House Study Bill 278 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON HEIN) A BILL FOR An Act relating to state taxation and economic development 1 activities, including future tax contingencies, state 2 income tax deductions, tax credits, the state inheritance 3 tax, the sales and use tax, disaster recovery housing, 4 energy infrastructure, telehealth parity, consumer loans, 5 local regulations, and other properly related matters, and 6 including effective date and retroactive applicability 7 provisions. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 2827YC (18) 89 jm/jh
H.F. _____ DIVISION I 1 FUTURE TAX CHANGES 2 Section 1. 2018 Iowa Acts, chapter 1161, section 133, is 3 amended by striking the section and inserting in lieu thereof 4 the following: 5 SEC. 133. EFFECTIVE DATE. This division of this Act takes 6 effect January 1, 2023. 7 DIVISION II 8 CHILD DEPENDENT AND DEVELOPMENT TAX CREDITS 9 Sec. 2. Section 422.12C, subsection 1, paragraphs f and g, 10 Code 2021, are amended to read as follows: 11 f. For a taxpayer with net income of forty thousand dollars 12 or more but less than forty-five ninety thousand dollars, 13 thirty percent. 14 g. For a taxpayer with net income of forty-five ninety 15 thousand dollars or more, zero percent. 16 Sec. 3. Section 422.12C, subsection 2, paragraph a, Code 17 2021, is amended to read as follows: 18 a. The taxes imposed under this subchapter , less the amounts 19 of nonrefundable credits allowed under this subchapter , may 20 be reduced by an early childhood development tax credit equal 21 to twenty-five percent of the first one thousand dollars 22 which the taxpayer has paid to others for each dependent, as 23 defined in the Internal Revenue Code, ages three through five 24 for early childhood development expenses. In determining the 25 amount of early childhood development expenses for the tax year 26 beginning in the 2006 calendar year only, such expenses paid 27 during November and December of the previous tax year shall 28 be considered paid in the tax year for which the tax credit 29 is claimed. This credit is available to a taxpayer whose net 30 income is less than forty-five ninety thousand dollars. If the 31 early childhood development tax credit is claimed for a tax 32 year, the taxpayer and the taxpayer’s spouse shall not claim 33 the child and dependent care credit under subsection 1 . 34 Sec. 4. RETROACTIVE APPLICABILITY. This division of this 35 -1- LSB 2827YC (18) 89 jm/jh 1/ 55
H.F. _____ Act applies retroactively to tax years beginning on or after 1 January 1, 2021. 2 DIVISION III 3 COVID-19 RELATED GRANTS —— TAXATION 4 Sec. 5. Section 422.7, subsection 62, Code 2021, is amended 5 to read as follows: 6 62. a. Subtract, to the extent included, the amount of 7 any financial assistance qualifying COVID-19 grant provided to 8 an eligible small issued to an individual or business by the 9 economic development authority under the Iowa small business 10 relief grant program created during calendar year 2020 to 11 provide financial assistance to eligible small businesses 12 economically impacted by the COVID-19 pandemic , the Iowa 13 finance authority, or the department of agriculture and land 14 stewardship . 15 b. For purposes of this subsection, “qualifying COVID-19 16 grant” includes any grant identified by the department by rule 17 that was issued under a grant program administered by the 18 economic development authority, Iowa finance authority, or 19 the department of agriculture and land stewardship to provide 20 financial assistance to individuals and businesses economically 21 impacted by the COVID-19 pandemic. 22 c. The economic development authority, Iowa finance 23 authority, or the department of agriculture and land 24 stewardship shall notify the department of any COVID-19 grant 25 program that may qualify under this subsection in the manner 26 and form prescribed by the department. 27 d. This subsection is repealed January 1, 2024, and does not 28 apply to tax years beginning on or after that date. 29 Sec. 6. Section 422.35, subsection 30, Code 2021, is amended 30 to read as follows: 31 30. a. Subtract, to the extent included, the amount of 32 any financial assistance qualifying COVID-19 grant provided 33 to an eligible small issued to a business by the economic 34 development authority under the Iowa small business relief 35 -2- LSB 2827YC (18) 89 jm/jh 2/ 55
