House File 652 - Introduced HOUSE FILE 652 BY COMMITTEE ON APPROPRIATIONS (SUCCESSOR TO HSB 187) A BILL FOR An Act relating to state revenue and finance by modifying 1 certain tax credits and tax credit programs and providing 2 for transfers to the cash reserve fund and the taxpayers 3 trust fund, and including effective date and retroactive and 4 other applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 2629HV (3) 87 mm/sc/rj

H.F. 652 DIVISION I 1 BEGINNING FARMER TAX CREDITS 2 Section 1. Section 16.80, subsection 5, paragraph a, 3 subparagraphs (1) and (2), Code 2017, are amended to read as 4 follows: 5 (1) If the qualified beginning farmer is not a veteran, the 6 taxpayer may claim a tax credit equal to seven six percent of 7 the gross amount paid to the taxpayer under the agreement for 8 each tax year that the tax credit is allowed. 9 (2) If the qualified beginning farmer is a veteran, the 10 taxpayer may claim eight percent of the gross amount paid to 11 the taxpayer under the agreement for the first year that the 12 tax credit is allowed and seven six percent of the gross amount 13 paid to the taxpayer for each subsequent tax year that the tax 14 credit is allowed. However, the taxpayer may only claim seven 15 six percent of the gross amount paid to the taxpayer under 16 a renewed agreement or a new agreement executed by the same 17 parties. 18 Sec. 2. Section 16.80, subsection 5, paragraph b, 19 subparagraph (1), Code 2017, is amended to read as follows: 20 (1) (a) If the qualified beginning farmer is not a 21 veteran, the taxpayer may claim a tax credit equal to seventeen 22 sixteen percent of the amount paid to the taxpayer from crops 23 or animals sold under the agreement in which the payment is 24 exclusively made from the sale of crops or animals. 25 (b) If the qualified beginning farmer is a veteran, the 26 taxpayer may claim a tax credit equal to eighteen percent of 27 the amount paid to the taxpayer from crops or animals sold 28 under the agreement for the first tax year that the taxpayer 29 is allowed the tax credit and seventeen sixteen percent of the 30 amount paid to the taxpayer for each subsequent tax year that 31 the taxpayer is allowed the tax credit. However, the taxpayer 32 may only claim seventeen sixteen percent of the amount paid to 33 the taxpayer from crops or animals sold for any tax year under 34 a renewed agreement or a new agreement executed by the same 35 -1- LSB 2629HV (3) 87 mm/sc/rj 1/ 36

H.F. 652 parties. 1 Sec. 3. Section 16.80, subsection 5, paragraphs a and b, 2 as enacted in 2014 Iowa Acts, chapter 1080, section 122, are 3 amended to read as follows: 4 a. Except as provided in paragraph “b” , the tax credit shall 5 equal five four and one-half percent of the amount paid to the 6 taxpayer under the agreement. 7 b. The tax credit shall equal fifteen fourteen percent of 8 the amount paid to the taxpayer from crops or animals sold 9 under an agreement in which the payment is exclusively made 10 from the sale of crops or animals. 11 Sec. 4. Section 16.81, subsection 8, paragraphs a and b, 12 Code 2017, are amended to read as follows: 13 a. If the qualified beginning farmer is not a veteran, the 14 taxpayer may claim a tax credit equal to seven six percent of 15 the gross amount paid to the qualified beginning farmer under 16 the contract for each tax year that the tax credit is allowed. 17 b. If the qualified beginning farmer is a veteran, the 18 taxpayer may claim a tax credit equal to eight percent of the 19 gross amount paid to the qualified beginning farmer under the 20 contract for the first year that the tax credit is allowed and 21 seven six percent of the gross amount paid to the qualified 22 beginning farmer under the contract for each subsequent tax 23 year that the tax credit is allowed. However, the taxpayer may 24 only claim seven six percent of the gross amount paid to the 25 qualified beginning farmer under a renewed contract or a new 26 contract executed by the same parties. 27 Sec. 5. EFFECTIVE DATE. 28 1. Except as provided in subsection 2, this division of this 29 Act, being deemed of immediate importance, takes effect upon 30 enactment. 31 2. The section of this division of this Act amending section 32 16.80, subsection 5, paragraphs “a” and “b”, as enacted in 2014 33 Iowa Acts, chapter 1080, section 122, takes effect January 1, 34 2018. 35 -2- LSB 2629HV (3) 87 mm/sc/rj 2/ 36

