House File 668 H-1150 Amend House File 668 as follows: 1 1. Page 1, before line 1 by inserting: 2 < DIVISION I 3 CHILD CARE CENTERS AND FACILITIES —— PROPERTY TAXATION > 4 2. Page 4, line 33, after < This > by inserting < division of 5 this > 6 3. Page 5, line 3, after < this > by inserting < division of 7 this > 8 4. Page 5, line 6, after < this > by inserting < division of 9 this > 10 5. Page 5, line 11, after < this > by inserting < division of 11 this > 12 6. Page 5, line 13, after < this > by inserting < division of 13 this > 14 7. Page 5, after line 15 by inserting: 15 < DIVISION ___ 16 CHILD AND DEPENDENT CARE TAX CREDIT 17 Sec. ___. Section 422.12C, subsection 1, Code 2023, is 18 amended by striking the subsection and inserting in lieu 19 thereof the following: 20 1. The taxes imposed under this subchapter, less the amounts 21 of nonrefundable credits allowed under this subchapter, shall 22 be reduced by a child and dependent care credit equal to the 23 following percentages of the federal child and dependent care 24 credit provided in section 21 of the Internal Revenue Code, 25 without regard to whether or not the federal credit was limited 26 by the taxpayer’s federal tax liability: 27 a. For a taxpayer with net income of forty-five thousand 28 dollars or less, one hundred percent. 29 b. For a taxpayer with net income exceeding forty-five 30 thousand dollars but not exceeding fifty thousand dollars, 31 eighty-eight percent. 32 c. For a taxpayer with net income exceeding fifty thousand 33 dollars but not exceeding sixty thousand dollars, seventy-five 34 percent. 35 -1- HF 668.1312 (1) 90 md/rn 1/ 8 #1. #2. #3. #4. #5. #6. #7.

d. For a taxpayer with net income exceeding sixty thousand 1 dollars but not exceeding seventy thousand dollars, sixty-three 2 percent. 3 e. For a taxpayer with net income exceeding seventy thousand 4 dollars but not exceeding eighty thousand dollars, fifty 5 percent. 6 f. For a taxpayer with net income exceeding eighty thousand 7 dollars but not exceeding ninety thousand dollars, thirty-eight 8 percent. 9 g. For a taxpayer with net income exceeding ninety thousand 10 dollars but not exceeding one hundred thousand dollars, 11 twenty-five percent. 12 h. For a taxpayer with net income exceeding one hundred 13 thousand dollars but not exceeding one hundred twenty-five 14 thousand dollars, thirteen percent. 15 i. For a taxpayer with net income exceeding one hundred 16 twenty-five thousand dollars but not exceeding one hundred 17 fifty thousand dollars, ten percent. 18 j. For a taxpayer with net income exceeding one hundred 19 fifty thousand dollars but not exceeding one hundred 20 seventy-five thousand dollars, five percent. 21 k. For a taxpayer with net income exceeding one hundred 22 seventy-five thousand dollars but not exceeding two hundred 23 thousand dollars, three percent. 24 l. For a taxpayer with net income exceeding two hundred 25 thousand dollars but not exceeding two hundred fifty thousand 26 dollars, two percent. 27 m. For a taxpayer with net income exceeding two hundred 28 fifty thousand dollars, zero percent. 29 DIVISION ___ 30 CHILD CARE CENTER AND CHILD DEVELOPMENT HOME GRANTS 31 Sec. ___. NEW SECTION . 237D.1 Definitions. 32 As used in this chapter, unless the context otherwise 33 requires: 34 1. “Child” means the same as defined in section 237A.1. 35 -2- HF 668.1312 (1) 90 md/rn 2/ 8