H.F. _____ grant program created during calendar year 2020 to provide 1 financial assistance to eligible small businesses economically 2 impacted by the COVID-19 pandemic , the Iowa finance authority, 3 or the department of agriculture and land stewardship . 4 b. For purposes of this subsection, “qualifying COVID-19 5 grant” includes any grant identified by the department by rule 6 that was issued under a grant program administered by the 7 economic development authority, Iowa finance authority, or 8 the department of agriculture and land stewardship to provide 9 financial assistance to businesses economically impacted by the 10 COVID-19 pandemic. 11 c. The economic development authority, Iowa finance 12 authority, or the department of agriculture and land 13 stewardship shall notify the department of any COVID-19 grant 14 program that may qualify under this subsection in the manner 15 and form prescribed by the department. 16 d. This subsection is repealed January 1, 2024, and does not 17 apply to tax years beginning on or after that date. 18 Sec. 7. EFFECTIVE DATE. This division of this Act, being 19 deemed of immediate importance, takes effect upon enactment. 20 Sec. 8. RETROACTIVE APPLICABILITY. This division of this 21 Act applies retroactively to March 23, 2020, for tax years 22 ending on or after that date. 23 DIVISION IV 24 FEDERAL PAYCHECK PROTECTION PROGRAM 25 Sec. 9. FEDERAL PAYCHECK PROTECTION PROGRAM. 26 Notwithstanding any other provision of the law to the contrary, 27 for any tax year ending after March 27, 2020, Division N, Tit. 28 II, subtit. B, §276 and §278(a), of the federal Consolidated 29 Appropriations Act, 2021, Pub. L. No. 116-260, applies in 30 computing net income for state tax purposes under section 422.7 31 or 422.35. 32 Sec. 10. EFFECTIVE DATE. This division of this Act, being 33 deemed of immediate importance, takes effect upon enactment. 34 DIVISION V 35 -3- LSB 2827YC (18) 89 jm/jh 3/ 55
H.F. _____ SCHOOL TUITION ORGANIZATION TAX CREDIT 1 Sec. 11. Section 422.11S, subsection 1, Code 2021, is 2 amended to read as follows: 3 1. a. The taxes imposed under this subchapter , less the 4 credits allowed under section 422.12 , shall be reduced by a 5 school tuition organization tax credit equal to sixty-five 6 percent the following percentage of the amount of the voluntary 7 cash or noncash contributions made by the taxpayer during the 8 applicable tax year to a school tuition organization, subject 9 to the total dollar value of the organization’s tax credit 10 certificates as computed in subsection 8 . : 11 (1) For the tax year beginning on or after January 1, 2021, 12 but before January 1, 2022, sixty-five percent. 13 (2) For the tax year beginning on or after January 1, 2022, 14 but before January 1, 2023, seventy-two percent. 15 (3) For the tax year beginning on or after January 1, 2023, 16 but before January 1, 2024, seventy-eight percent. 17 (4) For the tax year beginning on or after January 1, 2024, 18 but before January 1, 2025, eighty-five percent. 19 (5) For tax years beginning on or after January 1, 2025, 20 eighty-seven percent. 21 b. The tax credit shall be claimed by use of a tax credit 22 certificate as provided in subsection 7 . 23 Sec. 12. Section 422.11S, subsection 8, paragraph a, 24 subparagraph (2), Code 2021, is amended to read as follows: 25 (2) (a) “Total approved tax credits” means for the 2006 26 calendar year, two million five hundred thousand dollars, for 27 the 2007 calendar year, five million dollars, for calendar 28 years beginning on or after January 1, 2008, but before January 29 1, 2012, seven million five hundred thousand dollars, for 30 calendar years beginning on or after January 1, 2012, but 31 before January 1, 2014, eight million seven hundred fifty 32 thousand dollars, for calendar years beginning on or after 33 January 1, 2014, but before January 1, 2019, twelve million 34 dollars, and for calendar years beginning on or after January 35 -4- LSB 2827YC (18) 89 jm/jh 4/ 55