H.F. 652 Sec. 6. RETROACTIVE AND OTHER APPLICABILITY. 1 1. Except as provided in subsection 2, this division of this 2 Act applies retroactively to January 1, 2017, for tax years 3 beginning on or after that date. 4 2. The section of this division of this Act amending section 5 16.80, subsection 5, paragraphs “a” and “b”, as enacted in 2014 6 Iowa Acts, chapter 1080, section 122, applies to tax years 7 beginning on or after January 1, 2018. 8 DIVISION II 9 BIODIESEL BLENDED FUEL TAX CREDIT 10 Sec. 7. Section 422.11P, subsection 3, paragraph a, 11 subparagraph (1), Code 2017, is amended to read as follows: 12 (1) The taxpayer is a retail dealer who sells and dispenses 13 qualifying biodiesel blended fuel through a motor fuel pump 14 located at the retail dealer’s retail motor fuel site during 15 the calendar year or parts of the calendar years for which the 16 tax credit is claimed as provided in this section . 17 Sec. 8. Section 422.11P, subsection 4, unnumbered paragraph 18 1, Code 2017, is amended to read as follows: 19 For a retail dealer whose tax year is on a calendar year 20 basis, the A retail dealer shall calculate the amount of the 21 tax credit by multiplying a designated rate by the retail 22 dealer’s total biodiesel blended fuel gallonage for the 23 calendar year as provided in section 452A.31 which qualifies 24 under this subsection . 25 Sec. 9. Section 422.11P, subsection 5, Code 2017, is amended 26 by striking the subsection and inserting in lieu thereof the 27 following: 28 5. a. To receive a tax credit under this section, a retail 29 dealer must submit an application in the manner and form 30 prescribed by the department. The department may establish an 31 application deadline or require a retail dealer to apply for 32 the credit on or in conjunction with the retail dealer’s annual 33 report required under section 452A.33. 34 b. The department shall issue tax credits and related tax 35 -3- LSB 2629HV (3) 87 mm/sc/rj 3/ 36

H.F. 652 credit certificates to qualifying retail dealers on a calendar 1 year basis, which tax credits shall not exceed an aggregate 2 amount of sixteen million dollars per calendar year. In the 3 event the aggregate amount of tax credit claims for a calendar 4 year exceeds sixteen million dollars, the department shall 5 reduce in a prorated fashion all tax credit claims until the 6 aggregate credit claims equal sixteen million dollars. 7 c. The tax credit may be claimed for the tax year ending 8 on or after January 1 of the calendar year for which the tax 9 credit is calculated as provided in subsection 4. For an 10 individual claiming the tax credit allowed another entity 11 pursuant to subsection 7, the tax credit may be claimed for the 12 individual’s tax year beginning on or after the first day of 13 the tax year for which the other entity was allowed to claim 14 the tax credit. 15 d. (1) To claim a tax credit under this section, a taxpayer 16 shall include one or more tax credit certificates with the 17 taxpayer’s tax return. 18 (2) The tax credit certificate shall contain the taxpayer’s 19 name, address, tax identification number, the amount of the 20 credit, and any other information required by the department. 21 (3) The tax credit certificate, unless rescinded by the 22 department, shall be accepted by the department as payment 23 for the taxes under this division or division III, subject 24 to any conditions or restrictions placed by the department 25 upon the face of the tax credit certificate and subject to the 26 limitations of this section. 27 Sec. 10. EFFECTIVE UPON ENACTMENT. This division of this 28 Act, being deemed of immediate importance, takes effect upon 29 enactment. 30 Sec. 11. RETROACTIVE APPLICABILITY. This division of this 31 Act applies retroactively to January 1, 2017, for tax years 32 beginning on or after that date and for biodiesel blended fuel 33 sold on or after that date. 34 Sec. 12. TRANSITION PROVISIONS. For a retail dealer whose 35 -4- LSB 2629HV (3) 87 mm/sc/rj 4/ 36

