county treasurer, county assessor, city assessor, or other government body responsible for maintaining the names and addresses of individuals allowed a an exemption and credit under this section may display such exemption and credit on individual paper records and individual electronic records, including display on an internet site.
    Sec. 89.  Section 425.17, subsection 8, Code 2023, is amended to read as follows:
   8.  “Property taxes due” means property taxes including any special assessments, but exclusive of delinquent interest and charges for services, due on a claimant’s homestead in this state, but includes only property taxes for which the claimant is liable and which will actually be paid by the claimant. However, if the claimant is a person whose property taxes have been suspended under sections 427.8 and 427.9, “property taxes due” means property taxes including any special assessments, but exclusive of delinquent interest and charges for services, due on a claimant’s homestead in this state, but includes only property taxes for which the claimant is liable and which would have to be paid by the claimant if the payment of the taxes has not been suspended pursuant to sections 427.8 and 427.9. “Property taxes due” shall be computed with no deduction for any credit under this subchapter or for any homestead exemption or credit allowed under section 425.1. Each claim shall be based upon the taxes due during the fiscal year next following the base year. If a homestead is owned by two or more persons as joint tenants or tenants in common, and one or more persons are not members of claimant’s household, “property taxes due” is that part of property taxes due on the homestead which equals the ownership percentage of the claimant and the claimant’s household. The county treasurer shall include with the tax receipt a statement that if the owner of the property is eighteen years of age or over, the person may be eligible for the credit allowed under this subchapter. If a homestead is an integral part of a farm, the claimant may use the total property taxes due for the larger unit. If a homestead is an integral part of a multidwelling or multipurpose building the property taxes due for the purpose of this subsection shall be prorated to reflect the portion which the value of the property that the household occupies as its homestead is to the value of the entire structure. For purposes of this subsection, “unit” refers to that parcel of property covered by a single tax statement of which the homestead is a part.
    Sec. 90.  Section 425.23, subsection 2, Code 2023, is amended to read as follows:
   2.  The actual credit for property taxes due shall be determined by subtracting from the tentative credit the amount of the tax reduction resulting from the homestead exemption and credit under section sections 425.1 which is allowed as a credit and 425.1A against property taxes due in the fiscal year next following the base year by the claimant or any person of the claimant’s household. If the subtraction produces a negative amount, there shall be no credit but no refund shall be required. The actual reimbursement for rent constituting property taxes paid shall be equal to the tentative reimbursement.
    Sec. 91.  Section 435.26, subsection 1, paragraph a, Code 2023, is amended to read as follows:
   a.  A mobile home or manufactured home which is located outside a manufactured home community or mobile home park shall be converted to real estate by being placed on a permanent foundation and shall be assessed for real estate taxes. A home, after conversion to real estate, is eligible for the homestead tax exemption and credit and the military service tax exemption as provided in sections 425.2 and 426A.11. A taxable mobile home or manufactured home which is located outside of a manufactured home community or mobile home park as of January 1, 1995, is also exempt from the permanent foundation requirements of this chapter until the home is relocated.
    Sec. 92.  Section 435.26A, subsection 3, Code 2023, is amended to read as follows:
   3.  After the surrender of a manufactured home’s certificate of title under this section, the manufactured home shall continue to be taxed under section 435.22 and is not eligible for the homestead tax exemption and credit or the military service tax exemption and credit. A foreclosure action on a manufactured home whose title has been surrendered under this section shall be conducted as a real estate foreclosure. A tax lien and its priority shall remain the same on a manufactured home after its certificate of title has been surrendered.
    Sec. 93.  Section 483A.24, subsection 19, Code 2023, is amended to read as follows:
   19.  Upon payment of a fee established by rules adopted pursuant to section 483A.1 for a lifetime trout fishing license, the department shall issue a lifetime trout fishing license to a person who is at least sixty-five years of age or to a person who qualifies for the disabled veteran homestead exemption and credit under section 425.15. The department shall prepare an application to be used by a person requesting a lifetime trout fishing license under this subsection.
    Sec. 94.  Section 499A.14, Code 2023, is amended to read as follows:
   499A.14  Taxation.
   The real estate shall be taxed in the name of the cooperative, and each member of the cooperative shall pay that member’s proportionate share of the tax in accordance with the proration formula set forth in the bylaws, and each member occupying an apartment as a residence shall receive that member’s proportionate homestead tax exemption and credit and each veteran of the military services of the United States identified as such under the laws of the state of Iowa or the United States shall receive as a credit that member’s veterans tax benefit as prescribed by the laws of the state of Iowa.
    Sec. 95.  EXISTING HOMESTEAD CLAIMS.  Homestead credit claims approved under chapter 425, subchapter I, prior to and valid on the effective date of this division of this Act shall result in a homestead exemption under chapter 425, subchapter I, as enacted in this division of this Act, without further filing by the claimant.
    Sec. 96.  IMPLEMENTATION.  Section 25B.7, subsection 1, shall not apply to the property tax exemption provided in this division of this Act.
    Sec. 97.  APPLICABILITY.  This division of this Act applies to assessment years beginning on or after January 1, 2024.
DIVISION V
ELDERLY PROPERTY TAX CREDIT

    Sec. 98.  Section 425.17, subsection 2, paragraph a, subparagraph (3), Code 2023, is amended to read as follows:
   (3)  A person filing a claim for credit under this subchapter who has attained the age of seventy years on or before December 31 of the base year, who has a household income of less than two three hundred fifty percent of the federal poverty level, as defined by the most recently revised poverty income guidelines published by the United States department of health and human services, and is domiciled in this state at the time the claim is filed or at the time of the person’s death in the case of a claim filed by the executor or administrator of the claimant’s estate.
    Sec. 99.  Section 425.23, subsection 1, paragraph c, subparagraph (2), Code 2023, is amended to read as follows:
   (2)  The difference between the actual amount of net property taxes due on the homestead during the fiscal year next following the base year minus the actual amount of net property taxes due on the homestead during the first fiscal year for which the claimant filed a claim for a credit calculated under this paragraph “c” and for which the property taxes due on the homestead were calculated on an assessed valuation that was not a partial assessment and if the claimant has filed for the credit calculated under this paragraph “c” for each of the subsequent fiscal years after the first credit claimed.
