House File 640 H-1457 Amend the Senate amendment, H-1454, to House File 1 640, as amended, passed, and reprinted by the House, as 2 follows: 3 1. Page 7, by striking lines 33 through 46 and 4 inserting: 5 < Sec. ___. Section 312.2, subsection 9, paragraph 6 a, Code 2013, is amended to read as follows: 7 a. From the excise tax on motor fuel and special 8 fuel imposed under the tax rate of section 452A.3 , 9 except aviation gasoline and dyed special fuel , 10 the amount of excise tax collected from one and 11 three-fourths cents per gallon. 12 Sec. ___. Section 312.2, subsection 10, paragraph 13 a, Code 2013, is amended to read as follows: 14 a. From the excise tax on motor fuel and special 15 fuel imposed under the tax rate of section 452A.3 , 16 except aviation gasoline and dyed special fuel , the 17 amount of excise tax collected from one-fourth cent per 18 gallon. 19 Sec. ___. Section 312.2, Code 2013, is amended by 20 adding the following new subsection: 21 NEW SUBSECTION . 18. a. The treasurer of state, 22 before making the allotments provided for in this 23 section, shall credit monthly from the road use tax 24 fund to the TIME-21 fund created in section 312A.2 the 25 revenue accruing to the road use tax fund beginning 26 July 1, 2015, from the excise tax on motor fuel and 27 special fuel for motor vehicles and on dyed special 28 fuel used for off-highway purposes in the amount equal 29 to the revenues collected as follows: 30 (1) The amount of excise tax collected under 31 section 452A.3, subsection 1, paragraph “c” , or section 32 452A.3, subsection 1A, from ten cents per gallon. 33 (2) The amount of excise tax collected under 34 section 452A.3, subsection 3, paragraph “b” , 35 subparagraph (2), from ten cents per gallon. 36 (3) The amount of excise tax collected under 37 section 452A.3, subsection 3, paragraph “c” , from two 38 cents per gallon. 39 b. This subsection is repealed June 30, 2028. 40 Sec. ___. Section 423.3, subsection 56, Code 2013, 41 is amended to read as follows: 42 56. The sales price from the sale of motor fuel and 43 special fuel consumed for highway use or in watercraft 44 or aircraft where the fuel tax , except for the fuel tax 45 on dyed special fuel, has been imposed and paid and no 46 refund has been or will be allowed and the sales price 47 from the sales of ethanol blended gasoline, as defined 48 in section 214A.1 . 49 Sec. ___. Section 452A.3, subsection 1, unnumbered 50 -1- H1454.2342 (5) 85 dea/nh 1/ 8 #1.

paragraph 1, Code 2013, is amended to read as follows: 1 Except as otherwise provided in this section and 2 in this division , until June 30, 2013 2023 , this 3 subsection shall apply to the excise tax imposed on 4 each gallon of motor fuel used for any purpose for the 5 privilege of operating motor vehicles in this state. 6 Sec. ___. Section 452A.3, subsection 1, paragraph 7 b, unnumbered paragraph 1, Code 2013, is amended to 8 read as follows: 9 The For the period beginning July 1, 2013, and 10 ending June 30, 2015, the rate for the excise tax shall 11 be as follows: 12 Sec. ___. Section 452A.3, subsection 1, Code 2013, 13 is amended by adding the following new paragraph: 14 NEW PARAGRAPH . c. For the period beginning July 1, 15 2015, and ending June 30, 2023, the rate for the excise 16 tax shall be as follows: 17 (1) If the distribution percentage is not greater 18 than fifty percent, the rate shall be twenty-nine cents 19 for ethanol blended gasoline and thirty cents for motor 20 fuel other than ethanol blended gasoline. 21 (2) If the distribution percentage is greater than 22 fifty percent but not greater than fifty-five percent, 23 the rate shall be twenty-nine cents for ethanol blended 24 gasoline and thirty and one-tenth cents for motor fuel 25 other than ethanol blended gasoline. 26 (3) If the distribution percentage is greater than 27 fifty-five percent but not greater than sixty percent, 28 the rate shall be twenty-nine cents for ethanol blended 29 gasoline and thirty and three-tenths cents for motor 30 fuel other than ethanol blended gasoline. 