H.F. _____ 1, 2019, but before January 1, 2020, thirteen million dollars, 1 and for calendar years beginning on or after January 1, 2020, 2 but before January 1, 2022, fifteen million dollars , for 3 calendar years beginning on or after January 1, 2022, but 4 before January 1, 2023, sixteen million five hundred thousand 5 dollars, for calendar years beginning on or after January 1, 6 2023, but before January 1, 2024, eighteen million dollars, 7 for calendar years beginning on or after January 1, 2024, but 8 before January 1, 2025, nineteen million five hundred thousand 9 dollars, and for calendar years beginning on or after January 10 1, 2025, twenty million dollars . 11 (b) (i) During any calendar year beginning on or after 12 January 1, 2022, if the amount of awarded tax credits from the 13 preceding calendar year are equal to or greater than ninety 14 percent of the total approved tax credits for the current 15 calendar year, the total approved tax credits for the current 16 calendar year shall equal the product of ten percent multiplied 17 by the total approved tax credits for the current calendar year 18 plus the total approved tax credits for the current calendar 19 year. 20 (ii) If total approved tax credits are recomputed pursuant 21 to subparagraph subdivision (i), the total approved tax credits 22 shall equal the previous total approved tax credits recomputed 23 pursuant to subparagraph subdivision (i) for purposes of future 24 recomputations under subparagraph subdivision (i), provided 25 that the maximum total approved tax credits recomputed pursuant 26 to this subparagraph division (b) shall not exceed twenty 27 million dollars in a calendar year. 28 Sec. 13. RETROACTIVE APPLICABILITY. This division of this 29 Act applies retroactively to January 1, 2021, for tax years 30 beginning on or after that date. 31 DIVISION VI 32 TARGETED JOBS WITHHOLDING CREDIT 33 Sec. 14. Section 403.19A, subsection 3, paragraph c, 34 subparagraph (2), Code 2021, is amended to read as follows: 35 -5- LSB 2827YC (18) 89 jm/jh 5/ 55
H.F. _____ (2) The pilot project city and the economic development 1 authority shall not enter into a withholding agreement after 2 June 30, 2021 2026 . 3 DIVISION VII 4 ECONOMIC EMERGENCY FUND —— EXCESS MONEYS 5 Sec. 15. Section 8.55, subsection 2, Code 2021, is amended 6 by striking the subsection and inserting in lieu thereof the 7 following: 8 2. The maximum balance of the fund is the amount equal to 9 two and one-half percent of the adjusted revenue estimate for 10 the fiscal year. If the amount of moneys in the fund exceeds 11 the maximum balance, moneys in excess of the maximum balance 12 shall be distributed as follows: 13 a. An amount equal to not more than five percent of 14 the adjusted revenue estimate for the fiscal year shall be 15 transferred to the general fund of the state. 16 b. The remainder of the excess, if any, shall be transferred 17 to the taxpayer relief fund created in section 8.57E. 18 Sec. 16. EFFECTIVE DATE. This division of this Act takes 19 effect July 1, 2022. 20 DIVISION VIII 21 TAXPAYER RELIEF FUND —— TAX CREDIT 22 Sec. 17. Section 8.57E, subsection 2, Code 2021, is amended 23 to read as follows: 24 2. Moneys in the taxpayer relief fund shall only be used 25 pursuant to appropriations or transfers made by the general 26 assembly for tax relief , including but not limited to increases 27 in the general retirement income exclusion under section 422.7, 28 subsection 31 , or reductions in income tax rates . During 29 each fiscal year beginning on or after July 1, 2021, in which 30 the balance of the taxpayer relief fund equals or exceeds one 31 hundred twenty million dollars, there is transferred from the 32 taxpayer relief fund to the Iowa taxpayer relief tax credit 33 fund created in section 422.12O the entire balance of the 34 taxpayer relief fund to be used for the Iowa taxpayer relief 35 -6- LSB 2827YC (18) 89 jm/jh 6/ 55
H.F. _____ tax credit in accordance with section 422.12O, subsection 5. 1 Sec. 18. Section 257.21, subsection 2, Code 2021, is amended 2 to read as follows: 3 2. The instructional support income surtax shall be imposed 4 on the state individual income tax for the calendar year during 5 which the school’s budget year begins, or for a taxpayer’s 6 fiscal year ending during the second half of that calendar year 7 and after the date the board adopts a resolution to participate 8 in the program or the first half of the succeeding calendar 9 year, and shall be imposed on all individuals residing in the 10 school district on the last day of the applicable tax year. 11 As used in this section , “state individual income tax” means 12 the taxes computed under section 422.5 , less the amounts of 13 nonrefundable credits allowed under chapter 422, subchapter II , 14 except for the Iowa taxpayer relief tax credit allowed under 15 section 422.12O . 