    Sec. 100.  Section 425.23, subsection 2, Code 2023, is amended to read as follows:
   2.  a.  The Except as provided in paragraph “b”, the actual credit for property taxes due shall be determined by subtracting from the tentative credit the amount of the homestead credit under section 425.1 which is allowed as a credit against property taxes due in the fiscal year next following the base year by the claimant or any person of the claimant’s household. If the subtraction produces a negative amount, there shall be no credit but no refund shall be required. The actual reimbursement for rent constituting property taxes paid shall be equal to the tentative reimbursement.
   b.  If the claimant’s tentative credit is the amount determined under subsection 1, paragraph “c”, subparagraph (2), the actual credit amount shall be equal to the tentative credit amount.
    Sec. 101.  EFFECTIVE DATE.  The following, being deemed of immediate importance, take effect upon enactment:
   1.  The section of this division of this Act amending section 423.23, subsection 1, paragraph “c”, subparagraph (2).
   2.  The section of this division of this Act amending section 423.23, subsection 2.
    Sec. 102.  RETROACTIVE APPLICABILITY.  The following apply retroactively to claims under chapter 425, subchapter II, filed on or after January 1, 2022:
   1.  The section of this division of this Act amending section 423.25, subsection 1, paragraph “c”, subparagraph (2).
   2.  The section of this division of this Act amending section 423.23, subsection 2.
    Sec. 103.  APPLICABILITY.  The section of this division of this Act amending section 425.17, subsection 2, paragraph “a”, subparagraph (3), applies to claims under chapter 425, subchapter II, filed on or after January 1, 2024.
DIVISION VI
MILITARY SERVICE PROPERTY TAX EXEMPTION AND CREDIT

    Sec. 104.  Section 25B.7, subsection 2, paragraph c, Code 2023, is amended by striking the paragraph.
    Sec. 105.  Section 426A.1A, Code 2023, is amended to read as follows:
   426A.1A  Appropriation.
   There For each fiscal year beginning before July 1, 2026, there is appropriated from the general fund of the state the amounts necessary to fund the credits provided under this chapter.
    Sec. 106.  Section 426A.2, Code 2023, is amended to read as follows:
   426A.2  Military service tax credit.
   The For each fiscal year beginning before July 1, 2026, the moneys appropriated under section 426A.1A shall be apportioned each year so as to replace all or a portion of the tax which would be due on property eligible for military service tax exemption in the state, if the property were subject to taxation, the amount of the credit to be not more than six dollars and ninety-two cents per thousand dollars of assessed value of property, not to exceed nine hundred forty-five dollars, which would be subject to the tax, except for the military service tax exemption.
    Sec. 107.  Section 426A.11, subsections 1 and 2, Code 2023, are amended to read as follows:
   1.  The property, not to exceed two thousand seven hundred seventy-eight dollars in taxable value for assessment years beginning before January 1, 2024, of any veteran, as defined in section 35.1, of World War I.
   2.  a.  The property, not to exceed one thousand eight hundred fifty-two dollars in taxable value for assessment years beginning before January 1, 2024, of an honorably separated, retired, furloughed to a reserve, placed on inactive status, or discharged veteran, as defined in section 35.1, subsection 2, paragraph “a” or “b”.
   b.  The property, not to exceed two thousand fifty-five dollars in taxable value for the assessment year beginning January 1, 2024, of an honorably separated, retired, furloughed to a reserve, placed on inactive status, or discharged veteran, as defined in section 35.1, subsection 2, paragraph “a” or “b”.
   c.  The property, not to exceed four thousand dollars in taxable value for assessment years beginning on or after January 1, 2025, of an honorably separated, retired, furloughed to a reserve, placed on inactive status, or discharged veteran, as defined in section 35.1, subsection 2, paragraph “a” or “b”.
    Sec. 108.  IMPLEMENTATION.  Section 25B.7, subsection 1, shall not apply to the property tax exemption provided in this Act.
    Sec. 109.  APPLICABILITY.  This division of this Act applies to assessment years beginning on or after January 1, 2024.
DIVISION VII
PROPERTY TAX ASSESSMENT LIMITATIONS

    Sec. 110.  Section 441.21, subsections 5, 9, and 10, Code 2023, are amended to read as follows:
   5.  a.  (1)  For valuations established as of January 1, 1979, property valued by the department of revenue pursuant to chapters 428, 433, and 437, and 438 shall be considered as one class of property and shall be assessed as a percentage of its actual value. The percentage shall be determined by the director of revenue in accordance with the provisions of this section. For valuations established as of January 1, 1979, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend shall be the total actual valuation established for 1978 by the department of revenue, plus ten percent of the amount so determined. The divisor for property valued by the department of revenue pursuant to chapters 428, 433, and 437, and 438 shall be the valuation established for 1978, plus the amount of value added to the total actual value by the revaluation of the property by the department of revenue as of January 1, 1979. For valuations established as of January 1, 1980, property valued by the department of revenue pursuant to chapters 428, 433, and 437, and 438 shall be assessed at a percentage of its actual value. The percentage shall be determined by the director of revenue in accordance with the provisions of this section. For valuations established as of January 1, 1980, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend shall be the total actual valuation established for 1979 by the department of revenue, plus eight percent of the amount so determined. The divisor for property valued by the department of revenue pursuant to chapters 428, 433, and 437, and 438 shall be the valuation established for 1979, plus the amount of value added to the total actual value by the revaluation of the property by the department of revenue as of January 1, 1980. For valuations established as of January 1, 1981, and each year thereafter beginning before January 1, 2025, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428, 433, and 437, and 438 shall be assessed shall be calculated in accordance with the methods provided herein, except that any references to ten percent in this subsection shall be eight percent. For valuations established on or after January 1, 2013, property valued by the department of revenue pursuant to chapter 434 shall be assessed at a portion of its actual value determined in the same manner at which property assessed as commercial property is assessed under paragraph “b” for the same assessment year.  For valuations established for the assessment year beginning January 1, 2025, the percentage of actual value at which property valued by the department of revenue pursuant to chapter 438 shall be assessed shall be ninety-five percent. For valuations established for assessment years beginning on or after January 1, 2026, the percentage of actual value at which property valued by the department of revenue pursuant to chapter 438 shall be assessed shall be ninety percent. 
