S.F. 108 Section 1. NEW SECTION . 15B.5 Apprenticeship training tax 1 credit. 2 1. a. An apprenticeship training tax credit shall be 3 allowed against the taxes imposed in chapter 422, divisions II 4 and III, for a portion of the taxpayer’s costs in providing 5 wages to apprentices in the construction trade trained under an 6 apprenticeship program. 7 b. An individual may claim a tax credit under this 8 subsection of a partnership, limited liability company, 9 S corporation, estate, or trust electing to have income 10 taxed directly to the individual. The amount claimed by the 11 individual shall be based upon the pro rata share of the 12 individual’s earnings from the partnership, limited liability 13 company, S corporation, estate, or trust. 14 c. Any tax credit in excess of the taxpayer’s liability 15 for the tax year is not refundable. A tax credit shall not be 16 carried back to a tax year prior to the tax year in which the 17 taxpayer first receives the tax credit. 18 2. a. To be eligible for the tax credit, the taxpayer 19 shall be an apprenticeship sponsor conducting an apprenticeship 20 program for an apprentice working in the construction trade and 21 employed at an Iowa worksite. 22 b. The tax credit shall be two dollars per hour multiplied 23 by the total number of hours worked during the tax year by an 24 apprentice working for a taxpayer described in paragraph “a” . 25 The amount of tax credit in any year received by a taxpayer for 26 each apprentice may not exceed two thousand dollars or fifty 27 percent of the wages the apprentice earned, whichever is less. 28 3. a. To claim an apprenticeship training tax credit under 29 this section, a taxpayer must include one or more tax credit 30 certificates issued by the authority with the taxpayer’s tax 31 return, verifying the taxpayer’s eligibility for the credit. 32 A tax credit certificate shall not be included with a return 33 filed for a taxable year beginning prior to the tax year listed 34 on the certificate. 35 -1- LSB 1649XS (2) 86 ad/sc 1/ 3

S.F. 108 b. The tax credit certificate, unless rescinded by the 1 authority, shall be accepted by the department of revenue as 2 payment for taxes imposed pursuant to chapter 422, divisions II 3 and III, subject to any conditions or restrictions placed by 4 the authority upon the face of the tax credit certificate and 5 subject to the limitations of this section. 6 4. a. The authority shall accept applications from eligible 7 employers for an apprenticeship training tax credit. 8 b. If the authority determines the employer qualifies for 9 a tax credit pursuant to this section, the authority shall 10 issue an apprenticeship training tax credit certificate to 11 be included with the taxpayer’s tax return. The tax credit 12 certificate shall contain the taxpayer’s name, address, tax 13 identification number, the amount of the credit, the name of 14 the qualifying employer, the name of each apprentice, and any 15 other information required by the department of revenue. 16 c. Tax credit certificates issued under this section are not 17 transferrable to any person or entity. 18 5. The authority shall adopt rules pursuant to chapter 19 17A to administer this section, including rules governing 20 the application process and the criteria used to evaluate 21 applications. 22 Sec. 2. NEW SECTION . 422.10A Apprenticeship training tax 23 credit. 24 The taxes imposed under this division, less the credits 25 allowed under section 422.12, shall be reduced by an 26 apprenticeship training tax credit allowed under section 15B.5. 27 Sec. 3. Section 422.33, Code 2015, is amended by adding the 28 following new subsection: 29 NEW SUBSECTION . 31. The taxes imposed under this division 30 shall be reduced by an apprenticeship training tax credit 31 allowed under section 15B.5. 32 Sec. 4. APPLICABILITY. This Act applies to tax years 33 beginning on or after January 1, 2016. 34 EXPLANATION 35 -2- LSB 1649XS (2) 86 ad/sc 2/ 3

S.F. 108 The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill creates a tax credit for apprenticeship sponsors 3 employing an apprentice working in the construction trade 4 at Iowa worksites. The tax credit is available against the 5 individual and corporate income tax for a portion of the wages 6 paid to apprentices in the construction trade trained through 7 an apprenticeship program. 8 The amount of the credit is equal to $2 per hour multiplied 9 by the total number of hours that an apprentice worked during 10 the tax year. The bill limits the amount of the tax credit 11 in any year received by a taxpayer for each apprentice to a 12 maximum of $2,000 or 50 percent of the wages the apprentice 13 earned, whichever is less. 14 The bill requires the taxpayer to be an apprenticeship 15 sponsor conducting an apprenticeship program registered with 16 the United States department of labor, office of apprenticeship 17 through Iowa for an apprentice working in the construction 18 trade and employed at an Iowa worksite. 19 The tax credit is not refundable, and a tax credit shall not 20 be carried back to a tax year prior to the tax year in which the 21 taxpayer first receives the tax credit. The tax credit is not 22 transferable. 23 To claim an apprenticeship training tax credit, a taxpayer 24 must include with the tax return a tax credit certificate 25 issued by the economic development authority. The bill directs 26 the economic development authority to adopt rules for the 27 issuance of the tax credit certificates. 28 The bill applies to tax years beginning on or after January 29 1, 2016. 30 -3- LSB 1649XS (2) 86 ad/sc 3/ 3