House File 226 - Introduced HOUSE FILE 226 BY PETTENGILL A BILL FOR An Act relating to individual and corporate income tax credits 1 for the installation of geothermal energy systems in Iowa 2 and including effective date and retroactive applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1664YH (4) 86 mm/sc

H.F. 226 Section 1. Section 422.11I, Code 2015, is amended to read 1 as follows: 2 422.11I Geothermal heat pump energy system tax credit. 3 1. The taxes imposed under this division, less the credits 4 allowed under section 422.12 , shall be reduced by a geothermal 5 heat pump energy system tax credit equal to twenty the sum of 6 the following: 7 a. Sixty percent of the federal residential energy 8 efficient property tax credit allowed for geothermal heat pumps 9 provided in section 25D(a)(5) of the Internal Revenue Code for 10 residential property located in Iowa. 11 b. Sixty percent of the federal energy credit in section 12 48 of the Internal Revenue Code allowed for geothermal energy 13 systems described in section 48(a)(3)(A)(iii) and section 14 48(a)(3)(A)(vii) of the Internal Revenue Code for property 15 located in Iowa. 16 2. 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 ten years or until 19 depleted, whichever is earlier. 20 3. An individual may claim the tax credit allowed a 21 partnership, limited liability company, S corporation, estate, 22 or trust electing to have the income taxed directly to the 23 individual. The amount claimed by the individual shall be 24 based upon the pro rata share of the individual’s earnings of 25 the partnership, limited liability company, S corporation, 26 estate, or trust. 27 4. The director of revenue shall adopt rules to implement 28 this section . 29 Sec. 2. Section 422.33, Code 2015, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 31. a. The taxes imposed under this 32 division shall be reduced by a geothermal energy system tax 33 credit equal to sixty percent of the federal energy credit in 34 section 48 of the Internal Revenue Code allowed for geothermal 35 -1- LSB 1664YH (4) 86 mm/sc 1/ 2

H.F. 226 energy systems described in section 48(a)(3)(A)(iii) and 1 section 48(a)(3)(A)(vii) of the Internal Revenue Code for 2 property located in Iowa. 3 b. The taxpayer may claim the credit pursuant to this 4 subsection according to the same requirements, conditions, and 5 limitations as provided in section 422.11I. 6 Sec. 3. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 7 immediate importance, takes effect upon enactment. 8 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 9 retroactively to January 1, 2015, for tax years beginning on 10 or after that date. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanation’s substance by the members of the general assembly. 14 This bill relates to income tax credits for the installation 15 of certain geothermal energy systems in Iowa. 16 Under current law, an individual income tax credit is 17 available for the installation in Iowa of a geothermal heat 18 pump. The credit is equal to 20 percent of the federal 19 residential energy efficient property tax credit for geothermal 20 heat pumps. The bill raises the credit amount from 20 percent 21 to 60 percent of the federal credit. 22 The bill also provides an individual and corporate income 23 tax credit in an amount equal to 60 percent of the federal 24 energy credit provided in section 48 of the Internal Revenue 25 Code for the installation of a geothermal energy system, if the 26 property is located in Iowa. Any credit in excess of the tax 27 liability is nonrefundable, but may be carried forward for up 28 to 10 years. 29 The bill takes effect upon enactment and applies 30 retroactively to tax years beginning on or after January 1, 31 2015. 32 -2- LSB 1664YH (4) 86 mm/sc 2/ 2