   (2)  (a)  For valuations established for the assessment year beginning January 1, 2025, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428 and 437 shall be assessed shall be ninety-seven and one-half percent.
   (b)  For valuations established for the assessment year beginning January 1, 2026, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428 and 437 shall be assessed shall be ninety-five percent.
   (c)  For valuations established for the assessment year beginning January 1, 2027, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428 and 437 shall be assessed shall be ninety-two and one-half percent.
   (d)  For valuations established for the assessment year beginning January 1, 2028, and each assessment year thereafter, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428 and 437 shall be assessed shall be ninety percent.
   b.  For valuations established on or after January 1, 2013, commercial property, excluding properties referred to in section 427A.1, subsection 9, shall be assessed at a portion of its actual value, as determined in this paragraph “b”.  For valuations established on or after January 1, 2013, property valued by the department of revenue pursuant to chapter 434 shall be assessed at a portion of its actual value determined in the same manner at which property assessed as commercial property is assessed for the same assessment year.
   (1)  For valuations established for the assessment year beginning January 1, 2013, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which commercial property shall be assessed shall be ninety-five percent. For valuations established for the assessment year beginning January 1, 2014, and each assessment year thereafter beginning before January 1, 2022, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which commercial property shall be assessed shall be ninety percent.
   (2)  For valuations established for the assessment year beginning January 1, 2022, and each assessment year thereafter, the portion of actual value at which each property unit of commercial property shall be assessed shall be the sum of the following:
   (a)  An amount equal to the product of the assessment limitation percentage applicable to residential property under subsection 4 for that assessment year multiplied by the actual value of the property that exceeds zero dollars but does not exceed one hundred fifty thousand dollars.
   (b)  (i)  An For the assessment years beginning January 1, 2022, January 1, 2023, and January 1, 2024, an amount equal to ninety percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars.
   (ii)  For the assessment year beginning January 1, 2025, an amount equal to eighty-five percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars.
   (iii)  For the assessment year beginning January 1, 2026, and each assessment year thereafter, an amount equal to eighty percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars.
   c.  For valuations established on or after January 1, 2013, industrial property, excluding properties referred to in section 427A.1, subsection 9, shall be assessed at a portion of its actual value, as determined in this paragraph “c”.
   (1)  For valuations established for the assessment year beginning January 1, 2013, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which industrial property shall be assessed shall be ninety-five percent. For valuations established for the assessment year beginning January 1, 2014, and each assessment year thereafter beginning before January 1, 2022, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which industrial property shall be assessed shall be ninety percent.
   (2)  For valuations established for the assessment year beginning January 1, 2022, and each assessment year thereafter, the portion of actual value at which each property unit of industrial property shall be assessed shall be the sum of the following:
   (a)  An amount equal to the product of the assessment limitation percentage applicable to residential property under subsection 4 for that assessment year multiplied by the actual value of the property that exceeds zero dollars but does not exceed one hundred fifty thousand dollars.
   (b)  (i)  An For the assessment years beginning January 1, 2022, January 1, 2023, and January 1, 2024, an amount equal to ninety percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars.
   (ii)  For the assessment year beginning January 1, 2025, an amount equal to eighty-five percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars.
   (iii)  For the assessment year beginning January 1, 2026, and each assessment year thereafter, an amount equal to eighty percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars.
   d.  For valuations established for the assessment year beginning January 1, 2019, and each assessment year thereafter, the percentages or portions of actual value at which property is assessed, as determined under this subsection, shall not be applied to the value of wind energy conversion property valued under section 427B.26 the construction of which is approved by the Iowa utilities board on or after July 1, 2018.
   e.  (1)  For each fiscal year beginning on or after July 1, 2023, there is appropriated from the general fund of the state to the department of revenue the sum of one hundred twenty-five million dollars to be used for payments under this paragraph calculated as a result of the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a), and paragraph “c”, subparagraph (2), subparagraph division (a). 
   (2)  For fiscal years beginning on or after July 1, 2023, each county treasurer shall be paid by the department of revenue an amount calculated under subparagraph (4). If an amount appropriated for the fiscal year is insufficient to make all payments as calculated under subparagraph (4), the director of revenue shall prorate the payments to the county treasurers and shall notify the county auditors of the pro rata percentage on or before September 30. 
   (3)  On or before July 1 of each fiscal year, the assessor shall report to the county auditor that portion of the total actual value of all commercial property and industrial property in the county that is subject to the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a), and paragraph “c”, subparagraph (2), subparagraph division (a), for the assessment year used to calculate the taxes due and payable in that fiscal year.
   (4)  On or before September 1 of each fiscal year, the county auditor shall prepare a statement, based on the report received in subparagraph (3) and information transmitted to the county auditor under chapter 434, listing for each taxing district in the county:
   (a)  The product of the portion of the total actual value of all commercial property, industrial property, and property valued by the department under chapter 434 in the county that is subject to the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a), and paragraph “c”, subparagraph (2), subparagraph division (a), for the applicable assessment year used to calculate taxes which are due and payable in the applicable fiscal year multiplied by the difference, stated as a percentage, between ninety percent the percentage under paragraph “b”, subparagraph (2), subparagraph division (b), for the applicable assessment year and the assessment limitation percentage applicable to residential property under subsection 4 for the applicable assessment year. 
   (b)  The tax levy rate per one thousand dollars of assessed value for each taxing district for the applicable fiscal year.
