SENATE FILE 2069

BY  HOGG

A BILL FOR

An Act providing an individual and corporate income tax credit for the purchase of a fuel efficient new motor vehicle and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  422.11I  Fuel efficient new motor vehicle tax credit.
   1.  For purposes of this section, unless the context otherwise requires:
   a.  “Fuel economy” means the average number of miles traveled by an automobile per gallon of gasoline consumed as determined by the United States environmental protection agency administrator in accordance with 26 U.S.C. § 4064(c).
   b.  “New motor vehicle” means the same as defined in section 321.1, subsection 42, paragraph “c”, excluding motorcycles and motorized bicycles.
   c.  “Plug-in electric drive motor vehicle” means the same as in section 30D(d) of the Internal Revenue Code.
   2.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a fuel efficient new motor vehicle tax credit for the purchase in this state of a new motor vehicle subject to registration pursuant to section 321.18, which was purchased by the taxpayer and placed in service in this state during the tax year. The credit shall be equal to the following amount: 
   a.  Five hundred dollars if the new motor vehicle has a highway or city fuel economy of between thirty-five and thirty-nine miles per gallon.
   b.  One thousand dollars if the new motor vehicle has a highway or city fuel economy of between forty and forty-four miles per gallon.
   c.  Fifteen hundred dollars if the new motor vehicle has a highway or city fuel economy of between forty-five and forty-nine miles per gallon.
   d.  Two thousand dollars if the new motor vehicle has a highway or city fuel economy of fifty miles per gallon or higher, or if the new motor vehicle is a plug-in electric drive motor vehicle.
   3.  For purposes of this chapter, the basis of any property for which a credit is allowable under this section shall be reduced by the amount of the credit so allowed.
   4.  Any tax credit in excess of the taxpayer’s liability for the tax year is not refundable, but the taxpayer may elect to have the excess credited to the tax liability for the following three years or until depleted, whichever is earlier. 
   5.  An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
    Sec. 2.  Section 422.33, Code Supplement 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  29.  The taxes imposed under this division shall be reduced by a fuel efficient new motor vehicle tax credit allowed under section 422.11I.
    Sec. 3.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2012, for tax years beginning on or after that date.
EXPLANATION
   This bill provides an individual and corporate income tax credit for the purchase in this state of a new motor vehicle subject to registration pursuant to Code section 321.18, which was purchased by the taxpayer and placed in service in this state during the tax year. “New motor vehicle” means the same as defined in Code section 321.1, subsection 42, paragraph “c”, excluding motorcycles and motorized bicycles.
   The amount of the credit varies depending on the fuel economy of the new motor vehicle, as established by the United States environmental protection agency. The credit equals $500 if the fuel economy is between 35 and 39 miles per gallon; $1,000 if the fuel economy is between 40 and 44 miles per gallon; $1,500 if the fuel economy is between 45 and 49 miles per gallon; and $2,000 if the fuel economy is 50 miles per gallon or greater, or if the new motor vehicle is a plug-in electric drive motor vehicle. “Plug-in electric drive motor vehicle” means the same as in section 30D(d) of the Internal Revenue Code.
   Taxpayers are required to reduce the basis of their new motor vehicle by the amount of the credit allowed. The credit is not refundable, but may be carried forward for up to three years.
   An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
   The bill applies retroactively to January 1, 2012, for tax years beginning on or after that date.