Senate File 386 - Introduced SENATE FILE 386 BY COMMITTEE ON COMMERCE (SUCCESSOR TO SSB 1121) A BILL FOR An Act creating a geothermal tax credit available against 1 the corporate income tax and including effective date and 2 retroactive applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1788SV (1) 87 mm/sc/rn

S.F. 386 Section 1. Section 422.33, Code 2017, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 31. a. For purposes of this subsection, 3 unless the context otherwise requires: 4 (1) “Qualified geothermal energy system property” means any 5 equipment that uses the ground or groundwater as a thermal 6 energy source to heat a structure or as a thermal energy sink 7 to cool a structure. 8 (2) “Qualified geothermal energy system property 9 expenditures” means an expenditure for qualified geothermal 10 energy system property if depreciation or amortization is 11 allowable to the taxpayer under the Internal Revenue Code with 12 respect to the property, and if the property is installed on or 13 in connection with a structure located in Iowa. 14 b. The taxes imposed under this division shall be reduced by 15 a geothermal tax credit equal to ten percent of the qualified 16 geothermal energy system property expenditures made by the 17 taxpayer during the tax year. 18 c. Qualified geothermal energy system property expenditures 19 shall be deemed to have been made on the date the installation 20 is complete or, in the case of new construction or 21 reconstruction, the date the original use of the structure by 22 the taxpayer begins. 23 d. Any credit in excess of the tax liability is not 24 refundable but the excess for the tax year may be credited 25 to the tax liability for the following ten years or until 26 depleted, whichever is earlier. 27 Sec. 2. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 28 immediate importance, takes effect upon enactment. 29 Sec. 3. RETROACTIVE APPLICABILITY. This Act applies 30 retroactively to January 1, 2017, for tax years beginning on 31 or after that date. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -1- LSB 1788SV (1) 87 mm/sc/rn 1/ 2

S.F. 386 This bill creates a geothermal tax credit available 1 against the corporate income tax equal to 10 percent of the 2 expenditures made by a taxpayer for qualified geothermal 3 energy system property if depreciation or amortization 4 is allowable to the taxpayer under the Internal Revenue 5 Code with respect to the property, and if the property is 6 installed on or in connection with a structure located in 7 Iowa. “Qualified geothermal energy system property” and other 8 related terms are defined in the bill. For purposes of the 9 tax credit, expenditures are deemed to be made on the date the 10 installation is complete or, in the case of new construction 11 or reconstruction, the date the original use of the structure 12 begins. 13 The tax credit is nonrefundable, but any amount in excess of 14 the taxpayer’s tax liability may be carried forward for up to 15 10 years. 16 The bill takes effect upon enactment and applies 17 retroactively to January 1, 2017, for tax years beginning on 18 or after that date. 19 -2- LSB 1788SV (1) 87 mm/sc/rn 2/ 2