   (c)  The amount of the payment for each county is equal to the amount determined pursuant to subparagraph division (a), multiplied by the tax rate specified in subparagraph division (b), and then divided by one thousand dollars.
   (5)  The county auditor shall certify and forward one copy of the statement described in subparagraph (4) to the department of revenue not later than September 1 of each fiscal year.
   (6)  The amounts determined under this paragraph shall be paid by the department to the county treasurers in equal installments in September and March of each year. The county treasurer shall apportion the payments among the eligible taxing districts in the county and the amounts received by each taxing authority shall be treated the same as property taxes paid.
   f.  For the purposes of this subsection, unless the context otherwise requires:
   (1)  “Contiguous parcels” means any of the following:
   (a)  Parcels that share a common boundary.
   (b)  Parcels within the same building or structure regardless of whether the parcels share a common boundary.
   (c)  Permanent improvements to the land that are situated on one or more parcels of land that are assessed and taxed separately from the permanent improvements if the parcels of land upon which the permanent improvements are situated share a common boundary.
   (2)  “Parcel” means the same as defined in section 445.1. “Parcel” also means that portion of a parcel assigned a classification of commercial property or industrial property pursuant to section 441.21, subsection 14, paragraph “b”.
   (3)  “Property unit” means a parcel or contiguous parcels all of which are located within the same county, with the same property tax classification, are owned by the same person, and are operated by that person for a common use and purpose.
   9.  Not later than November 1, 1979, and November 1 of each subsequent year, the director shall certify to the county auditor of each county the percentages of actual value at which residential property, agricultural property, commercial property, industrial property, property valued by the department of revenue pursuant to chapter 434, property valued by the department pursuant to chapter 438, and property valued by the department of revenue pursuant to chapters 428, 433, and 437, and 438 in each assessing jurisdiction in the county shall be assessed for taxation, including for assessment years beginning on or after January 1, 2022, the percentages used to apply the assessment limitations under subsection 5, paragraphs “b” and “c”. The county auditor shall proceed to determine the assessed values of agricultural property, residential property, commercial property, industrial property, property valued by the department of revenue pursuant to chapter 434, property valued by the department pursuant to chapter 438, and property valued by the department of revenue pursuant to chapters 428, 433, and 437, and 438 by applying such percentages to the current actual value of such property, as reported to the county auditor by the assessor, and the assessed values so determined shall be the taxable values of such properties upon which the levy shall be made.
   10.  The percentages of actual value computed by the department of revenue for agricultural property, residential property, commercial property, industrial property, property valued by the department of revenue pursuant to chapter 434, property valued by the department pursuant to chapter 438, and property valued by the department of revenue pursuant to chapters 428, 433, and 437, and 438, including for assessment years beginning on or after January 1, 2022, the percentages used to apply the assessment limitations under subsection 5, paragraphs “b” and “c”, and used to determine assessed values of those classes of property do not constitute a rule as defined in section 17A.2, subsection 11.
    Sec. 111.  EFFECTIVE DATE.  This division of this Act takes effect July 1, 2024.
DIVISION VIII
NATURAL RESOURCES AND OUTDOOR RECREATION TRUST FUND

    Sec. 112.  Section 461.32, subsection 2, paragraph a, Code 2023, is amended to read as follows:
   a.  The establishment, restoration, or enhancement, and management of state parks, state preserves, state forests, wildlife areas, wildlife habitats, native prairies, and wetlands.
    Sec. 113.  Section 461.32, subsection 2, Code 2023, is amended by adding the following new paragraphs:
   NEW PARAGRAPH.  g.  The construction, maintenance, or expansion of roads on state-owned land under the jurisdiction of the department of natural resources.
   NEW PARAGRAPH.  h.  Salaries and employee benefits paid to support conservation officer, park ranger, or park manager positions within the department of natural resources.
    Sec. 114.  Section 461.33, subsection 2, paragraph a, Code 2023, is amended to read as follows:
   a.  (1)  Soil conservation and watershed protection, including by supporting the division of soil conservation and water quality within the department of agriculture and land stewardship and soil and water conservation district commissioners. The department may provide for the installation establishment of conservation practices, management practices to control soil erosion on row cropped land, and watershed protection improvements as provided in chapters 161A, 161C, 461A, and 466.
   (2)  Each fiscal year, at least ten percent of the moneys allocated to the account shall be used to support the planting and maintenance of cover crops as provided in section 161A.73.
    Sec. 115.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2025.
DIVISION IX
CHARITABLE CONSERVATION CONTRIBUTION TAX CREDIT

    Sec. 116.  Section 2.48, subsection 3, paragraph e, subparagraph (6), Code 2023, is amended by striking the subparagraph.
    Sec. 117.  Section 422.11W, Code 2023, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.  Commencing with tax years beginning on or after January 1, 2025, a charitable conservation contribution tax credit shall not be claimed against taxes as provided in this section, except for tax credits claimed for qualified real property interests conveyed prior to January 1, 2025.
    Sec. 118.  Section 422.33, subsection 25, Code 2023, is amended by striking the subsection and inserting in lieu thereof the following:
   25.  The taxes imposed under this subchapter shall be reduced by a charitable conservation contribution tax credit as allowed under section 422.11W for each tax year the taxpayer has credit, in excess of tax liability, for qualified real property interests conveyed prior to January 1, 2025.
    Sec. 119.  PRESERVATION OF EXISTING RIGHTS.  This division of this Act is not intended to and shall not limit, modify, or otherwise adversely affect any amount of tax credit issued, awarded, or allowed prior to January 1, 2025, nor shall it limit, modify, or otherwise adversely affect a taxpayer’s right to claim or redeem a tax credit issued, awarded, or allowed prior to January 1, 2025, including but not limited to any tax credit carryforward amount.
    Sec. 120.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2025.
    Sec. 121.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2025.
DIVISION X
PROPERTY TAX BENEFITS AND INCENTIVES

    Sec. 122.  NEW SECTION.  404.3C  Assessment agreements —— commercial property.
