House Study Bill 671 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED ECONOMIC DEVELOPMENT AUTHORITY BILL) A BILL FOR An Act relating to certain tax credits awarded by the economic 1 development authority for equity investments in qualifying 2 businesses or innovation funds and including effective date 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5371DP (3) 88 ko/jh

S.F. _____ H.F. _____ Section 1. Section 15.119, subsection 2, paragraphs d and e, 1 Code 2020, are amended to read as follows: 2 d. The tax credits for investments in qualifying businesses 3 issued pursuant to section 15E.43 . In allocating tax credits 4 pursuant to this subsection , the authority shall allocate at 5 least two million and not more than four million dollars for 6 purposes of this paragraph, unless the authority determines 7 that the tax credits awarded will be less than that amount. 8 e. The tax credits for investments in an innovation fund 9 pursuant to section 15E.52 . In allocating tax credits pursuant 10 to this subsection , the authority shall allocate at least six 11 million and not more than eight million dollars for purposes of 12 this paragraph, unless the authority determines that the tax 13 credits awarded will be less than that amount. 14 Sec. 2. Section 15.119, Code 2020, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION . 2A. On or before June 30 of each year, 17 the authority shall determine the amount of tax credits that 18 shall be issued pursuant to sections 15E.43 and 15E.52 for 19 the following fiscal year. In allocating the amount of tax 20 credits authorized pursuant to subsection 1 among the programs 21 specified in subsection 2, the aggregate amount allocated by 22 the authority for purposes of subsection 2, paragraphs “d” and 23 “e” , shall not exceed ten million dollars. 24 Sec. 3. Section 15E.43, subsection 2, paragraphs b and c, 25 Code 2020, are amended to read as follows: 26 b. The maximum amount of a tax credit that may be issued 27 per calendar fiscal year to a natural person and the person’s 28 spouse or dependent shall not exceed one hundred thousand 29 dollars combined. For purposes of this paragraph, a tax 30 credit issued to a partnership, limited liability company, S 31 corporation, estate, or trust electing to have income taxed 32 directly to the individual shall be deemed to be issued to 33 the individual owners based upon the pro rata share of the 34 individual’s earnings from the entity. For purposes of this 35 -1- LSB 5371DP (3) 88 ko/jh 1/ 2

S.F. _____ H.F. _____ paragraph, “dependent” has the same meaning as provided by the 1 Internal Revenue Code. 2 c. The maximum amount of tax credits that may be issued 3 per calendar fiscal year for equity investments in any one 4 qualifying business shall not exceed five hundred thousand 5 dollars. 6 Sec. 4. EFFECTIVE DATE. This Act, being deemed of immediate 7 importance, takes effect upon enactment. 8 EXPLANATION 9 The inclusion of this explanation does not constitute agreement with 10 the explanation’s substance by the members of the general assembly. 11 This bill relates to certain tax credits awarded by the 12 economic development authority for equity investments in a 13 qualifying business or innovation fund. 14 The bill directs the economic development authority to 15 determine on or before June 30 of each year the amount of tax 16 credits that will be issued for the following fiscal year 17 for equity investments in qualifying businesses pursuant to 18 Code section 15E.43 and in innovation funds pursuant to Code 19 section 15E.52. The bill caps the aggregate amount of these 20 tax credits at $10 million. 21 The bill changes the maximum amount of tax credits that may 22 be issued in a year to a natural person and the person’s spouse 23 or dependant, or for equity investments in any one qualifying 24 business, from a calendar year basis to a fiscal year basis. 25 The bill takes effect upon enactment. 26 -2- LSB 5371DP (3) 88 ko/jh 2/ 2