H.F. 34 Section 1. NEW SECTION . 422.12O New resident tax credit. 1 1. a. For purposes of this section, “new resident” means an 2 individual who became a resident of Iowa upon taking full-time 3 employment in this state, who remains a resident of and 4 employed full-time in this state while claiming the credit, and 5 who has not been a resident of this state at any time during the 6 previous twelve-month period prior to establishing residency 7 in this state. 8 b. For purposes of this section, “public assistance” means 9 the supplemental nutrition assistance program, the Medicaid 10 program, or the family investment program. 11 2. a. The taxes imposed under this subchapter less the 12 credits allowed under section 422.12 shall be reduced by a new 13 resident tax credit equal to one hundred percent of the taxes 14 imposed in a tax year for up to four consecutive tax years. 15 b. An individual may claim the credit during either the 16 first or second tax year of residency, and may take the 17 credit consecutively every tax year thereafter as provided in 18 paragraph “a” . 19 c. An individual is eligible to take the credit one time in 20 the individual’s lifetime. If an individual is unable to claim 21 the credit in consecutive tax years, the individual shall be 22 ineligible to claim the credit in a future tax year. 23 3. Any new resident tax credit in excess of the tax 24 liability is not refundable. 25 4. An individual claiming the credit may claim an exemption 26 from withholding on the state W-4 form. 27 5. Married taxpayers electing to file separate returns or 28 filing separately on a combined return may avail themselves 29 of the new resident tax credit by allocating the new resident 30 tax credit to each spouse in the proportion that each spouse’s 31 respective earned income bears to the total combined earned 32 income. 33 6. An individual shall not be eligible to claim the credit 34 if the person is receiving public assistance after the first 35 -1- LSB 1330YH (2) 89 jm/jh 1/ 6

H.F. 34 tax year the credit is claimed. 1 Sec. 2. NEW SECTION . 422.12P New graduate tax credit. 2 1. a. For purposes of this section, “new graduate” means 3 an individual who is within two years of graduation from an 4 Iowa-based community college, college, university, or an 5 apprenticeship program as defined in section 15B.2, who is a 6 resident of and employed in this state, and who is thirty years 7 of age or less during the first tax year when claiming the tax 8 credit. 9 b. For purposes of this section, “public assistance” means 10 the supplemental nutrition assistance program, the Medicaid 11 program, or the family investment program. 12 2. a. The taxes imposed under this subchapter less the 13 credits allowed under section 422.12 shall be reduced by a new 14 graduate tax credit equal to one hundred percent of the taxes 15 imposed in a tax year for up to four consecutive tax years. 16 b. An individual may claim the tax credit during either the 17 first or second tax year after graduation, and may take the 18 credit consecutively every tax year thereafter as provided in 19 paragraph “a” . 20 c. An individual is eligible to take the credit one time in 21 the individual’s lifetime. If an individual is unable to claim 22 the credit in consecutive tax years, the individual shall be 23 ineligible to claim the credit in a future tax year. 24 3. Any new graduate tax credit in excess of the tax 25 liability is not refundable. 26 4. An individual claiming the credit may claim an exemption 27 from withholding on the state W-4 form. 28 5. Married taxpayers electing to file separate returns or 29 filing separately on a combined return may avail themselves 30 of the new graduate tax credit by allocating the new graduate 31 tax credit to each spouse in the proportion that each spouse’s 32 respective earned income bears to the total combined earned 33 income. 34 6. An individual shall not be eligible to claim the credit 35 -2- LSB 1330YH (2) 89 jm/jh 2/ 6

H.F. 34 if the person is receiving public assistance after the first 1 tax year the credit is claimed. 2 Sec. 3. CONTINGENT FUTURE REPEAL —— CODE EDITOR DIRECTIVE 3 —— APPLICABILITY AFTER REPEAL. 4 1. Sections 422.12O and 422.12P are repealed January 1 5 following the occurrence of the statewide average annual 6 unemployment rate equaling or exceeding four percent for three 7 consecutive calendar years as calculated by the United States 8 department of labor, bureau of labor statistics, beginning 9 with calendar year 2022. The director of the department of 10 workforce development or the director’s designee shall notify 11 the Code editor when the annual statewide unemployment rate 12 exceeds four percent for three consecutive calendar years as 13 set forth in this subsection. 14 2. If the Code editor is notified by the director of the 15 department of workforce development or the director’s designee 16 that the condition in subsection 1 has been satisfied, the Code 17 editor is directed to remove sections 422.12O and 422.12P from 18 the Code. 19 3. A taxpayer claiming the tax credit in section 422.12O or 20 422.12P prior to repeal pursuant to subsection 2 is eligible 21 to claim the credit after the repeal up to any remaining tax 22 years the taxpayer would have been eligible to claim prior to 23 the repeal, as long as the taxpayer remains eligible to claim 24 the credit under the law prior to repeal. 25 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 26 retroactively to January 1, 2021, for tax years beginning on 27 or after that date. 28 EXPLANATION 29 The inclusion of this explanation does not constitute agreement with 30 the explanation’s substance by the members of the general assembly. 31 This bill creates the new resident and new graduate tax 32 credits, which are available against the individual income tax. 33 The bill applies to tax years beginning on or after January 1, 34 2021. 35 -3- LSB 1330YH (2) 89 jm/jh 3/ 6