   1.  For revitalization areas established under this chapter on or after the effective date of this division of this Act and for first-year exemption applications for property located in a revitalization area in existence on the effective date of this division of this Act filed on or after the effective date of this division of this Act, commercial property shall not receive a tax exemption under this chapter unless the city or county, as applicable, and the owner of the qualified real estate enter into a written assessment agreement specifying a minimum actual value until a specified termination date for the duration of the exemption period.
   2.  a.  The assessment agreement shall be presented to the appropriate assessor. The assessor shall review the plans and specifications for the improvements to be made to the property and if the minimum actual value contained in the assessment agreement appears to be reasonable, the assessor shall execute the following certification upon the agreement:
    The undersigned assessor, being legally responsible for the assessment of the above described property upon completion of the improvements to be made on it, certifies that the actual value assigned to that land and improvements upon completion shall not be less than $.........

   b.  The assessment agreement with the certification of the assessor and a copy of this subsection shall be filed in the office of the county recorder of the county where the property is located. Upon completion of the improvements, the assessor shall value the property as required by law, except that the actual value shall not be less than the minimum actual value contained in the assessment agreement. This subsection does not prohibit the assessor from assigning a higher actual value to the property or prohibit the owner from seeking administrative or legal remedies to reduce the actual value assigned except that the actual value shall not be reduced below the minimum actual value contained in the assessment agreement. An assessor, county auditor, board of review, director of revenue, or court of this state shall not reduce or order the reduction of the actual value below the minimum actual value in the agreement during the term of the agreement regardless of the actual value which may result from the incomplete construction of improvements, destruction or diminution by any cause, insured or uninsured, except in the case of acquisition or reacquisition of the property by a public entity. Recording of an assessment agreement complying with this subsection constitutes notice of the assessment agreement to a subsequent purchaser or encumbrancer of the land or any part of it, whether voluntary or involuntary, and is binding upon a subsequent purchaser or encumbrancer.
    Sec. 123.  NEW SECTION.  404.3D  Exemptions for residential property.
   For revitalization areas established under this chapter on or after the effective date of this division of this Act and for first-year exemption applications for property located in a revitalization area in existence on the effective date of this division of this Act filed on or after the effective date of this division of this Act, an exemption otherwise authorized under this chapter shall not be authorized for or approved by a city or county, as applicable, for property that is residential property.
    Sec. 124.  EFFECTIVE DATE.  This division of this Act takes effect July 1, 2024.
DIVISION XI
TAX INCREMENT FINANCING

    Sec. 125.  Section 403.19, subsection 2, paragraph a, Code 2023, is amended to read as follows:
   a.  That portion of the taxes each year in excess of such amount shall be allocated to and when collected be paid into a special fund of the municipality to pay the principal of and interest on loans, moneys advanced to, or indebtedness, whether funded, refunded, assumed, or otherwise, including bonds issued under the authority of section 403.9, subsection 1, incurred by the municipality to finance or refinance, in whole or in part, an urban renewal project within the area, and to provide assistance for low and moderate income family housing as provided in section 403.22. However, except as provided in paragraph “b”, taxes for the regular and voter-approved physical plant and equipment levy of a school district imposed pursuant to section 298.2 and taxes for the instructional support program of a school district imposed pursuant to section 257.19, taxes for the payment of bonds and interest of each taxing district, and taxes imposed under section 346.27, subsection 22, related to joint county-city buildings shall be collected against all taxable property within the taxing district without limitation by the provisions of this subsection.  Additionally, for property taxes due and payable in fiscal years beginning on or after July 1, 2025, if the portion of the urban renewal area that is subject to a division of revenue under this section contains wind energy conversion property that is subject to special valuation under section 427B.26, foundation property taxes of a school district imposed under section 257.3 shall be collected against all taxable property within that portion of the urban renewal area without limitation by the provisions of this subsection and when collected be paid into the fund of the school district into which all other property taxes are paid.
DIVISION XII
TRANSIT FUNDING

    Sec. 126.  Section 364.2, subsection 4, paragraph f, subparagraph (1), subparagraph division (b), Code 2023, is amended to read as follows:
   (b)  For franchise fees assessed and collected during fiscal years beginning on or after July 1, 2013 2024, but before July 1, 2030, by a city that is the subject of a judgment, court-approved settlement, or court-approved compromise providing for payment of restitution, a refund, or a return described in section 384.3A, subsection 3, paragraph “j” with a population exceeding two hundred thousand, the rate of the franchise fee shall not exceed seven and one-half percent of gross revenues generated from sales of the franchisee in the city, and franchise fee amounts assessed and collected during such fiscal years in excess of five percent of gross revenues generated from sales shall be used solely for the purpose specified in section 384.3A, subsection 3, paragraph “j”. A city may assess and collect a franchise fee in excess of five percent of gross revenues generated from the sales of the franchisee pursuant to this subparagraph division (b) for a period not to exceed seven consecutive fiscal years once the franchise fee is first imposed at a rate in excess of five percent. An ordinance increasing the franchise fee rate to greater than five percent pursuant to this subparagraph division (b) shall not become effective unless approved at an election. After passage of the ordinance, the council shall submit the proposal at a special election held on a date specified in section 39.2, subsection 4, paragraph “b”. If a majority of those voting on the proposal approves the proposal, the city may proceed as proposed. The complete text of the ordinance shall be included on the ballot and the full text of the ordinance posted for the voters pursuant to section 52.25. All absentee voters shall receive the full text of the ordinance along with the absentee ballot. This subparagraph division (b) is repealed July 1, 2030.