H.F. 652 tax year is not on a calendar year basis, the retailer shall 1 calculate tax credits for the tax year beginning in calendar 2 year 2016, and ending in calendar year 2017 as follows: 3 1. For the period beginning on the first day of the retail 4 dealer’s tax year until December 31, the retail dealer shall 5 calculate a tax credit in the same manner as a retail dealer 6 who calculates the tax credit on that same December 31 as 7 provided in section 422.11P, subsection 4, Code 2017. 8 2. For any period beginning on or after January 1, 2017, 9 the retail dealer shall calculate a tax credit as provided in 10 section 422.11P, as amended in this division of this Act. 11 DIVISION III 12 E-15 PLUS GASOLINE PROMOTION TAX CREDIT 13 Sec. 13. Section 422.11Y, subsection 3, paragraph a, 14 subparagraph (1), Code 2017, is amended to read as follows: 15 (1) The taxpayer is a retail dealer who sells and dispenses 16 qualifying ethanol blended gasoline through a motor fuel pump 17 located at the retail dealer’s retail motor fuel site during 18 the calendar year or parts of the calendar years for which the 19 tax credit is claimed as provided in this section . 20 Sec. 14. Section 422.11Y, subsection 4, unnumbered 21 paragraph 1, Code 2017, is amended to read as follows: 22 For a retail dealer whose tax year is on a calendar year 23 basis, the A retail dealer shall calculate the amount of the 24 tax credit by multiplying a designated rate by the retail 25 dealer’s total ethanol blended gasoline gallonage for the 26 calendar year as provided in section 452A.31 which qualifies 27 under this subsection . 28 Sec. 15. Section 422.11Y, subsection 5, Code 2017, is 29 amended by striking the subsection and inserting in lieu 30 thereof the following: 31 5. a. To receive a tax credit under this section, a retail 32 dealer must submit an application in the manner and form 33 prescribed by the department. The department may establish an 34 application deadline or require a retail dealer to apply for 35 -5- LSB 2629HV (3) 87 mm/sc/rj 5/ 36

H.F. 652 the credit on or in conjunction with the retail dealer’s annual 1 report required under section 452A.33. 2 b. The department shall issue tax credits and related tax 3 credit certificates to qualifying retail dealers on a calendar 4 year basis, which tax credits shall not exceed an aggregate 5 amount of four hundred thirty thousand two hundred dollars per 6 calendar year. In the event the aggregate amount of tax credit 7 claims for a calendar year exceeds four hundred thirty thousand 8 two hundred dollars, the department shall reduce in a prorated 9 fashion all tax credit claims until the aggregate credit claims 10 equal four hundred thirty thousand two hundred dollars. 11 c. The tax credit may be claimed for the tax year ending 12 on or after January 1 of the calendar year for which the tax 13 credit is calculated as provided in subsection 4. For an 14 individual claiming the tax credit allowed another entity 15 pursuant to subsection 8, the tax credit may be claimed for the 16 individual’s tax year beginning on or after the first day of 17 the tax year for which the other entity was allowed to claim 18 the tax credit. 19 d. (1) To claim a tax credit under this section, a taxpayer 20 shall include one or more tax credit certificates with the 21 taxpayer’s tax return. 22 (2) The tax credit certificate shall contain the taxpayer’s 23 name, address, tax identification number, the amount of the 24 credit, and any other information required by the department. 25 (3) The tax credit certificate, unless rescinded by the 26 department, shall be accepted by the department as payment 27 for the taxes under this division or division III, subject 28 to any conditions or restrictions placed by the department 29 upon the face of the tax credit certificate and subject to the 30 limitations of this section. 31 Sec. 16. EFFECTIVE UPON ENACTMENT. This division of this 32 Act, being deemed of immediate importance, takes effect upon 33 enactment. 34 Sec. 17. RETROACTIVE APPLICABILITY. This division of this 35 -6- LSB 2629HV (3) 87 mm/sc/rj 6/ 36