H.F. 34 NEW RESIDENT TAX CREDIT. The bill defines “new resident” to 1 mean an individual who became a resident of Iowa upon taking 2 full-time employment in this state, who remains a resident of 3 and employed full-time in this state while claiming the credit, 4 and who has not been a resident of this state at any time during 5 the previous 12-month period prior to establishing residency. 6 The new resident tax credit authorized in the bill is 7 available to a new resident for up to four consecutive tax 8 years following the establishment of residency in this state. 9 A new resident may begin to claim the credit during either the 10 first or second tax year of residency. 11 The amount of the credit is equal to 100 percent of the 12 income tax imposed in a tax year for up to four consecutive tax 13 years. 14 An individual is eligible to claim the new resident tax 15 credit one time in the individual’s lifetime for the tax year 16 period described in the bill. 17 An individual claiming the new resident tax credit may claim 18 an exemption from withholding on the state W-4 form. 19 Any new resident tax credit in excess of tax liability is not 20 refundable. 21 An individual is not eligible to claim the credit if the 22 person is receiving public assistance after the first tax year 23 the credit is claimed. The bill defines “public assistance” 24 to mean the supplemental nutrition assistance program, the 25 Medicaid program, or the family investment program. 26 NEW GRADUATE TAX CREDIT. The bill defines “new graduate” to 27 mean an individual who is within two years of graduation from 28 an Iowa-based community college, college, university, or an 29 apprenticeship program as defined in Code section 15B.2, who is 30 a resident of and employed in this state, and who is 30 years 31 of age or less during the first tax year when claiming the tax 32 credit. 33 The new graduate tax credit authorized in the bill is 34 available to a new graduate for up to four consecutive tax 35 -4- LSB 1330YH (2) 89 jm/jh 4/ 6

H.F. 34 years following graduation. A new graduate may begin to claim 1 the credit during either the first or second tax year after 2 graduation. 3 The amount of the credit is equal to 100 percent of the 4 income tax imposed in a tax year for up to four consecutive tax 5 years. 6 An individual is eligible to claim the new graduate tax 7 credit one time in the individual’s lifetime for the tax year 8 period described in the bill. 9 An individual claiming the new graduate tax credit may claim 10 an exemption from withholding on the state W-4 form. 11 Any new graduate tax credit in excess of tax liability is not 12 refundable. 13 An individual is not eligible to claim the credit if the 14 person is receiving public assistance after the first tax year 15 the credit is claimed. The bill defines “public assistance” 16 to mean the supplemental nutrition assistance program, the 17 Medicaid program, or the family investment program. 18 CONTINGENT FUTURE REPEAL —— CODE EDITOR DIRECTIVE —— 19 APPLICABILITY AFTER REPEAL. The bill repeals the new resident 20 tax credit and the new graduate tax credit January 1 following 21 the occurrence of the statewide average annual unemployment 22 rate equaling or exceeding 4 percent for three consecutive 23 calendar years as calculated by the United States department of 24 labor, bureau of labor statistics, beginning with calendar year 25 2022. The director of the department of workforce development 26 or the director’s designee shall notify the Code editor when 27 the annual statewide unemployment rate exceeds 4 percent for 28 three consecutive calendar years. 29 If the Code editor receives notification under the bill, the 30 Code editor is directed to remove the tax credits. 31 A taxpayer claiming a tax credit prior to repeal under the 32 bill is eligible to claim the credit after the repeal up to 33 any remaining tax years the taxpayer would have been eligible 34 to claim prior to the repeal, as long as the taxpayer remains 35 -5- LSB 1330YH (2) 89 jm/jh 5/ 6