S.F. 217 DIVISION I 1 HIRE A HERO TAX CREDIT 2 Section 1. NEW SECTION . 422.10A Hire a hero tax credit. 3 1. The taxes imposed under this division, less the credits 4 allowed under section 422.12, shall be reduced by a hire a hero 5 tax credit. An employer who hires and employs an eligible 6 employee is eligible to claim the tax credit. 7 2. As used in this section: 8 a. “Eligible employee” means a person who is a resident 9 of this state and a member of the national guard, reserve, or 10 regular component of the armed forces of the United States, or 11 a veteran as defined in section 35.1, employed on a permanent 12 full-time or a permanent part-time basis of at least thirty 13 hours per week each week and earns a salary of thirty-five 14 thousand dollars or more from the employer for the tax year. 15 A person shall not be an eligible employee if the person was 16 hired to replace a different eligible employee whose employment 17 was terminated within the twelve-month period preceding the 18 date of first employment, unless the eligible employee being 19 replaced left employment voluntarily without good cause 20 attributable to the employer or was discharged for misconduct 21 in connection with the eligible employee’s employment. 22 b. “Employer” includes a self-employed person who meets the 23 definition of eligible employee. 24 c. “Military service” means federal active duty, state 25 active duty, or national guard duty, as defined in section 26 29A.1. 27 3. The allowable credit shall be an amount equal to the sum 28 of the following: 29 a. (1) One thousand dollars for each eligible employee 30 hired for employment in this state during the tax year. 31 (2) If the eligible employee was not employed by the 32 employer for the entire tax year, the amount of the credit in 33 subparagraph (1) shall be prorated and the amount of the credit 34 for the taxpayer shall equal the maximum amount of credit for 35 -1- LSB 1700XS (2) 85 aw/sc 1/ 6

S.F. 217 the tax year, divided by twelve, multiplied by the number of 1 months in the tax year that the eligible employee was employed 2 by the employer. The credit shall be rounded to the nearest 3 dollar. If the employee was employed by the employer during 4 any part of a month, the eligible employee shall be considered 5 to be employed for the entire month. 6 b. (1) Five hundred dollars for each eligible employee 7 employed in this state during a tax year subsequent to the tax 8 year that the employee was hired for employment in this state. 9 (2) If the eligible employee was not employed by the 10 employer for the entire tax year, the amount of the credit in 11 subparagraph (1) shall be prorated and the amount of the credit 12 for the taxpayer shall equal the maximum amount of credit for 13 the tax year, divided by twelve, multiplied by the number of 14 months in the tax year that the eligible employee was employed 15 by the employer. The credit shall be rounded to the nearest 16 dollar. If the employee was employed by the employer during 17 any part of a month, the eligible employee shall be considered 18 to be employed for the entire month. 19 c. In addition to the credit amount in paragraph “a” or “b” , 20 five hundred dollars for each eligible employee who performs at 21 least thirty days of military service during the tax year while 22 employed by the employer. 23 4. Any credit in excess of the tax liability shall be 24 refunded. In lieu of claiming a refund, a taxpayer may 25 elect to have the overpayment shown on the taxpayer’s final, 26 completed return credited to the tax liability for the 27 following tax year. 28 5. An individual may claim the tax credit allowed a 29 partnership, limited liability company, S corporation, estate, 30 or trust electing to have the income taxed directly to the 31 individual. The amount claimed by the individual shall be 32 based upon the pro rata share of the individual’s earnings of a 33 partnership, limited liability company, S corporation, estate, 34 or trust. 35 -2- LSB 1700XS (2) 85 aw/sc 2/ 6

S.F. 217 6. The department shall, by rule, establish a process by 1 which to verify the status of eligible employees, as defined in 2 this section. 3 Sec. 2. Section 422.33, Code 2013, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 11. The taxes imposed under this division 6 shall be reduced by a hire a hero tax credit. The taxpayer 7 shall claim the tax credit according to the same requirements 8 and calculated in the same manner as provided in section 9 422.10A. 10 Sec. 3. Section 422.60, Code 2013, is amended by adding the 11 following new subsection: 12 NEW SUBSECTION . 12. The taxes imposed under this division 13 shall be reduced by a hire a hero tax credit. The taxpayer 14 shall claim the tax credit according to the same requirements 15 and calculated in the same manner as provided in section 16 422.10A. 17 Sec. 4. RETROACTIVE APPLICABILITY. This division of this 18 Act applies retroactively to January 1, 2013, for eligible 19 employees hired or employed on or after that date. 20 DIVISION II 21 IOWA FULFILLING THE PROMISE FUND 22 Sec. 5. NEW SECTION . 35A.23 Iowa fulfilling the promise 23 fund. 24 1. a. An Iowa fulfilling the promise fund is created in the 25 state treasury under the control of the department. The fund 26 shall consist of appropriations made to the fund and any other 27 moneys available to and obtained or accepted by the department 28 from other sources for deposit in the fund. 29 b. There is appropriated from the general fund of the state 30 to the department for the fiscal year beginning July 1, 2013, 31 the sum of ten million dollars to be credited to the Iowa 32 fulfilling the promise fund. 33 c. The moneys credited to the fund are not subject to 34 section 8.33 and moneys in the fund shall not be transferred, 35 -3- LSB 1700XS (2) 85 aw/sc 3/ 6