16 Sec. 19. NEW SECTION . 422.12O Iowa taxpayer relief tax 17 credit —— fund. 18 1. For purposes of this section, unless the context 19 otherwise requires: 20 a. “Eligible individual” means, with respect to a tax year, 21 an individual who makes and files an individual income tax 22 return pursuant to section 422.13. “Eligible individual” does 23 not include an estate or trust, or an individual for whom an 24 individual income tax return was not timely filed, including 25 extensions. 26 b. “Unclaimed tax credit” means, with respect to a tax 27 year, the aggregate amount by which the Iowa taxpayer relief 28 tax credits that were eligible to be claimed by eligible 29 individuals, if any, exceeds the Iowa taxpayer relief tax 30 credits actually claimed by eligible individuals, if any. 31 2. The taxes imposed under this subchapter, less the credits 32 allowed under this subchapter except the credits for withheld 33 tax and estimated tax paid in section 422.16, shall be reduced 34 by an Iowa taxpayer relief tax credit to an eligible individual 35 -7- LSB 2827YC (18) 89 jm/jh 7/ 55
H.F. _____ for the tax year beginning January 1 immediately preceding July 1 1 of any fiscal year during which a transfer, if any, is made 2 from the taxpayer relief fund in section 8.57E to the Iowa 3 taxpayer relief tax credit fund created in this section. 4 3. The credit shall be equal to the quotient of the amount 5 transferred to the Iowa taxpayer relief tax credit fund in 6 the applicable fiscal year, divided by the number of eligible 7 individuals for the tax year immediately preceding the tax year 8 for which the credit in this section is allowed, as determined 9 by the director of revenue in accordance with this section, 10 rounded down to the nearest whole dollar. The department of 11 revenue shall draft the income tax form for any tax year in 12 which a credit will be allowed under this section to provide 13 the information and space necessary for eligible individuals to 14 claim the credit. 15 4. Any credit in excess of the taxpayer’s liability for the 16 tax year is not refundable and shall not be credited to the tax 17 liability for any following year or carried back to a tax year 18 prior to the tax year in which the taxpayer claims the credit. 19 5. a. There is established within the state treasury 20 under the control of the department an Iowa taxpayer relief 21 tax credit fund consisting of any moneys transferred by the 22 general assembly by law from the taxpayer relief fund created 23 in section 8.57E for purposes of the credit provided in this 24 section. For the fiscal year beginning July 1, 2021, and for 25 each fiscal year thereafter, the department shall transfer from 26 the Iowa taxpayer relief tax credit fund to the general fund 27 of the state, the lesser of the balance of the Iowa taxpayer 28 relief tax credit fund or an amount equal to the Iowa taxpayer 29 relief tax credits claimed in that fiscal year, if any. Any 30 moneys in the Iowa taxpayer relief tax credit fund which 31 represent unclaimed tax credits shall immediately revert to 32 the taxpayer relief fund created in section 8.57E. Interest 33 or earnings on moneys in the Iowa taxpayer relief tax credit 34 fund shall be credited to the taxpayer relief fund created in 35 -8- LSB 2827YC (18) 89 jm/jh 8/ 55
H.F. _____ section 8.57E. 1 b. The moneys transferred to the general fund of the state 2 in accordance with this subsection shall not be considered new 3 revenues for purposes of the state general fund expenditure 4 limitation under section 8.54 but instead as replacement of 5 a like amount included in the expenditure limitation for the 6 fiscal year in which the transfer is made. 7 Sec. 20. Section 422D.2, Code 2021, is amended to read as 8 follows: 9 422D.2 Local income surtax. 10 A county may impose by ordinance a local income surtax as 11 provided in section 422D.1 at the rate set by the board of 12 supervisors, of up to one percent, on the state individual 13 income tax of each individual residing in the county at the 14 end of the individual’s applicable tax year. However, the 15 cumulative total of the percents of income surtax imposed on 16 any taxpayer in the county shall not exceed twenty percent. 