    Sec. 127.  Section 384.3A, subsection 3, paragraph j, Code 2023, is amended to read as follows:
   j.  For franchise fees assessed and collected by a city in excess of five percent of gross revenues generated from sales of the franchisee within the city pursuant to section 364.2, subsection 4, paragraph “f”, subparagraph (1), subparagraph division (b), during fiscal years beginning on or after July 1, 2013 2024, but before July 1, 2030, the adjustment, renewal, or extension of any part or all of the legal indebtedness of a city, whether evidenced by bonds, warrants, court-approved settlements, court-approved compromises, or judgments, or the funding or refunding of the same, if such legal indebtedness relates to restitution, a refund, or a return ordered by a court of competent jurisdiction for franchise fees assessed and collected by the city before June 20, 2013 solely for the reduction of property tax levies that support the operation and maintenance of a municipal transit system or a regional transit district. This paragraph “j” is repealed July 1, 2030.
    Sec. 128.  EFFECTIVE DATE.  This division of this Act takes effect July 1, 2024.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to state and local revenue and finances.
   DIVISION I —— SALES AND USE TAX RATES AND DISTRIBUTION. An amendment to the Iowa Constitution was ratified on November 2, 2010, which created a natural resources and outdoor recreation trust fund (fund) and dedicated a portion of state revenues to the fund for the purposes of protecting and enhancing water quality and natural areas in the state including parks, trails, and fish and wildlife habitat, and conserving agricultural soils in the state (Article VII, section 10). The fund is codified in Code section 461.31. Pursuant to the amendment, the amount credited to the fund will be equal to the amount generated by an increase in the state sales tax rate occurring after the effective date of the constitutional amendment, but shall not exceed the amount that a state sales tax rate of 0.375 percent would generate. The state sales tax rate has not been increased since the effective date of the constitutional amendment, so no amounts have been credited to the fund. The bill increases the sales tax rate and the use tax rate from 6 percent to 7 percent beginning January 1, 2025. In lieu of the local option and sales services tax revenue repealed in another division of the bill, the bill transfers a specified amount of the state sales and use tax revenues collected to the local sales and use tax fund established under Code chapter 423B, for allocation and expenditure in a manner similar to that which was provided for local sales and services tax revenues. However, as provided in another division of the bill, amounts resulting from the increase in the use tax for the period beginning January 1, 2025, through December 31, 2043, are deposited in the local use tax supplement fund to be used for purposes of that fund. The amount of sales tax revenues transferred to the local sales and use tax fund under Code chapter 423B for the period beginning January 1, 2025, through December 31, 2027, is an amount equating to a tax of 1.4 percent. The amount transferred is then reduced each year by an amount equating to a 0.05 percent tax until January 1, 2030. The amount of sales tax revenues transferred to the local sales and use tax fund under Code chapter 423B beginning January 1, 2030, is an amount equating to a tax of 1.25 percent. The bill, as the result of Article VII, section 10, of the Constitution of the State of Iowa, also amends the transfer of sales tax revenues to the secure an advanced vision for education fund in Code section 423.2A(2).
   DIVISION II —— WATER SERVICE TAX. The bill changes the water service tax on the furnishing of water to consumers so that the rate is equal to the rate of the sales tax that is being imposed under Code chapter 423.
   Currently, one-half of the moneys collected from the water service tax are deposited into the general fund of the state and one-half of the moneys are deposited into the water quality financial assistance fund created in Code section 16.134A.  The bill strikes the provision requiring one-half of the water service tax moneys be deposited into the water quality financial assistance fund and requires all moneys generated from the water service tax be deposited into the general fund of the state.
   The bill also strikes the future repeal of the water service excise tax.
   The division takes effect January 1, 2025.
   DIVISION III —— LOCAL OPTION TAXES. Code chapter 423B authorizes, following approval at election, the imposition of a local option sales and services tax at a rate not to exceed one percent to be administered similarly to the state sales and services tax and authorizes the imposition of a local vehicle tax. The bill strikes the authorization for the local vehicle tax and also strikes the authorization to impose the local option sales and services tax under Code chapter 423B, but instead authorizes cities and counties to expend specified state sales and use tax revenues that are deposited in the local sales and use tax fund following the increase of the state sales and use taxes rates in previous sections of the bill.
   Under the bill, sales and services tax revenue credited to and deposited in each county’s account within the local sales and use tax fund must be expended by each recipient county and city as required by the jurisdiction’s revenue purpose statement, including a revenue purpose statement approved at election prior to January 1, 2025, and in effect on or set to take effect on or after January 1, 2025, for the use of local option sales and use tax revenue previously collected under Code chapter 423B, or be used to reduce specified property tax levies.
   The bill also modifies the requirements and permissible uses of funds received under Code chapter 423B. The bill specifies that for a county with a population of 400,000 or more, a revenue purpose statement governing the use of revenues for the unincorporated area of the county approved on or after January 1, 2025, shall require the use of 75 percent of such moneys for property tax relief. Additionally, the bill provides that property tax relief includes payments under a Code chapter 28E agreement for purposes of a regional transit district if such payments are used to reduce the regional transit district levy. For a city located in whole or in part in a county with a population of 400,000 or more, the use of revenues received under Code chapter 423B for such regional transit district purposes shall not exceed 10 percent of the amount received and for a county with a population of 400,000 or more, for the unincorporated area, shall not exceed 25 percent.
   The board of supervisors of each county and the city council of each city may adopt by resolution a revenue purpose statement for the expenditure of funds received under Code chapter 423B.
   The revenues transferred to the local sales and use tax fund continue to be allocated to the specific county account for the county in which the tax was collected. Additionally, all cities and counties are eligible to receive the allocation of revenues, not just those that had previously approved the local option tax.
   As provided in another division of the bill, specified amounts of use tax revenue is transferred to the local use tax supplement fund, as created in the bill. Moneys in the local use tax supplement fund are annually appropriated to the department of revenue to be used for supplement payments to cities and counties. For each year during the period beginning January 1, 2025, through December 31, 2043, each city or county for the unincorporated portion of the county shall receive a local use tax supplement payment equal to the difference, but not less than zero, between the amount of revenue received by the city or county under Code section 423B.7, Code 2023, for the period beginning January 1, 2024, and ending December 31, 2024, minus the amount that would have been received by that city or county for that period if all cities and the county were eligible for distributions of such revenues under Code section 423B.7, Code 2023. If moneys in the fund are insufficient to pay all supplement amounts for the year, the director of revenue shall prorate the payment of the supplement payments. The supplement payment is required to be combined with and be used in the same manner and be subject to the same requirements as moneys received by the city or county under Code section 423B.7 for that year. The bill establishes a future repeal of the Code section establishing the supplement payments on January 1, 2044. Moneys in the fund upon the repeal shall be transferred to the appropriate county accounts for the counties from which the tax was paid. 