H.F. 652 Act applies retroactively to January 1, 2017, for tax years 1 beginning on or after that date and for qualifying ethanol 2 blended gasoline sold on or after that date. 3 Sec. 18. TRANSITION PROVISIONS. For a retail dealer whose 4 tax year is not on a calendar year basis, the retailer shall 5 calculate tax credits for the tax year beginning in calendar 6 year 2016, and ending in calendar year 2017 as follows: 7 1. For the period beginning on the first day of the retail 8 dealer’s tax year until December 31, the retail dealer shall 9 calculate a tax credit in the same manner as a retail dealer 10 who calculates the tax credit on that same December 31 as 11 provided in section 422.11Y, subsection 4, Code 2017. 12 2. For any period beginning on or after January 1, 2017, 13 the retail dealer shall calculate a tax credit as provided in 14 section 422.11Y, as amended in this division of this Act. 15 DIVISION IV 16 E-85 GASOLINE PROMOTION TAX CREDIT 17 Sec. 19. Section 422.11O, subsection 2, paragraph a, 18 subparagraph (1), Code 2017, is amended to read as follows: 19 (1) The taxpayer is a retail dealer who sells and dispenses 20 E-85 gasoline through a motor fuel pump located at the retail 21 dealer’s retail motor fuel site during the calendar year or 22 parts of the calendar year for which the tax credit is claimed 23 as provided in this section . 24 Sec. 20. Section 422.11O, subsection 3, Code 2017, is 25 amended to read as follows: 26 3. For a retail dealer whose tax year is on a calendar year 27 basis, the A retail dealer shall calculate the amount of the 28 tax credit by multiplying a designated rate of sixteen cents 29 by the retail dealer’s total E-85 gasoline gallonage for the 30 calendar year as provided in sections 452A.31 and 452A.32 . 31 Sec. 21. Section 422.11O, subsection 4, Code 2017, is 32 amended by striking the subsection and inserting in lieu 33 thereof the following: 34 4. a. To receive a tax credit under this section, a retail 35 -7- LSB 2629HV (3) 87 mm/sc/rj 7/ 36

H.F. 652 dealer must submit an application in the manner and form 1 prescribed by the department. The department may establish an 2 application deadline or require a retail dealer to apply for 3 the credit on or in conjunction with the retail dealer’s annual 4 report required under section 452A.33. 5 b. The department shall issue tax credits and related tax 6 credit certificates to qualifying retail dealers on a calendar 7 year basis, which tax credits shall not exceed an aggregate 8 amount of two million five hundred eleven thousand one 9 hundred dollars per calendar year. In the event the aggregate 10 amount of tax credit claims for a calendar year exceeds two 11 million five hundred eleven thousand one hundred dollars, the 12 department shall reduce in a prorated fashion all tax credit 13 claims until the aggregate credit claims equal two million five 14 hundred eleven thousand one hundred dollars. 15 c. The tax credit may be claimed for the tax year ending 16 on or after January 1 of the calendar year for which the tax 17 credit is calculated as provided in subsection 3. For an 18 individual claiming the tax credit allowed another entity 19 pursuant to subsection 7, the tax credit may be claimed for the 20 individual’s tax year beginning on or after the first day of 21 the tax year for which the other entity was allowed to claim 22 the tax credit. 23 d. (1) To claim a tax credit under this section, a taxpayer 24 shall include one or more tax credit certificates with the 25 taxpayer’s tax return. 26 (2) The tax credit certificate shall contain the taxpayer’s 27 name, address, tax identification number, the amount of the 28 credit, and any other information required by the department. 29 (3) The tax credit certificate, unless rescinded by the 30 department, shall be accepted by the department as payment 31 for the taxes under this division or division III, subject 32 to any conditions or restrictions placed by the department 33 upon the face of the tax credit certificate and subject to the 34 limitations of this section. 35 -8- LSB 2629HV (3) 87 mm/sc/rj 8/ 36

H.F. 652 Sec. 22. EFFECTIVE UPON ENACTMENT. This division of this 1 Act, being deemed of immediate importance, takes effect upon 2 enactment. 3 Sec. 23. RETROACTIVE APPLICABILITY. This division of this 4 Act applies retroactively to January 1, 2017, for tax years 5 beginning on or after that date and for E-85 gasoline sold on 6 or after that date. 7 Sec. 24. TRANSITION PROVISIONS. For a retail dealer whose 8 tax year is not on a calendar year basis, the retailer shall 9 calculate tax credits for the tax year beginning in calendar 10 year 2016, and ending in calendar year 2017 as follows: 11 1. For the period beginning on the first day of the retail 12 dealer’s tax year until December 31, the retail dealer shall 13 calculate a tax credit in the same manner as a retail dealer 14 who calculates the tax credit on that same December 31 as 15 provided in section 422.11O, subsection 3, Code 2017. 16 2. For any period beginning on or after January 1, 2017, 17 the retail dealer shall calculate a tax credit as provided in 18 section 422.11O, as amended in this division of this Act. 19 DIVISION V 20 ETHANOL PROMOTION TAX CREDIT 21 Sec. 25. Section 422.11N, subsection 3, paragraph a, Code 22 2017, is amended to read as follows: 23 a. The taxpayer is a retail dealer who sells and dispenses 24 ethanol blended gasoline through a motor fuel pump located 25 at the retail dealer’s retail motor fuel site during the 26 determination period or parts of the determination periods for 27 which the tax credit is claimed as provided in this section . 28 Sec. 26. Section 422.11N, subsection 6, paragraph a, 29 unnumbered paragraph 1, Code 2017, is amended to read as 30 follows: 31 For a retail dealer whose tax year is the same as a 32 determination period beginning on January 1 and ending on 33 December 31, the A retail dealer’s tax credit is calculated 34 by multiplying the retail dealer’s total ethanol gallonage 35 -9- LSB 2629HV (3) 87 mm/sc/rj 9/ 36