31 (4) If the distribution percentage is greater than 32 sixty percent but not greater than sixty-five percent, 33 the rate shall be twenty-nine cents for ethanol blended 34 gasoline and thirty and five-tenths cents for motor 35 fuel other than ethanol blended gasoline. 36 (5) If the distribution percentage is greater 37 than sixty-five percent but not greater than seventy 38 percent, the rate shall be twenty-nine cents for 39 ethanol blended gasoline and thirty and seven-tenths 40 cents for motor fuel other than ethanol blended 41 gasoline. 42 (6) If the distribution percentage is greater than 43 seventy percent but not greater than seventy-five 44 percent, the rate shall be twenty-nine cents for 45 ethanol blended gasoline and thirty-one cents for motor 46 fuel other than ethanol blended gasoline. 47 (7) If the distribution percentage is greater 48 than seventy-five percent but not greater than eighty 49 percent, the rate shall be twenty-nine and three-tenths 50 -2- H1454.2342 (5) 85 dea/nh 2/ 8

cents for ethanol blended gasoline and thirty and 1 eight-tenths cents for motor fuel other than ethanol 2 blended gasoline. 3 (8) If the distribution percentage is greater 4 than eighty percent but not greater than eighty-five 5 percent, the rate shall be twenty-nine and five-tenths 6 cents for ethanol blended gasoline and thirty and 7 seven-tenths cents for motor fuel other than ethanol 8 blended gasoline. 9 (9) If the distribution percentage is greater 10 than eighty-five percent but not greater than ninety 11 percent, the rate shall be twenty-nine and seven-tenths 12 cents for ethanol blended gasoline and thirty and 13 four-tenths cents for motor fuel other than ethanol 14 blended gasoline. 15 (10) If the distribution percentage is greater 16 than ninety percent but not greater than ninety-five 17 percent, the rate shall be twenty-nine and nine-tenths 18 cents for ethanol blended gasoline and thirty and 19 one-tenth cents for motor fuel other than ethanol 20 blended gasoline. 21 (11) If the distribution percentage is greater than 22 ninety-five percent, the rate shall be thirty cents for 23 ethanol blended gasoline and thirty cents for motor 24 fuel other than ethanol blended gasoline. 25 Sec. ___. Section 452A.3, subsection 1A, Code 2013, 26 is amended to read as follows: 27 1A. Except as otherwise provided in this section 28 and in this division , after June 30, 2013 2023 , an 29 excise tax of twenty thirty cents is imposed on each 30 gallon of motor fuel used for any purpose for the 31 privilege of operating motor vehicles in this state. 32 Sec. ___. Section 452A.3, subsection 3, Code 2013, 33 is amended to read as follows: 34 3. a. For the privilege of operating motor 35 vehicles or aircraft in this state, there is imposed 36 an excise tax on the use of special fuel in a motor 37 vehicle or aircraft. The 38 b. (1) Until June 30, 2015, the tax rate on 39 special fuel for diesel engines of motor vehicles , 40 other than biodiesel blended fuel classified as B-10 or 41 higher or dyed special fuel, is twenty-two and one-half 42 cents per gallon. 43 (2) Beginning July 1, 2015, the tax rate on special 44 fuel for diesel engines of motor vehicles, other than 45 biodiesel blended fuel classified as B-10 or higher or 46 dyed special fuel, is thirty-two and one-half cents per 47 gallon. 48 (3) The tax rate on biodiesel blended fuel 49 classified as B-10 or higher for diesel engines of 50 -3- H1454.2342 (5) 85 dea/nh 3/ 8

motor vehicles is twenty-two and one-half cents per 1 gallon. 2 (4) The rate of tax on special fuel for aircraft is 3 three cents per gallon. 4 (5) On all other special fuel, unless otherwise 5 specified in this section , the per gallon rate is the 6 same as the motor fuel tax. 7 c. Indelible dye meeting United States 8 environmental protection agency and internal revenue 9 service regulations must be added to fuel before or 10 upon withdrawal at a terminal or refinery rack for that 11 fuel to be exempt from the tax imposed under paragraph 12 “b” and the dyed fuel may be used only for an exempt 13 purpose off-highway purposes . Beginning July 1, 2015, 14 an excise tax at the rate of two cents per gallon 15 is imposed on dyed special fuel used for off-highway 16 purposes. 