   Code section 423B.10 allows a city in which a local sales and services tax is imposed to, by ordinance and following approval of the board of supervisors, to provide for the use of a designated amount of increased local option sales and services tax revenue for urban renewal purposes. The bill modifies provisions governing this authorization to provide for the use of a specified amount of the applicable increased state sales tax revenues deposited in the local sales and use tax fund in lieu of the increased local option sales and services tax revenue. The bill allows city ordinances providing for the use of certain local option sales and services tax revenues for urban renewal purposes in effect on January 1, 2025, to remain in effect until expiration, amendment, or repeal.
   The bill also eliminates the authority to impose a local sales and services tax under the quad cities interstate metropolitan authority compact under Code chapter 28A beginning on January 1, 2025.
   The division takes effect January 1, 2025.
   DIVISION IV —— HOMESTEAD PROPERTY TAX CREDIT. Code chapter 425 establishes a homestead property tax credit in an amount equal to the property tax levy on the first $4,850 of actual value. The homestead credit is paid for from the homestead credit fund under Code section 425.1 for which there is an annual appropriation for an amount sufficient to implement the credit.
   The bill reduces the amount of the homestead credit over a period beginning with the fiscal year beginning July 1, 2025, until the credit is ended in the fiscal year beginning July 1, 2028, at which time the remaining moneys in the homestead credit fund are transferred for deposit in the general fund of the state. During the same period, the bill establishes a homestead property tax exemption. For the assessment year beginning January 1, 2024, the exemption amount is $2,500. For the assessment year beginning January 1, 2025, the exemption amount is $5,000. For the assessment year beginning January 1, 2026, the exemption amount is $7,500. For the assessment year beginning January 1, 2027, and each succeeding assessment year, the exemption amount is $10,000.
   Code section 25B.7 provides that if a state appropriation made to fund a credit or exemption is not sufficient to fully fund the credit or exemption, the political subdivision shall be required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by the state appropriation. The requirement for fully funding and the consequences of not fully funding under Code section 25B.7 applies to the homestead credit under Code chapter 425. The bill strikes the portion of Code section 25B.7 that makes the requirement for fully funding and the consequences of not fully funding applicable to the homestead property tax credit and provides that the general requirement of Code section 25B.7 for property tax credits and exemptions on or after January 1, 1997, does not apply to the homestead property tax exemption established in the bill.
   The bill makes corresponding changes to various other provisions of the Code relating to and referencing the homestead property tax credit.
   The bill provides that homestead credit claims approved prior to and valid on the effective date of the division shall result in a homestead tax exemption under Code chapter 425, subchapter I, as enacted in the division, without further filing by the claimant.
   Division IV applies to assessment years beginning on or after January 1, 2024.
   DIVISION V —— ELDERLY PROPERTY TAX CREDIT. Code section 425.17, in part, establishes eligibility criteria for the elderly property tax credit. One such category of eligibility is a person who has attained the age of 70 years on or before December 31 of the base year, who has a household income of less than 250 percent of the federal poverty level. The bill changes that income threshold to 300 percent of the federal poverty level for credit claims filed on or after January 1, 2024.
   The bill also amends Code section 423.23 to modify part of the calculation for the elderly property tax credit to account for the homestead credit for the property under Code section 425.1. The portions of the division amending Code section 423.23 take effect upon enactment and apply retroactively to claims for the credit filed on or after January 1, 2022.
   DIVISION VI —— MILITARY SERVICE PROPERTY TAX EXEMPTION AND CREDIT. Division VII relates to the military service property tax exemption and credit. Under current law, veterans of World War I are entitled to a property tax exemption of $2,778 in taxable value and honorably discharged veterans who served during other specific time periods are entitled to a property tax exemption of $1,852 in taxable value. The bill increases the exemption amount for all eligible veterans to $2,055 for the assessment year beginning January 1, 2024, and to $4,000 for assessment years beginning on or after January 1, 2025.
   Under current law, the state provides funding to local governments for the military service property tax exemption and credit up to $6.92 per $1,000 of assessed value of the exempt property. The bill reduces the amount of the credit for the fiscal year beginning July 1, 2025, to $6.92 per $1,000 of assessed value of the exempt property, but not to exceed $945 of assessed value and eliminates funding for the credit starting with the fiscal year beginning July 1, 2026.
   Code section 25B.7 provides that if a state appropriation made to fund a credit or exemption is not sufficient to fully fund the credit or exemption, the political subdivision shall be required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by the state appropriation. The requirement for fully funding and the consequences of not fully funding under Code section 25B.7 applies to the military service property tax credit and exemption to the extent of $6.92 per $1,000 of assessed value of the exempt property. The bill strikes the portion of Code section 25B.7 that makes the requirement for fully funding and the consequences of not fully funding applicable to the military service property tax credit and exemption and provides that the general requirement of Code section 25B.7 for property tax credits and exemptions on or after January 1, 1997, does not apply to the military property tax exemption established in the bill.
   The division applies to assessment years beginning on or after January 1, 2024.
   DIVISION VII —— PROPERTY TAX ASSESSMENT LIMITATIONS. Code section 441.21 establishes assessment limitations for various classifications of property. The bill reduces the percentage of actual value at which property valued by the department of revenue pursuant to Code chapter 438 (pipelines) shall be assessed by 5 percent each year from 100 percent for the assessment year beginning January 1, 2024, to 90 percent for assessment years beginning on or after January 1, 2025.
