House Study Bill 720 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SHOMSHOR) A BILL FOR An Act exempting from taxation the interest earned on and 1 the capital gain from the sale of bonds or notes issued 2 by the Iowa finance authority and including retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6184HC (3) 83 tw/sc

H.F. _____ Section 1. Section 16.26, Code 2009, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 10. a. The interest earned on bonds or 3 notes issued by the authority in connection with its corporate 4 purposes is exempt from taxation in this state. 5 b. The capital gain realized from the sale of bonds or 6 notes issued by the authority in connection with its corporate 7 purposes is exempt from taxation in this state, and is not 8 subject to inclusion in the computation of net income pursuant 9 to section 422.7, subsection 36, or section 422.35, subsection 10 18. 11 Sec. 2. Section 422.7, subsection 36, Code Supplement 2009, 12 is amended to read as follows: 13 36. Add, except as provided in section 16.26, subsection 10, 14 and to the extent not already included, income from the sale 15 of obligations of the state and its political subdivisions. 16 Income from the sale of these obligations is exempt from the 17 taxes imposed by this division only if the law authorizing 18 these obligations specifically exempts the income from the sale 19 from the state individual income tax. 20 Sec. 3. Section 422.35, subsection 18, Code Supplement 21 2009, is amended to read as follows: 22 18. Add, except as provided in section 16.26, subsection 10, 23 and to the extent not already included, income from the sale 24 of obligations of the state and its political subdivisions. 25 Income from the sale of these obligations is exempt from the 26 taxes imposed by this division only if the law authorizing 27 these obligations specifically exempts the income from the sale 28 from the state corporate income tax. 29 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 30 retroactively to January 1, 2010, for tax years beginning on 31 or after that date. 32 EXPLANATION 33 This bill exempts from Iowa taxation, including from the 34 individual and corporate income taxes, the interest earned on 35 -1- LSB 6184HC (3) 83 tw/sc 1/ 2

H.F. _____ and the capital gain from the sale of bonds or notes issued by 1 the Iowa finance authority in connection with its corporate 2 purposes. 3 The bill applies retroactively to January 1, 2010, for tax 4 years beginning on or after that date. 5 -2- LSB 6184HC (3) 83 tw/sc 2/ 2