2. “Child care” means the same as defined in section 237A.1. 1 3. “Child development home” means the same as defined in 2 section 237A.1. 3 4. “Department” means the department of health and human 4 services. 5 5. “Facility” means the same as defined in section 237A.1. 6 6. “Fund” means the child care center and child development 7 home grant fund. 8 7. “Home” means a child development home. 9 8. “Licensed child care center” or “center” means a facility 10 providing child care or preschool services for seven or more 11 children that has been issued a license by the department 12 pursuant to section 237A.2. 13 9. “Program” means the child care center and child 14 development home grant program. 15 Sec. ___. NEW SECTION . 237D.2 Child care center and child 16 development home grant fund. 17 1. A child care center and child development home grant fund 18 is created and established as a separate and distinct fund in 19 the state treasury under the control of the department. 20 2. a. The fund may consist of any moneys appropriated by 21 the general assembly for purposes of this chapter and any other 22 moneys that are lawfully available to the department. Moneys 23 in the fund are appropriated to the department and shall be 24 used for the purposes of this chapter. 25 b. Notwithstanding section 8.33, moneys in the fund 26 that remain unencumbered or unobligated at the close of the 27 fiscal year shall not revert but shall remain available for 28 expenditure for the purposes of this section in succeeding 29 fiscal years. Notwithstanding section 12C.7, subsection 2, 30 interest earned on moneys in the fund shall be credited to the 31 fund. 32 Sec. ___. NEW SECTION . 237D.3 Child care center and child 33 development home grant program. 34 1. The department shall adopt rules to establish and 35 -3- HF 668.1312 (1) 90 md/rn 3/ 8

administer a child care center and child development home 1 grant program to provide for the allocation of money in the 2 fund in the form of grants, not to exceed fifty thousand 3 dollars per grant, to eligible persons for costs related to 4 the establishment of a new licensed child care center or 5 a new child development home, or for the expansion of an 6 existing licensed child care center or the expansion of an 7 existing child development home. For any one fiscal year, the 8 department shall not approve more than four million dollars 9 in grants. The rules adopted by the department shall specify 10 the eligibility requirements for applicants of the program and 11 the items eligible for a program grant. Items eligible for a 12 program grant must include the costs related to licensing or 13 registration, supplies, employee salaries, and infrastructure. 14 2. A new center or a new home must be licensed or registered 15 and fully operational within two years of the date of an 16 applicant’s receipt of a grant. 17 3. Of the children for whom a new or expanded center or a 18 new or expanded home provide child care, a minimum of twenty 19 percent of the children must be from a family that qualifies 20 for state child care assistance pursuant to section 237A.13. 21 4. A person that is awarded a grant shall enter into an 22 agreement with the department that specifies the requirements 23 that must be maintained throughout the period of the agreement 24 in order for the person to retain the grant. The agreement 25 must contain, at a minimum, provisions addressing all of the 26 following: 27 a. The legal name of the person receiving the grant. 28 b. The amount of the grant. 29 c. Annual certification by the person to the department of 30 compliance with the requirements of the agreement, the program, 31 and this chapter. 32 d. The repayment of the grant, or a portion of the grant, 33 if the person does not meet all of the requirements of the 34 agreement, the program, and this chapter. 35 -4- HF 668.1312 (1) 90 md/rn 4/ 8

e. If a new center or a new home for which the grant was 1 received goes out of business within two years of the date the 2 new center or new home becomes fully operational pursuant to 3 subsection 2, the grant shall be subject to repayment. If an 4 expanded center or an expanded home for which the grant was 5 received goes out of business within two years of the date on 6 which the grant was received, the grant shall be subject to 7 repayment. 8 DIVISION ___ 9 SMALL BUSINESS CHILD CARE TAX CREDIT 10 Sec. ___. NEW SECTION . 237A.32 Small business child care 11 tax credit. 12 1. As used in this section “small business” means any 13 enterprise which is located in this state, which is operated 14 for profit and under a single management, and which has either 15 fewer than twenty employees or an annual gross income of less 16 than four million dollars computed as the average of the three 17 preceding fiscal years. This definition does not apply to any 18 program or activity for which a definition for small business 19 is provided for the program or activity by federal law or 20 regulation or other state law. 21 2. A small business may receive a child care tax credit 22 for providing child care employee benefits to employees of the 23 business. The credit may be applied against income tax imposed 24 under chapter 422, subchapter II or III, the franchise tax 25 imposed under chapter 422, subchapter V, the gross premiums 26 tax imposed under chapter 432, or the moneys and credits tax 27 imposed in section 533.329. The amount of the credit equals 28 the costs to provide the benefit up to three thousand dollars 29 per employee per year. 30 3. The aggregate amount of tax credits authorized pursuant 31 to this section shall not exceed a total of two million 32 dollars per fiscal year, and shall be awarded on a first-come, 33 first-served basis. 34 4. To be eligible for a small business child care tax 35 -5- HF 668.1312 (1) 90 md/rn 5/ 8

