House Study Bill 244 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act creating a cellulosic ethanol production tax credit 1 available against the individual and corporate income tax 2 and including effective date and retroactive and other 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2425YC (3) 86 mm/sc

H.F. _____ Section 1. NEW SECTION . 422.10A Cellulosic ethanol 1 production tax credit. 2 1. As used in this section, unless the context otherwise 3 requires: 4 a. “Cellulosic biomass materials” means any lignocellulosic 5 or hemicellulosic matter that is available on a renewable or 6 recurring basis, including energy crops grown specifically for 7 fuel production such as switchgrass, and including agricultural 8 plant residues such as corn stover, rice hulls, sugarcane, and 9 cereal straws. 10 b. “Cellulosic ethanol” means ethyl alcohol for use as motor 11 fuel that meets the current American society for testing and 12 materials standard D4806 for ethanol that is produced from 13 cellulosic biomass materials. 14 c. “Cellulosic ethanol producer” means an entity that uses 15 cellulosic biomass materials to manufacture cellulosic ethanol 16 at a location in this state. 17 2. The taxes imposed under this division, less the 18 credits allowed under section 422.12, shall be reduced by a 19 cellulosic ethanol production tax credit to a taxpayer who is 20 a cellulosic ethanol producer equal to the product of twenty 21 cents multiplied by the number of gallons of cellulosic ethanol 22 produced in this state by the cellulosic ethanol producer 23 during the calendar year, not to exceed five million dollars 24 per cellulosic ethanol producer per calendar year. 25 3. Any tax credit in excess of the tax liability is 26 refundable. In lieu of claiming a refund, the taxpayer 27 may elect to have the overpayment shown on the taxpayer’s 28 final, completed return credited to the tax liability for the 29 following tax year. 30 4. An individual may claim the tax credit allowed a 31 partnership, limited liability company, S corporation, estate, 32 or trust electing to have the income taxed directly to the 33 individual. The amount claimed by the individual shall be 34 based upon the pro rata share of the individual’s earnings of 35 -1- LSB 2425YC (3) 86 mm/sc 1/ 3

H.F. _____ the partnership, limited liability company, S corporation, 1 estate, or trust. 2 5. The department shall adopt rules pursuant to chapter 17A 3 to administer this section. 4 6. This section is repealed January 1, 2025. 5 Sec. 2. Section 422.33, Code 2015, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 23. a. The taxes imposed under this 8 division shall be reduced by a cellulosic ethanol production 9 tax credit allowed under section 422.10A. 10 b. This section is repealed on January 1, 2025. 11 Sec. 3. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 12 immediate importance, takes effect upon enactment. 13 Sec. 4. APPLICABILITY. This Act applies to cellulosic 14 ethanol produced in this state on or after the effective date 15 of this Act. 16 Sec. 5. RETROACTIVE APPLICABILITY. This Act applies 17 retroactively to January 1, 2015, for tax years beginning on 18 or after that date. 19 EXPLANATION 20 The inclusion of this explanation does not constitute agreement with 21 the explanation’s substance by the members of the general assembly. 22 This bill creates a tax credit available against the 23 individual and corporate income tax for the production of 24 cellulosic ethanol in this state by a cellulosic ethanol 25 producer. “Cellulosic ethanol”, “cellulosic ethanol producer”, 26 and other related terms are defined in the bill. The tax 27 credit is equal to the product of 20 cents multiplied by 28 the number of gallons of cellulosic ethanol produced by a 29 cellulosic ethanol producer in this state during a calendar 30 year, not to exceed a maximum of $5 million per cellulosic 31 ethanol producer per calendar year. The tax credit is 32 refundable but may be carried forward to the following tax year 33 in lieu of a refund. The tax credit is repealed on January 1, 34 2025. 35 -2- LSB 2425YC (3) 86 mm/sc 2/ 3

H.F. _____ The bill takes effect upon enactment and applies to 1 cellulosic ethanol produced in this state on or after that 2 date. The bill applies retroactively to tax years beginning on 3 or after January 1, 2015. 4 -3- LSB 2425YC (3) 86 mm/sc 3/ 3