17 Sec. ___. Section 452A.3, subsection 5, Code 2013, 18 is amended by adding the following new paragraph: 19 NEW PARAGRAPH . c. The director of revenue 20 shall administer the excise tax on dyed special 21 fuel as nearly as possible in conjunction with the 22 administration of the state sales and use tax law, 23 except that portion of the law which implements the 24 streamlined sales and use tax agreement. Section 25 422.25, subsection 4, sections 422.30, 422.67, and 26 422.68, section 422.69, subsection 1, sections 422.70, 27 422.71, 422.72, 422.74, and 422.75, section 423.14, 28 subsection 1, and sections 423.23, 423.24, 423.25, 29 423.31 through 423.35, 423.37 through 423.42, and 30 423.47, consistent with the provisions of this chapter, 31 apply with respect to the tax on dyed special fuel 32 authorized under this section, in the same manner and 33 with the same effect as if the excise taxes on dyed 34 special fuel were retail sales taxes within the meaning 35 of those statutes. 36 Sec. ___. Section 452A.8, subsection 1, paragraph 37 b, Code 2013, is amended to read as follows: 38 b. For information purposes only, a supplier, 39 restrictive supplier, or importer shall show the 40 The number of invoiced gallons of dyed special fuel 41 withdrawn from the terminal. 42 Sec. ___. APPLICABILITY —— INVENTORY 43 TAX. Notwithstanding section 452A.85, persons who have 44 title to motor fuel, ethanol blended gasoline, undyed 45 special fuel, compressed natural gas, or liquefied 46 petroleum gas in storage and held for sale on the 47 effective date of an increase in the rate of excise 48 tax imposed on motor fuel, ethanol blended gasoline, 49 or special fuel pursuant to this division of this 50 -4- H1454.2342 (5) 85 dea/nh 4/ 8

Act shall not be subject to an inventory tax on the 1 gallonage in storage as provided in section 452A.85 as 2 a result of the tax increases provided in this division 3 of this Act. > 4 2. Page 7, after line 49 by inserting: 5 < DIVISION ___ 6 INCOME TAX CREDITS 7 Sec. ___. NEW SECTION . 422.11C Dyed special fuel 8 tax credit. 9 1. The taxes imposed under this division, less the 10 credits allowed under section 422.12, shall be reduced 11 by a dyed special fuel tax credit equal to two cents 12 per gallon of dyed special fuel used for off-highway 13 purposes subject to the excise tax in section 452A.3 14 which was purchased by the taxpayer during the tax 15 year. 16 2. An individual may claim the tax credit allowed a 17 partnership, limited liability company, S corporation, 18 estate, or trust electing to have the income taxed 19 directly to the individual. The amount claimed by the 20 individual shall be based upon the pro rata share of 21 the individual’s earnings of the partnership, limited 22 liability company, S corporation, estate, or trust. 23 3. Any credit in excess of the tax liability 24 shall be refunded. In lieu of claiming a refund, a 25 taxpayer may elect to have the overpayment shown on the 26 taxpayer’s final, completed return credited to the tax 27 liability for the following taxable year. 28 Sec. ___. NEW SECTION . 422.11E Fuel tax neutrality 29 tax credit. 30 1. For purposes of this section, unless the context 31 otherwise requires: 32 a. “Hybrid motor vehicle” means a motor vehicle 33 subject to registration under section 321.18, which 34 operates on a combination of an electric propulsion 35 system and an internal combustion propulsion system. 36 b. “Lease” or “leased” means the same as defined in 37 section 321F.1. 38 c. “Motor vehicle” means a motor vehicle subject 39 to registration under section 321.18, excluding a 40 motor vehicle that operates solely on an electric 41 propulsion system or a motor vehicle that operates on 42 a combination of an electric propulsion system and an 43 internal combustion propulsion system. 44 d. “Used primarily for business purposes” means to 45 primarily use a motor vehicle or hybrid motor vehicle 46 in such a way as to allow the taxpayer a deduction 47 under section 162(a) of the Internal Revenue Code, but 48 shall not include a vehicle primarily used for lease or 49 rental to another person, or held primarily for sale to 50 -5- H1454.2342 (5) 85 dea/nh 5/ 8 #2.