H.F. 652 for the determination period by a tax credit rate, which may 1 be adjusted based on the retail dealer’s biofuel threshold 2 percentage disparity. The tax credit rate is as follows: 3 Sec. 27. Section 422.11N, subsection 6, paragraph b, Code 4 2017, is amended by striking the paragraph. 5 Sec. 28. Section 422.11N, Code 2017, is amended by adding 6 the following new subsection: 7 NEW SUBSECTION . 7A. a. To receive a tax credit under this 8 section, a retail dealer must submit an application in the 9 manner and form prescribed by the department. The department 10 may establish an application deadline or require a retail 11 dealer to apply for the credit on or in conjunction with the 12 retail dealer’s annual report required under section 452A.33. 13 b. The department shall issue tax credits and related tax 14 credit certificates to qualifying retail dealers on a calendar 15 year basis, which tax credits shall not exceed an aggregate 16 amount of one million seventy-one thousand five hundred 17 dollars per determination period. In the event the aggregate 18 amount of tax credit claims for a determination period exceeds 19 one million seventy-one thousand five hundred dollars, the 20 department shall reduce in a prorated fashion all tax credit 21 claims until the aggregate credit claims equal one million 22 seventy-one thousand five hundred dollars. 23 c. The tax credit may be claimed for the tax year ending 24 on or after January 1 of the determination period for which 25 the tax credit is calculated as provided in subsection 6. For 26 an individual claiming the tax credit allowed another entity 27 pursuant to subsection 9, the tax credit may be claimed for the 28 individual’s tax year beginning on or after the first day of 29 the tax year for which the other entity was allowed to claim 30 the tax credit. 31 d. (1) To claim a tax credit under this section, a taxpayer 32 shall include one or more tax credit certificates with the 33 taxpayer’s tax return. 34 (2) The tax credit certificate shall contain the taxpayer’s 35 -10- LSB 2629HV (3) 87 mm/sc/rj 10/ 36

H.F. 652 name, address, tax identification number, the amount of the 1 credit, and any other information required by the department. 2 (3) The tax credit certificate, unless rescinded by the 3 department, shall be accepted by the department as payment 4 for the taxes under this division or division III, subject 5 to any conditions or restrictions placed by the department 6 upon the face of the tax credit certificate and subject to the 7 limitations of this section. 8 Sec. 29. EFFECTIVE UPON ENACTMENT. This division of this 9 Act, being deemed of immediate importance, takes effect upon 10 enactment. 11 Sec. 30. RETROACTIVE APPLICABILITY. This division of 12 this Act applies retroactively to January 1, 2017, for tax 13 years beginning on or after that date and for ethanol blended 14 gasoline sold on or after that date. 15 Sec. 31. TRANSITION PROVISIONS. For a retail dealer whose 16 tax year is not on a calendar year basis, the retailer shall 17 calculate tax credits for the tax year beginning in calendar 18 year 2016, and ending in calendar year 2017 as follows: 19 1. For the period beginning on the first day of the retail 20 dealer’s tax year until December 31, the retail dealer shall 21 calculate a tax credit in the same manner as a retail dealer 22 who calculates the tax credit on that same December 31 as 23 provided in section 422.11N, subsection 6, paragraph “a”, Code 24 2017. 25 2. For any period beginning on or after January 1, 2017, 26 the retail dealer shall calculate a tax credit as provided in 27 section 422.11N, as amended in this division of this Act. 28 DIVISION VI 29 HISTORIC PRESERVATION AND CULTURAL AND ENTERTAINMENT DISTRICT 30 TAX CREDIT 31 Sec. 32. Section 404A.2, subsection 1, Code 2017, is amended 32 to read as follows: 33 1. An eligible taxpayer who has entered into an agreement 34 under section 404A.3, subsection 3 , is eligible to receive a 35 -11- LSB 2629HV (3) 87 mm/sc/rj 11/ 36