17 The reason for imposing the surtax and the amount needed 18 shall be set out in the ordinance. The surtax rate shall be 19 set to raise only the amount needed. For purposes of this 20 section , “state individual income tax” means the tax computed 21 under section 422.5 , less the amounts of nonrefundable credits 22 allowed under chapter 422, subchapter II , except for the Iowa 23 taxpayer relief tax credit allowed under section 422.12O . 24 Sec. 21. EFFECTIVE DATE. This division of this Act, being 25 deemed of immediate importance, takes effect upon enactment. 26 Sec. 22. RETROACTIVE APPLICABILITY. This division of this 27 Act applies retroactively to January 1, 2021, for tax years 28 beginning on or after that date. 29 DIVISION IX 30 STATE INHERITANCE TAX 31 Sec. 23. Section 450.10, Code 2021, is amended by adding the 32 following new subsection: 33 NEW SUBSECTION . 7. a. In lieu of each rate of tax imposed 34 in subsections 1 through 4, for property passing from the 35 -9- LSB 2827YC (18) 89 jm/jh 9/ 55
H.F. _____ estate of a decedent dying on or after July 1, 2021, but before 1 July 1, 2022, there shall be imposed a rate of tax equal to 2 the applicable tax rate in subsections 1 through 4, reduced by 3 ten percent, and rounded to the nearest one-hundredth of one 4 percent. 5 b. In lieu of each rate of tax imposed in subsections 1 6 through 4, for property passing from the estate of a decedent 7 dying on or after July 1, 2022, but before July 1, 2023, there 8 shall be imposed a rate of tax equal to the applicable tax rate 9 in subsections 1 through 4, reduced by twenty percent, and 10 rounded to the nearest one-hundredth of one percent. 11 c. In lieu of each rate of tax imposed in subsections 1 12 through 4, for property passing from the estate of a decedent 13 dying on or after July 1, 2023, but before July 1, 2024, there 14 shall be imposed a rate of tax equal to the applicable tax rate 15 in subsections 1 through 4, reduced by thirty percent, and 16 rounded to the nearest one-hundredth of one percent. 17 d. In lieu of each rate of tax imposed in subsections 1 18 through 4, for property passing from the estate of a decedent 19 dying on or after July 1, 2024, but before July 1, 2025, there 20 shall be imposed a rate of tax equal to the applicable tax 21 rate in subsections 1 through 4, reduced by forty percent, and 22 rounded to the nearest one-hundredth of one percent. 23 e. In lieu of each rate of tax imposed in subsections 1 24 through 4, for property passing from the estate of a decedent 25 dying on or after July 1, 2025, but before July 1, 2026, there 26 shall be imposed a rate of tax equal to the applicable tax 27 rate in subsections 1 through 4, reduced by fifty percent, and 28 rounded to the nearest one-hundredth of one percent. 29 f. In lieu of each rate of tax imposed in subsections 1 30 through 4, for property passing from the estate of a decedent 31 dying on or after July 1, 2026, but before July 1, 2027, there 32 shall be imposed a rate of tax equal to the applicable tax 33 rate in subsections 1 through 4, reduced by sixty percent, and 34 rounded to the nearest one-hundredth of one percent. 35 -10- LSB 2827YC (18) 89 jm/jh 10/ 55
H.F. _____ g. In lieu of each rate of tax imposed in subsections 1 1 through 4, for property passing from the estate of a decedent 2 dying on or after July 1, 2027, but before July 1, 2028, there 3 shall be imposed a rate of tax equal to the applicable tax rate 4 in subsections 1 through 4, reduced by seventy percent, and 5 rounded to the nearest one-hundredth of one percent. 6 h. In lieu of each rate of tax imposed in subsections 1 7 through 4, for property passing from the estate of a decedent 8 dying on or after July 1, 2028, but before July 1, 2029, there 9 shall be imposed a rate of tax equal to the applicable tax rate 10 in subsections 1 through 4, reduced by eighty percent, and 11 rounded to the nearest one-hundredth of one percent. 12 i. In lieu of each rate of tax imposed in subsections 1 13 through 4, for property passing from the estate of a decedent 14 dying on or after July 1, 2029, but before July 1, 2030, there 15 shall be imposed a rate of tax equal to the applicable tax rate 16 in subsections 1 through 4, reduced by ninety percent, and 17 rounded to the nearest one-hundredth of one percent. 