S.F. 2142 Section 1. NEW SECTION . 422.11I Hire a hero tax credit. 1 1. The taxes imposed under this division, less the credits 2 allowed under section 422.12, shall be reduced by a hire a hero 3 tax credit. An employer who hires and employs an eligible 4 employee is eligible to claim the tax credit. 5 2. As used in this section: 6 a. “Eligible employee” means a person who is a resident 7 of this state and a member of the national guard, reserve, or 8 regular component of the armed forces of the United States 9 employed on a permanent full-time or a permanent part-time 10 basis of at least thirty hours per week each week. A person 11 shall not be an eligible employee if the person was hired to 12 replace a different eligible employee whose employment was 13 terminated within the twelve-month period preceding the date of 14 first employment, unless the eligible employee being replaced 15 left employment voluntarily without good cause attributable to 16 the employer or was discharged for misconduct in connection 17 with the eligible employee’s employment. 18 b. “Employer” includes a self-employed person who meets the 19 definition of eligible employee. 20 c. “Military service” means federal service, state active 21 duty, or state military service as defined in section 29A.1. 22 3. The allowable credit shall be an amount equal to the sum 23 of the following: 24 a. (1) One thousand dollars for each eligible employee 25 hired for employment in this state during the tax year. 26 (2) If the eligible employee was not employed by the 27 employer for the entire tax year, the amount of the credit in 28 subparagraph (1) shall be prorated and the amount of the credit 29 for the taxpayer shall equal the maximum amount of credit for 30 the tax year, divided by twelve, multiplied by the number of 31 months in the tax year that the eligible employee was employed 32 by the employer. The credit shall be rounded to the nearest 33 dollar. If the employee was employed by the employer during 34 any part of a month, the eligible employee shall be considered 35 -1- LSB 5397SV (2) 84 aw/sc 1/ 3

S.F. 2142 to be employed for the entire month. 1 b. (1) Five hundred dollars for each eligible employee 2 employed in this state during a tax year subsequent to the tax 3 year that the employee was hired for employment in this state. 4 (2) If the eligible employee was not employed by the 5 employer for the entire tax year, the amount of the credit in 6 subparagraph (1) shall be prorated and the amount of the credit 7 for the taxpayer shall equal the maximum amount of credit for 8 the tax year, divided by twelve, multiplied by the number of 9 months in the tax year that the eligible employee was employed 10 by the employer. The credit shall be rounded to the nearest 11 dollar. If the employee was employed by the employer during 12 any part of a month, the eligible employee shall be considered 13 to be employed for the entire month. 14 c. In addition to the credit amount in paragraph “a” or “b” , 15 five hundred dollars for each eligible employee who performs at 16 least thirty days of military service during the tax year while 17 employed by the employer. 18 4. Any credit in excess of the tax liability shall be 19 refunded. In lieu of claiming a refund, a taxpayer may 20 elect to have the overpayment shown on the taxpayer’s final, 21 completed return credited to the tax liability for the 22 following tax year. 23 5. An individual may claim the tax credit allowed a 24 partnership, limited liability company, S corporation, estate, 25 or trust electing to have the income taxed directly to the 26 individual. The amount claimed by the individual shall be 27 based upon the pro rata share of the individual’s earnings of a 28 partnership, limited liability company, S corporation, estate, 29 or trust. 30 Sec. 2. Section 422.33, Code Supplement 2011, is amended by 31 adding the following new subsection: 32 NEW SUBSECTION . 11. The taxes imposed under this division 33 shall be reduced by a hire a hero tax credit. The taxpayer 34 shall claim the tax credit according to the same requirements 35 -2- LSB 5397SV (2) 84 aw/sc 2/ 3

S.F. 2142 and calculated in the same manner as provided in section 1 422.11I. 2 Sec. 3. Section 422.60, Code Supplement 2011, is amended by 3 adding the following new subsection: 4 NEW SUBSECTION . 14. The taxes imposed under this division 5 shall be reduced by a hire a hero tax credit. The taxpayer 6 shall claim the tax credit according to the same requirements 7 and calculated in the same manner as provided in section 8 422.11I. 9 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 10 retroactively to January 1, 2012, for eligible employees hired 11 or employed on or after that date. 12 EXPLANATION 13 This bill creates the hire a hero tax credit for purposes 14 of the state individual and corporate income taxes and the 15 franchise tax. The tax credit is available for employers in 16 the amount of $1,000 per eligible employee for the year in 17 which the eligible employee is hired, $500 for each year of 18 employment subsequent to the year of hiring, and $500 for each 19 year an eligible employee is called to at least 30 days of 20 military service. The annual credits for initial and continued 21 employment shall be prorated if such employment does not 22 extend through an entire tax year. Eligible employees must 23 be a resident of this state and be a member of the national 24 guard or a reserve or regular component of the armed forces 25 of the United States employed on a permanent full-time or 26 permanent part-time basis of at least 30 hours per week. The 27 bill provides that an otherwise eligible employee shall not be 28 considered an eligible employee if the eligible employee was 29 hired to replace another eligible employee whose employment 30 was terminated in the previous 12 months unless the eligible 31 employee being replaced left voluntarily or was discharged for 32 misconduct. The bill applies retroactively to January 1, 2012, 33 for eligible employees hired or employed on or after that date. 34 -3- LSB 5397SV (2) 84 aw/sc 3/ 3