   The bill also reduces the percentage of actual value at which the portion of commercial, industrial, and railway properties that exceeds $150,000 is assessed by 5 percent each year from 90 percent for the assessment year beginning January 1, 2024, to 80 percent for assessment years beginning on or after January 1, 2026. Accordingly, the bill makes a change to the payments made to local governments under Code section 441.21(5)(e) that are in part calculated using the assessment limitation applied to commercial and industrial property.
   2018 Iowa Acts, chapter 1158, changed the assessment of telephone and telegraph company property under Code chapter 433. Code chapter 433 applies to the assessment and taxation of telephone and telegraph company property for assessment years beginning before January 1, 2022. Starting with the assessment year beginning January 1, 2022, such property is assessed locally in the same manner as commercial property. References to Code chapter 433 are not included in the applicable Code section as amended in the bill for assessment years beginning on or after January 1, 2025.
   This division of the bill takes effect July 1, 2024.
   DIVISION VIII —— NATURAL RESOURCES AND OUTDOOR RECREATION TRUST FUND. The bill amends provisions in Code chapter 461 which would implement an amendment to the Constitution of the State of Iowa as ratified on November 2, 2010, as directed in the Iowa Constitution (see Code section 461.3; and Article VII, section 10 of the codified Iowa Constitution).
   CONSTITUTIONAL AMENDMENT. The amendment dedicates a portion of state revenue annually generated from the state’s sales tax to protect and enhance water quality and natural areas in this state, including parks, trails, and fish and wildlife habitats, and conserve agricultural soils in this state. The amendment creates a natural resources and outdoor recreation trust fund (fund) within the state treasury. The fund is credited with an amount equal to the amount annually generated by a sales tax rate of three-eighths of 1 percent. However, no revenue is credited to the fund until the tax rate existing on the effective date of the amendment is increased. After the effective date of any such increase, which another division of the bill provides, the fund will be credited with an amount equal to the amount generated by the increase up to the three-eighths of 1 percent limit.
   BILL’S PROVISIONS. Code chapter 461 creates the statutory version of the fund and provides for the distributions of revenue from the fund to various accounts used to support various initiatives to be carried out by state agencies including the department of natural resources (DNR) and department of agriculture and land stewardship (DALS).  Twenty-three percent of moneys credited to the fund are allocated to a natural resources account administered by DNR to support initiatives related to state lands, wildlife, recreation, natural habitat, rivers and streams, and education. The bill provides that moneys in the account are to be used (1) for the construction, maintenance, or expansion of roads on state-owned land under DNR’s jurisdiction, and (2) to support salaries and benefits paid to conservation officers, park rangers, or park managers (amended Code section 461.32). Twenty percent of moneys credited to the fund are allocated to the soil conservation and water protection account to support soil conservation practices, the conservation of highly erodible land, and soil conservation or crop management practices used in biomass production. The bill expressly provides that for each fiscal year, at least 10 percent of moneys in the account must be used to support the planting and maintenance of cover crops by landowners (amended Code section 461.33; referring to voluntary cost-share projects administered under Code section 161A.73).
   EFFECTIVE DATE. The division of the bill takes effect January 1, 2025.
   DIVISION IX —— CHARITABLE CONSERVATION CONTRIBUTION TAX CREDIT. The bill prohibits a charitable conservation contribution tax credit from being claimed against the individual or corporate income tax, except for qualified real property interests conveyed prior to January 1, 2025. The bill allows the credit in excess of tax liability to carry forward for qualified real property interests conveyed prior to January 1, 2025. The bill preserves existing rights and is intended to not limit, modify, or otherwise adversely affect any amount of the tax credit issued, awarded, or allowed prior to the repeal date of any tax credit. The division takes effect January 1, 2025, and applies to tax years beginning on or after that date.
   DIVISION X —— PROPERTY TAX BENEFITS AND INCENTIVES. The bill amends Code chapter 404 (urban revitalization areas) to provide that for revitalization areas established on or after the effective date of the division and for first-year property tax exemption applications for property located in a revitalization area in existence on the effective date of the division filed on or after the effective date of the division, commercial property shall not receive a tax exemption under Code chapter 404 unless the city or county, as applicable, and the owner of the qualified real estate enter into a written assessment agreement specifying a minimum actual value until a specified termination date for the duration of the exemption period.
   The bill also establishes limitations on exemptions for residential property within revitalization areas. For revitalization areas established on or after the effective date of the division and for first-year exemption applications for property located in a revitalization area in existence on the effective date of the division filed on or after the effective date of the division, an exemption otherwise authorized under Code chapter 404 shall not be authorized for or approved by a city or county, as applicable, for property that is residential property.
   Division X of the bill takes effect July 1, 2024.
   DIVISION XI —— TAX INCREMENT FINANCING. Code section 403.19 authorizes municipalities to provide by ordinance for the division of property tax revenue (tax increment financing) collected against property located within an urban renewal area. The bill provides that for property taxes due and payable in fiscal years beginning on or after July 1, 2025, if the portion of the urban renewal area that is subject to a division of property tax revenue contains wind energy conversion property that is subject to special valuation under Code section 427B.26, foundation property taxes of a school district imposed under Code section 257.3 in that portion of the urban renewal area shall not be subject to the division of property tax revenue and shall instead be paid to the school district.
   DIVISION XII —— TRANSIT FUNDING. Cities may grant various types of franchises for specified services under Code section 362.4 and may generally impose a franchise fee based upon a percentage of gross revenues generated from sales of the franchisee within the city not to exceed 5 percent. An exception allowing for a franchise fee up to 7.5 percent exists in specified circumstances for a period of fiscal years ending July 1, 2030, if approved at election. The bill strikes the provisions providing for that exception and establishes conditions under which a city with a population that exceeds 200,000 may impose a franchise fee of up to 7.5 percent for fiscal years beginning on or after July 1, 2024. The bill requires that franchise fee amounts collected during such fiscal years in excess of 5 percent of gross revenues generated from sales shall be used solely for the reduction of property tax levies used to support the operation and maintenance of a municipal transit system or a regional transit district.
   The division of the bill takes effect July 1, 2024.