S.F. 217 used, obligated, appropriated, or otherwise encumbered except 1 as provided in this section. Notwithstanding section 12C.7, 2 subsection 2, interest or earnings on moneys deposited in the 3 Iowa fulfilling the promise fund shall be credited to the fund. 4 2. a. Moneys in the fund are appropriated annually to 5 the department to be used to distribute grants to political 6 subdivisions of this state to assist political subdivisions in 7 hiring eligible veterans. 8 b. If sufficient moneys are available, a political 9 subdivision may apply for and receive a grant of not less than 10 one thousand dollars and not more than ten thousand dollars for 11 each eligible veteran hired during the fiscal year. Grants 12 awarded under this section shall be determined on a sliding 13 scale established by the department based upon the salary 14 earned by an eligible veteran. 15 c. For purposes of this section, “eligible veteran” means 16 a person who is a resident of this state and a member of 17 the national guard, reserve, or a regular component of the 18 armed forces of the United States, or a veteran as defined in 19 section 35.1, employed on a permanent full-time or a permanent 20 part-time basis of at least thirty hours per week each week. 21 A person shall not be considered an eligible veteran if 22 the person was hired to replace a different employee whose 23 employment was terminated within the twelve-month period 24 preceding the date of first employment, unless the employee 25 being replaced left employment voluntarily without good cause 26 attributable to the employer or was discharged for misconduct 27 in connection with the employee’s employment. 28 3. The department shall adopt rules pursuant to chapter 17A 29 necessary for the administration of this section. 30 EXPLANATION 31 This bill provides private and public employers with certain 32 incentives for hiring veterans and currently serving members of 33 the national guard, reserve, or regular component of the armed 34 forces of the United States. 35 -4- LSB 1700XS (2) 85 aw/sc 4/ 6

S.F. 217 Division I of the bill creates the hire a hero tax credit 1 for purposes of the state individual and corporate income 2 taxes and the franchise tax. The tax credit is available for 3 employers in the amount of $1,000 per eligible employee for the 4 year in which the eligible employee is hired, $500 for each 5 year of employment subsequent to the year of hiring, and $500 6 for each year an eligible employee is called to at least 30 7 days of military service. The annual credits for initial and 8 continued employment shall be prorated if such employment does 9 not extend through an entire tax year. Eligible employees must 10 be a resident of this state and be a member of the national 11 guard or a reserve or regular component of the armed forces 12 of the United States, or a veteran as defined in Code section 13 35.1, and employed on a permanent full-time or permanent 14 part-time basis of at least 30 hours per week and earning a 15 salary of $35,000 or more. The bill provides that an otherwise 16 eligible employee shall not be considered an eligible employee 17 if the eligible employee was hired to replace another eligible 18 employee whose employment was terminated in the previous 19 12 months unless the eligible employee being replaced left 20 voluntarily or was discharged for misconduct. The bill applies 21 retroactively to January 1, 2013, for eligible employees hired 22 or employed on or after that date. 23 Division II of the bill creates an Iowa fulfilling the 24 promise fund to be administered by the department of veterans 25 affairs. The bill provides for a $10 million appropriation for 26 the fiscal year beginning January 1, 2013. The bill provides 27 that moneys in the fund are appropriated to the department of 28 veterans to distribute grants to political subdivisions of the 29 state to hire eligible veterans. The grants shall be not less 30 than $1,000 and not more than $10,000 and shall be determined 31 on a sliding scale established by the department based upon the 32 salary earned by an eligible veteran. An “eligible veteran” is 33 defined as a person who is a resident of this state and a member 34 of the national guard, reserve, or a regular component of the 35 -5- LSB 1700XS (2) 85 aw/sc 5/ 6

S.F. 217 armed forces of the United States, or a veteran as defined 1 in Code section 35.1, employed on a permanent full-time or a 2 permanent part-time basis of at least 30 hours per week each 3 week. The bill provides that an otherwise eligible veteran 4 shall not be considered an eligible veteran if the veteran 5 was hired to replace another employee whose employment was 6 terminated in the previous 12 months unless the employee being 7 replaced left voluntarily or was discharged for misconduct. 8 The bill provides that the moneys credited to the fund are not 9 subject to Code section 8.33. The bill also provides that 10 interest or earnings on moneys deposited into the fund shall 11 be credited to the fund. 12 -6- LSB 1700XS (2) 85 aw/sc 6/ 6