S.F. 353 Section 1. NEW SECTION . 422.11K Private school tuition tax 1 credit. 2 1. The taxes imposed under this division, less the credits 3 allowed under section 422.12, shall be reduced by a private 4 school tuition tax credit equal to the amounts that the 5 taxpayer has paid to others for tuition and textbooks of each 6 dependent in grades kindergarten through twelve attending a 7 nonpublic elementary or secondary school situated in Iowa, 8 which school is accredited or approved under section 256.11, 9 which is not operated for profit, and which adheres to the 10 provisions of the federal Civil Rights Act of 1964 and chapter 11 216, not to exceed an amount per dependent equal to the regular 12 program state cost per pupil calculated by the department 13 of management for the budget year that begins during the 14 taxpayer’s tax year. A taxpayer who elects to claim the credit 15 provided in this section shall not claim the tuition credit 16 provided in section 422.12, subsection 2, paragraph “b” . For 17 purposes of this subsection, “dependent” , “textbooks” , and 18 “tuition” all mean the same as defined in section 422.12. 19 2. Any tax credit in excess of the tax liability for the tax 20 year is refundable. 21 3. a. In lieu of claiming the credit on the taxpayer’s 22 return the taxpayer may elect, in the manner and form 23 prescribed by the department, to transfer the tax credit or any 24 amount of the tax credit. 25 b. A taxpayer who has made an election to transfer a 26 tax credit pursuant to paragraph “a” shall be issued a tax 27 credit certificate by the department containing the taxpayer’s 28 name, address, tax identification number, the amount of the 29 credit, a place for the name and tax identification number of a 30 transferee and the amount of the tax credit being transferred, 31 and any other information deemed relevant by the department. 32 c. Tax credit certificates issued under this subsection 33 may be transferred to any person. Within ninety days of 34 transfer, the transferee shall submit the transferred tax 35 -1- LSB 2290XS (1) 86 mm/sc 1/ 3

S.F. 353 credit certificate to the department along with a statement 1 containing the transferee’s name, tax identification number, 2 and address, the denomination that each replacement tax credit 3 certificate is to carry, and any other information required 4 by the department. However, tax credit certificate amounts 5 of less than the minimum amount established by rule of the 6 department shall not be transferable. 7 d. Within thirty days of receiving the transferred tax 8 credit certificate and the transferee’s statement, the 9 department shall issue one or more replacement tax credit 10 certificates to the transferee. Each replacement tax credit 11 certificate must contain the information required for the 12 original tax credit certificate and must have the same 13 expiration date that appeared on the transferred tax credit 14 certificate. 15 e. A tax credit shall not be claimed by a transferee 16 under this section until a replacement tax credit certificate 17 identifying the transferee as the proper holder has been 18 issued. The transferee may use the amount of the tax credit 19 transferred against the taxes imposed in chapter 422, division 20 II, for any tax year the original transferor could have claimed 21 the tax credit. Any consideration received for the transfer of 22 the tax credit shall not be included as income under chapter 23 422, divisions II, III, and V. Any consideration paid for the 24 transfer of the tax credit shall not be deducted from income 25 under chapter 422, divisions II, III, and V. 26 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 27 retroactively to January 1, 2015, for tax years beginning on 28 or after that date. 29 EXPLANATION 30 The inclusion of this explanation does not constitute agreement with 31 the explanation’s substance by the members of the general assembly. 32 This bill creates a private school tuition tax credit 33 available against the individual income tax. Under current law 34 in Code section 422.12, a taxpayer may claim a nonrefundable 35 -2- LSB 2290XS (1) 86 mm/sc 2/ 3

S.F. 353 individual income tax credit equal to 25 percent of the first 1 $1,000 paid by a taxpayer for tuition and textbooks of a 2 dependent to attend an elementary or secondary school in Iowa 3 that meets certain requirements. 4 The bill creates a new private school tuition tax credit 5 equal to the full amount of tuition and textbooks paid by a 6 taxpayer for a dependent of the taxpayer to attend a nonpublic 7 elementary or secondary school in Iowa that meets certain 8 requirements specified in the bill. “Dependent”, “tuition”, 9 and “textbooks” are defined in the bill to mean the same as 10 used in the existing tuition and textbook tax credit in Code 11 section 422.12. 12 The maximum amount of private school tuition tax credit that 13 may be claimed per dependent in any given tax year shall not 14 exceed the regular program state cost per pupil calculated by 15 the department of management during that tax year. 16 The tax credit is refundable or, at the election of the 17 taxpayer, may be transferred to any other person. The bill 18 establishes procedures for transferring the credit to another 19 person, including procedures for the issuance of a tax credit 20 certificate by the department of revenue. 21 A taxpayer that elects to claim the private school tuition 22 tax credit provided in the bill is ineligible to claim the 23 existing tuition and textbook tax credit in Code section 24 422.12. 25 The bill applies retroactively to tax years beginning on or 26 after January 1, 2015. 27 -3- LSB 2290XS (1) 86 mm/sc 3/ 3