H.F. 652 historic preservation and cultural and entertainment district 1 tax credit in an amount equal to twenty-five fifteen percent 2 of the qualified rehabilitation expenditures of a qualified 3 rehabilitation project that are specified in the agreement. 4 Notwithstanding any other provision of this chapter or any 5 provision in the agreement to the contrary, the amount of the 6 tax credits shall not exceed twenty-five fifteen percent of the 7 final qualified rehabilitation expenditures verified by the 8 authority pursuant to section 404A.3, subsection 5 , paragraph 9 “c” . 10 Sec. 33. Section 404A.4, subsection 1, paragraph a, Code 11 2017, is amended to read as follows: 12 a. Except as provided in subsections 2 and 3 , the authority 13 shall not award in any one fiscal year an amount of tax credits 14 provided in section 404A.2 in excess of forty-five thirty-five 15 million dollars. 16 Sec. 34. APPLICABILITY. This section of this division 17 of this Act amending section 404A.2, subsection 1, applies 18 to qualified rehabilitation projects registered on or after 19 July 1, 2017, and qualified rehabilitation projects registered 20 prior to July 1, 2017, shall be governed by section 404A.2, 21 subsection 1, Code 2017. 22 DIVISION VII 23 SOLAR ENERGY SYSTEM TAX CREDIT 24 Sec. 35. Section 422.11L, subsection 1, Code 2017, is 25 amended to read as follows: 26 1. The taxes imposed under this division , less the credits 27 allowed under section 422.12 , shall be reduced by a solar 28 energy system tax credit equal to the sum of the following: 29 a. Sixty Forty percent of the federal residential energy 30 efficient property credit related to solar energy provided in 31 section 25D(a)(1) and section 25D(a)(2) of the Internal Revenue 32 Code, not to exceed five thousand dollars. 33 b. Sixty Forty percent of the federal energy credit related 34 to solar energy systems provided in section 48(a)(2)(A)(i)(II) 35 -12- LSB 2629HV (3) 87 mm/sc/rj 12/ 36

H.F. 652 and section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, 1 not to exceed twenty thousand dollars. 2 c. Notwithstanding paragraphs “a” and “b” of this 3 subsection , for installations occurring on or after January 1, 4 2016, the applicable percentages of the federal residential 5 energy efficiency property tax credit related to solar energy 6 and the federal energy credit related to solar energy systems 7 shall be fifty percent. 8 Sec. 36. Section 422.11L, subsection 4, paragraph a, Code 9 2017, is amended to read as follows: 10 a. The cumulative value of tax credits claimed annually by 11 applicants pursuant to this section shall not exceed five four 12 million dollars. Of this amount, at least one million dollars 13 shall be reserved for claims associated with or resulting from 14 residential solar energy system installations. In the event 15 that the total amount of claims submitted for residential solar 16 energy system installations in a tax year is an amount less 17 than one million dollars, the remaining unclaimed reserved 18 amount shall be made available for claims associated with or 19 resulting from nonresidential solar energy system installations 20 received for the tax year. 21 Sec. 37. Section 422.33, subsection 29, paragraph a, Code 22 2017, is amended to read as follows: 23 a. The taxes imposed under this division shall be reduced 24 by a solar energy system tax credit equal to sixty forty 25 percent of the federal energy credit related to solar energy 26 systems provided in section 48(a)(2)(A)(i)(II) and section 27 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed 28 twenty thousand dollars. For installations occurring on or 29 after January 1, 2016, the applicable percentage of the federal 30 energy credit related to solar energy systems shall be fifty 31 percent. 32 Sec. 38. Section 422.60, subsection 12, paragraph a, Code 33 2017, is amended to read as follows: 34 a. The taxes imposed under this division shall be reduced 35 -13- LSB 2629HV (3) 87 mm/sc/rj 13/ 36