credit, the small business must provide child care employee 1 benefits to employees of the business through any of the 2 following: 3 a. Build a new structure or rehabilitate an existing 4 structure to be used as a child care center at or near the small 5 business where the children of the employees of the business 6 are provided child care. A small business may construct or 7 rehabilitate the structure in conjunction with another business 8 but only the actual cost of the business shall be considered in 9 determining the credit. 10 b. Operate or lease a child care center at or near the small 11 business where the children of the employees of the business 12 are provided child care. 13 5. A taxpayer who elects to claim the small business child 14 care tax credit shall not claim the employer child care tax 15 credit under section 237A.31. 16 6. Any credit in excess of the tax liability is not 17 refundable but the excess for the tax year may be credited 18 to the tax liability for the following five years or until 19 depleted, whichever is earlier. The director of revenue shall 20 adopt rules to implement this section. 21 Sec. ___. NEW SECTION . 422.12P Small business child care 22 tax credit. 23 1. The taxes imposed under this subchapter, less the credits 24 allowed under section 422.12, shall be reduced by a small 25 business child care tax credit received pursuant to section 26 237A.32. 27 2. An individual may claim the tax credit allowed a 28 partnership, S corporation, limited liability company, estate, 29 or trust electing to have the income taxed directly to the 30 individual. The amount claimed by the individual shall be 31 based upon the pro rata share of the individual’s earnings of a 32 partnership, S corporation, limited liability company, estate, 33 or trust. 34 Sec. ___. Section 422.33, Code 2023, is amended by adding 35 -6- HF 668.1312 (1) 90 md/rn 6/ 8

the following new subsection: 1 NEW SUBSECTION . 33. The taxes imposed under this subchapter 2 shall be reduced by a small business child care tax credit 3 received pursuant to section 237A.32. 4 Sec. ___. Section 422.60, Code 2023, is amended by adding 5 the following new subsection: 6 NEW SUBSECTION . 16. The taxes imposed under this subchapter 7 shall be reduced by a small business child care tax credit 8 received pursuant to section 237A.32. 9 Sec. ___. NEW SECTION . 432.12P Small business child care 10 tax credit. 11 The taxes imposed under this chapter shall be reduced by 12 a small business child care tax credit received pursuant to 13 section 237A.32. 14 Sec. ___. Section 533.329, subsection 2, Code 2023, is 15 amended by adding the following new paragraph: 16 NEW PARAGRAPH . n. The moneys and credits tax imposed under 17 this section shall be reduced by a small business child care 18 tax credit received pursuant to section 237A.32. 19 Sec. ___. APPLICABILITY. This division of this Act applies 20 to tax years beginning on or after January 1, 2023. 21 DIVISION ___ 22 STATE CHILD CARE ASSISTANCE 23 Sec. ___. Section 237A.13, subsection 8, paragraph c, Code 24 2023, is amended to read as follows: 25 c. Families with an income of more than one hundred 26 percent but not more than one two hundred forty-five percent 27 of the federal poverty level whose members, for at least 28 twenty-eight hours per week in the aggregate, are employed 29 or are participating at a satisfactory level in an approved 30 training program or educational program. 31 Sec. ___. DIRECTIVE TO DEPARTMENT OF HEALTH AND HUMAN 32 SERVICES —— CHILD CARE ASSISTANCE. 33 1. The department of health and human services shall amend 34 its administrative rules pursuant to chapter 17A to do all of 35 -7- HF 668.1312 (1) 90 md/rn 7/ 8

the following: 1 a. Provide income eligibility for state child care 2 assistance, according to family size for children needing basic 3 care, to families whose nonexempt gross monthly income does not 4 exceed two hundred percent of the federal poverty level. 5 b. Adjust the state child care assistance copayment 6 schedule in incrementally increased amounts for families whose 7 nonexempt gross monthly income does not exceed two hundred 8 percent of the federal poverty level. 9 2. The rules adopted pursuant to this section shall take 10 effect January 1, 2024. > 11 8. Title page, by striking lines 1 and 2 and inserting < An 12 Act relating to child care and including effective date, > 13 9. By renumbering as necessary. 14 ______________________________ KURTH of Scott ______________________________ ______________________________ -8- HF 668.1312 (1) 90 md/rn 8/ 8 #8. #9.