another person. 1 e. “Used primarily for personal purposes” means to 2 primarily use a motor vehicle or hybrid motor vehicle 3 for any purpose other than a business purpose, but 4 shall not include a vehicle primarily used for lease or 5 rental to another person, or held primarily for sale to 6 another person. 7 2. The taxes imposed under this division, less 8 the credits allowed under section 422.12, shall be 9 reduced by a fuel tax neutrality tax credit equal to 10 the following: 11 a. For a motor vehicle owned or leased by a 12 taxpayer and used primarily for personal purposes, 13 seventy-five dollars. However, for tax years beginning 14 in the 2015 calendar year, the amount shall not exceed 15 thirty-seven dollars. 16 b. For a hybrid motor vehicle owned or leased by 17 a taxpayer and used primarily for personal purposes, 18 forty dollars. However, for tax years beginning in the 19 2015 calendar year, the amount shall not exceed twenty 20 dollars. 21 c. For a motor vehicle or hybrid motor vehicle 22 owned or leased by a taxpayer and used primarily for 23 business purposes, one of the following amounts: 24 (1) If the taxpayer has elected for federal tax 25 purposes to use the standard mileage rate method for 26 computation of deductible business expenses pursuant 27 to the Internal Revenue Code, an amount equal to 28 fifty-five hundredths of a cent per mile driven within 29 Iowa during the tax year, rounded to the nearest 30 dollar. However, the credit in this subparagraph shall 31 not apply to miles driven before July 1, 2015. 32 (2) If the taxpayer has elected for federal tax 33 purposes to deduct the actual costs of operating the 34 motor vehicle or hybrid motor vehicle pursuant to the 35 Internal Revenue Code, an amount equal to ten cents per 36 gallon of motor fuel or undyed special fuel purchased 37 within Iowa by the taxpayer during the tax year for use 38 in the motor vehicle or hybrid motor vehicle, rounded 39 to the nearest dollar. However, the credit in this 40 subparagraph shall not apply to fuel purchased before 41 July 1, 2015. 42 3. For purposes of the credit in subsection 2, if a 43 motor vehicle or hybrid motor vehicle is jointly owned 44 or leased by two or more taxpayers, the credit shall 45 only be claimed by one taxpayer. 46 4. For purposes of the credits in subsection 2, 47 paragraphs “a” and “b” , if the taxpayer is not the 48 owner or lessee of the motor vehicle or hybrid motor 49 vehicle for the entire tax year, the maximum amount 50 -6- H1454.2342 (5) 85 dea/nh 6/ 8

of the credit shall be prorated and the amount of 1 the credit for the taxpayer with respect to those 2 paragraphs shall equal the maximum amount of credit 3 for the tax year, divided by twelve, multiplied by the 4 number of months in the tax year that the taxpayer 5 owned or leased the motor vehicle or hybrid motor 6 vehicle. 7 5. An individual may claim the tax credit allowed a 8 partnership, limited liability company, S corporation, 9 estate, or trust electing to have the income taxed 10 directly to the individual. The amount claimed by the 11 individual shall be based upon the pro rata share of 12 the individual’s earnings of the partnership, limited 13 liability company, S corporation, estate, or trust. 14 6. Any credit in excess of the tax liability 15 shall be refunded. In lieu of claiming a refund, a 16 taxpayer may elect to have the overpayment shown on the 17 taxpayer’s final, completed return credited to the tax 18 liability for the following taxable year. 19 Sec. ___. Section 422.33, Code 2013, is amended by 20 adding the following new subsections: 21 NEW SUBSECTION . 22. The taxes imposed under this 22 division shall be reduced by a dyed special fuel 23 tax credit in the same manner, for the same amount, 24 and under the same conditions as provided in section 25 422.11C. 26 NEW SUBSECTION . 23. The taxes imposed under this 27 division shall be reduced by a fuel tax neutrality 28 tax credit in the same manner, for the same amount, 29 and under the same conditions as provided in section 30 422.11E. 31 Sec. ___. EFFECTIVE DATE. This division of this 32 Act takes effect January 1, 2015. 33 Sec. ___. APPLICABILITY. This division of this Act 34 applies to tax years beginning on or after January 1, 35 2015. > 36 3. Page 8, after line 1 by inserting: 37 < ___. Title page, line 7, by striking < extending 38 the period for determining the rates > 39 ___. Title page, by striking lines 8 and 9 and 40 inserting < relating to excise taxes on motor fuel and 41 certain special fuel, providing for the use of certain 42 revenues resulting from the excise taxes, providing 43 income tax credits, including > 44 ___. Title page, line 10, after < date > by inserting 45 < and applicability >> 46 4. By renumbering as necessary. 47 -7- H1454.2342 (5) 85 dea/nh 7/ 8 #3.