H.F. 652 by a solar energy system tax credit equal to sixty forty 1 percent of the federal energy credit related to solar energy 2 systems provided in section 48(a)(2)(A)(i)(II) and section 3 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed 4 twenty thousand dollars. For installations occurring on or 5 after January 1, 2016, the applicable percentage of the federal 6 energy credit related to solar energy systems shall be fifty 7 percent. 8 Sec. 39. EFFECTIVE UPON ENACTMENT. This division of this 9 Act, being deemed of immediate importance, takes effect upon 10 enactment. 11 Sec. 40. RETROACTIVE APPLICABILITY. The following 12 provision or provisions of this division of this Act apply 13 retroactively to January 1, 2017, for tax years beginning and 14 installations occurring on or after that date: 15 1. The section of this division of this Act amending section 16 422.11L, subsection 4, paragraph “a”. 17 Sec. 41. APPLICABILITY. The following provision or 18 provisions of this division of this Act apply to installations 19 occurring on or after the effective date of this division of 20 this Act: 21 1. The section of this division of this Act amending section 22 422.11L, subsection 1. 23 2. The section of this division of this Act amending section 24 422.33, subsection 29, paragraph “a”. 25 3. The section of this division of this Act amending section 26 422.60, subsection 12, paragraph “a”. 27 DIVISION VIII 28 GEOTHERMAL HEAT PUMP TAX CREDIT 29 Sec. 42. Section 422.11I, Code 2017, is amended to read as 30 follows: 31 422.11I Geothermal heat pump tax credit. 32 1. The taxes imposed under this division, less the credits 33 allowed under section 422.12 , shall be reduced by a geothermal 34 heat pump tax credit equal to twenty sixteen percent of the 35 -14- LSB 2629HV (3) 87 mm/sc/rj 14/ 36

H.F. 652 federal residential energy efficient property tax credit 1 allowed for geothermal heat pumps provided in section 25D(a)(5) 2 of the Internal Revenue Code for residential property located 3 in Iowa. 4 2. a. To receive a tax credit under this section, a 5 taxpayer must submit an application in the manner and form 6 prescribed by the department by May 1 following the calendar 7 year of the installation of the qualified geothermal heat 8 pump property that is the subject of the federal credit. The 9 application must be approved by the department in order to 10 receive a tax credit certificate and claim the tax credit. 11 b. The department shall issue tax credits and related 12 tax credit certificates on a first-come, first-served basis 13 in the order the applications are received until the maximum 14 amount of tax credits authorized pursuant to subsection 3 is 15 reached. If for a calendar year the maximum amount of tax 16 credits applied for exceeds the amount specified in subsection 17 3, the department shall establish a wait list for tax credits. 18 Valid applications filed by the taxpayer by May 1 following 19 the calendar year of the installation but not approved by 20 the department shall be placed on a wait list in the order 21 the applications were received and those applicants shall 22 be given priority for having their applications approved 23 in succeeding years. Placement on a wait list pursuant to 24 this paragraph shall not constitute a promise binding the 25 state. The availability of a tax credit and issuance of a tax 26 credit certificate pursuant to this section in a future year 27 is contingent upon the availability of tax credits in that 28 particular year. 29 c. For tax credit certificates issued in the calendar 30 year of the installation or the calendar year following the 31 installation, the tax credit may be claimed for the applicant’s 32 tax year during which the installation was completed. For tax 33 credit certificates issued in any later calendar year, the tax 34 credit may be claimed for the applicant’s tax year during which 35 -15- LSB 2629HV (3) 87 mm/sc/rj 15/ 36

H.F. 652 the tax credit is issued. 1 d. (1) To claim a tax credit under this section, a taxpayer 2 shall include one or more tax credit certificates with the 3 taxpayer’s tax return. 4 (2) The tax credit certificate shall contain the taxpayer’s 5 name, address, tax identification number, the amount of the 6 credit, and any other information required by the department. 7 (3) The tax credit certificate, unless rescinded by the 8 department, shall be accepted by the department as payment 9 for the taxes imposed under this division, subject to any 10 conditions or restrictions placed by the department upon 11 the face of the tax credit certificate and subject to the 12 limitations of this section. 13 3. The maximum aggregate amount of tax credits issued in a 14 calendar year pursuant to this section shall not exceed three 15 hundred seventy-six thousand twenty dollars. 16 4. 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 5. The director of revenue shall adopt rules to implement 21 this section . 22 Sec. 43. EFFECTIVE UPON ENACTMENT. This division of this 23 Act, being deemed of immediate importance, takes effect upon 24 enactment. 25 Sec. 44. RETROACTIVE APPLICABILITY. This division of this 26 Act applies retroactively to January 1, 2017, for tax years 27 beginning on or after that date. 28 DIVISION IX 29 GEOTHERMAL TAX CREDIT 30 Sec. 45. Section 422.10A, subsection 2, Code 2017, is 31 amended to read as follows: 32 2. Except as provided in subsection 6 , the taxes imposed 33 under this division , less the credits allowed under section 34 422.12 , shall be reduced by a geothermal tax credit equal 35 -16- LSB 2629HV (3) 87 mm/sc/rj 16/ 36