18 Sec. 24. NEW SECTION . 450.98 Tax repealed. 19 Effective July 1, 2030, this chapter shall not apply to 20 property of estates of decedents dying on or after July 1, 21 2030. The inheritance tax shall not be imposed under this 22 chapter in the event the decedent dies on or after July 1, 23 2030, and, to this extent, this chapter is repealed. 24 Sec. 25. NEW SECTION . 450B.8 Tax repealed. 25 Effective July 1, 2030, this chapter shall not apply to 26 property of estates of decedents dying on or after July 1, 27 2030. The qualified use inheritance tax shall not be imposed 28 under this chapter in the event the decedent dies on or after 29 July 1, 2030, and, to this extent, this chapter is repealed. 30 Sec. 26. CODE EDITOR DIRECTIVE. The Code editor is directed 31 to remove chapters 450 and 450B from the Code and correct 32 appropriate references to chapters 450 and 450B and appropriate 33 references to the inheritance tax and qualified use inheritance 34 tax effective July 1, 2040. 35 -11- LSB 2827YC (18) 89 jm/jh 11/ 55
H.F. _____ DIVISION X 1 HIGH QUALITY JOBS —— ELIGIBILITY REQUIREMENTS 2 Sec. 27. HIGH QUALITY JOBS —— REDUCTIONS IN OPERATIONS. 3 1. Notwithstanding section 15.329, subsection 1, paragraph 4 “b”, subparagraph (2), the economic development authority shall 5 not presume that a reduction in operations is a reduction in 6 operations while simultaneously applying for assistance with 7 regard to a business that submits an application on or before 8 June 30, 2022, if the business demonstrates to the satisfaction 9 of the authority all of the following: 10 a. That the reduction in operations occurred after March 1, 11 2020. 12 b. That the reduction in operations was caused by the 13 COVID-19 pandemic. 14 2. The economic development authority shall consider 15 whether the benefit of the project proposed by a business 16 under subsection 1 outweighs any negative impact related to 17 the business’s reduction in operations. The business shall 18 remain subject to all other eligibility requirements pursuant 19 to section 15.329. 20 3. This section is repealed July 1, 2022. 21 DIVISION XI 22 HOUSING TRUST FUND 23 Sec. 28. Section 428A.8, subsection 3, Code 2021, is amended 24 to read as follows: 25 3. Notwithstanding subsection 2 , the amount of money that 26 shall be transferred pursuant to this section to the housing 27 trust fund in any one fiscal year shall not exceed three seven 28 million dollars. Any money that otherwise would be transferred 29 pursuant to this section to the housing trust fund in excess 30 of that amount shall be deposited in the general fund of the 31 state. 32 DIVISION XII 33 HIGH QUALITY JOBS PROGRAM —— DAY CARE CENTERS 34 Sec. 29. Section 15.327, Code 2021, is amended by adding the 35 -12- LSB 2827YC (18) 89 jm/jh 12/ 55
H.F. _____ following new subsection: 1 NEW SUBSECTION . 016. “Licensed center” means the same as 2 defined in section 237A.1. 3 Sec. 30. Section 15.329, Code 2021, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 3A. In addition to the factors in 6 subsection 3, in determining the eligibility of a business to 7 participate in the program the authority may consider whether a 8 proposed project will provide a licensed center for use by the 9 business’s employees. 10 DIVISION XIII 11 WORKFORCE HOUSING TAX CREDITS 12 Sec. 31. Section 15.119, subsection 2, paragraph g, Code 13 2021, is amended to read as follows: 14 g. The workforce housing tax incentives program administered 15 pursuant to sections 15.351 through 15.356 . In allocating 16 tax credits pursuant to this subsection , the authority shall 17 not allocate more than twenty-five thirty million dollars for 18 purposes of this paragraph. Of the moneys allocated under this 19 paragraph, ten fifteen million dollars shall be reserved for 20 allocation to qualified housing projects in small cities, as 21 defined in section 15.352 , that are registered on or after July 22 1, 2017. 23 DIVISION XIV 24 DISASTER RECOVERY HOUSING ASSISTANCE PROGRAM AND FUND 25 Sec. 32. NEW SECTION . 16.57A Transfer of unobligated or 26 unencumbered funds —— report. 27 1. Notwithstanding any other provision of law to the 28 contrary, the authority may transfer any unobligated and 29 unencumbered moneys in any revolving loan program fund created 30 pursuant to section 16.46, 16.47, 16.48, or 16.49, for deposit 31 in the disaster recovery housing assistance fund created in 32 section 16.57B. 33 2. Notwithstanding section 8.39, and any other law to 34 the contrary, with the prior written consent and approval of 35 -13- LSB 2827YC (18) 89 jm/jh 13/ 55