H.F. 652 to ten eight percent of the qualified geothermal heat pump 1 property expenditures made by the taxpayer during the tax year. 2 Sec. 46. Section 422.10A, Code 2017, is amended by adding 3 the following new subsections: 4 NEW SUBSECTION . 4A. a. To receive a tax credit under this 5 section, a taxpayer must submit an application in the manner 6 and form prescribed by the department by May 1 following the 7 calendar year of the installation of the qualified geothermal 8 heat pump property. The application must be approved by the 9 department in order to receive a tax credit certificate and 10 claim the tax credit. 11 b. The department shall issue tax credits and related 12 tax credit certificates on a first-come, first-served basis 13 in the order the applications are received until the maximum 14 amount of tax credits authorized pursuant to subsection 4B is 15 reached. If for a calendar year the maximum amount of tax 16 credits applied for exceeds the amount specified in subsection 17 4B, the department shall establish a wait list for tax credits. 18 Valid applications filed by the taxpayer by May 1 following 19 the calendar year of the installation but not approved by 20 the department shall be placed on a wait list in the order 21 the applications were received and those applicants shall 22 be given priority for having their applications approved 23 in succeeding years. Placement on a wait list pursuant to 24 this paragraph shall not constitute a promise binding the 25 state. The availability of a tax credit and issuance of a tax 26 credit certificate pursuant to this section in a future year 27 is contingent upon the availability of tax credits in that 28 particular year. 29 c. For tax credit certificates issued in the calendar 30 year of the installation or the calendar year following the 31 installation, the tax credit may be claimed for the applicant’s 32 tax year during which the installation was completed. For tax 33 credit certificates issued in any later calendar year, the tax 34 credit may be claimed for the applicant’s tax year during which 35 -17- LSB 2629HV (3) 87 mm/sc/rj 17/ 36

H.F. 652 the tax credit is issued. 1 d. (1) To claim a tax credit under this section, a taxpayer 2 shall include one or more tax credit certificates with the 3 taxpayer’s tax return. 4 (2) The tax credit certificate shall contain the taxpayer’s 5 name, address, tax identification number, the amount of the 6 credit, and any other information required by the department. 7 (3) The tax credit certificate, unless rescinded by the 8 department, shall be accepted by the department as payment 9 for the taxes imposed under this division, subject to any 10 conditions or restrictions placed by the department upon 11 the face of the tax credit certificate and subject to the 12 limitations of this section. 13 NEW SUBSECTION . 4B. The maximum aggregate amount of tax 14 credits issued in a calendar year pursuant to this section 15 shall not exceed one million five hundred thousand dollars. 16 Sec. 47. EFFECTIVE UPON ENACTMENT. This division of this 17 Act, being deemed of immediate importance, takes effect upon 18 enactment. 19 Sec. 48. RETROACTIVE APPLICABILITY. The following 20 provision or provisions of this division of this Act apply 21 retroactively to January 1, 2017, for tax years beginning and 22 installations occurring on or after that date: 23 1. The sections of this division of this Act enacting 24 section 422.10A, subsections 4A and 4B. 25 Sec. 49. APPLICABILITY. The following provision or 26 provisions of this division of this Act apply to installations 27 occurring on or after the effective date of this division of 28 this Act: 29 1. The section of this division of this Act amending section 30 422.10A, subsection 2. 31 DIVISION X 32 INNOVATION FUND TAX CREDIT 33 Sec. 50. Section 15E.52, subsection 3, Code 2017, is amended 34 to read as follows: 35 -18- LSB 2629HV (3) 87 mm/sc/rj 18/ 36