H.F. _____ the governor, the executive director of the authority may 1 transfer any unobligated and unencumbered moneys in any fund 2 created pursuant to section 16.5, subsection 1, paragraph 3 “s” , for deposit in the disaster recovery housing assistance 4 fund created in section 16.57B. The prior written consent and 5 approval of the director of the department of management shall 6 not be required to transfer the unobligated and unencumbered 7 moneys. 8 3. Notwithstanding section 8.39, and any other law to the 9 contrary, with the prior written approval of the governor, the 10 director of the economic development authority may transfer 11 any unobligated and unencumbered moneys in any fund created 12 pursuant to section 15.106A, subsection 1, paragraph “o” , 13 for deposit in the disaster recovery housing assistance fund 14 created in section 16.57B. 15 4. Any transfer made under this section shall be reported in 16 the same manner as provided in section 8.39, subsection 5. 17 Sec. 33. NEW SECTION . 16.57B Disaster recovery housing 18 assistance program —— fund. 19 1. Definitions. As used in this section, unless the context 20 otherwise requires: 21 a. Disaster-affected home” means any of the following: 22 (1) A primary residence that is destroyed or damaged due 23 to a natural disaster that occurs on or after the effective 24 date of this division of this Act, and the primary residence is 25 located in a county that is the subject of a state of disaster 26 emergency proclamation by the governor that authorizes disaster 27 recovery housing assistance. 28 (2) A primary residence that is destroyed or damaged due to 29 a natural disaster that occurred on or after March 12, 2019, 30 but before the effective date of this division of this Act, and 31 is located in a county that has been declared a major disaster 32 by the president of the United States on or after March 12, 33 2019, but before the effective date of this division of this 34 Act, and is located in a county where individuals are eligible 35 -14- LSB 2827YC (18) 89 jm/jh 14/ 55
H.F. _____ for federal individual assistance. 1 b. “Fund” means the disaster recovery housing assistance 2 fund. 3 c. “Local program administrator” means any of the following: 4 (1) The cities of Ames, Cedar Falls, Cedar Rapids, Council 5 Bluffs, Davenport, Des Moines, Dubuque, Iowa City, Waterloo, 6 and West Des Moines. 7 (2) A council of governments whose territory includes at 8 least one county that is the subject of a state of disaster 9 emergency proclamation by the governor that authorizes disaster 10 recovery housing assistance or the eviction prevention program 11 under section 16.57C on or after the effective date of this 12 division of this Act. 13 (3) A community action agency as defined in section 216A.91 14 and whose territory includes at least one county that is the 15 subject of a state of disaster emergency proclamation by the 16 governor that authorizes disaster recovery housing assistance 17 or the eviction prevention program under section 16.57C on or 18 after the effective date of this division of this Act. 19 (4) A qualified local organization or governmental entity 20 as determined by rules adopted by the authority. 21 d. “Program” means the disaster recovery housing assistance 22 program. 23 e. “Replacement housing” means housing purchased 24 by a homeowner or leased by a renter needed to replace 25 a disaster-affected home that is destroyed or damaged 26 beyond reasonable repair as determined by a local program 27 administrator. 28 f. “State of disaster emergency” means the same as described 29 in section 29C.6, subsection 1. 30 2. Fund. 31 a. (1) A disaster recovery housing assistance fund is 32 created within the authority. The moneys in the fund shall be 33 used by the authority for the development and operation of a 34 forgivable loan and grant program for homeowners and renters 35 -15- LSB 2827YC (18) 89 jm/jh 15/ 55
H.F. _____ with disaster-affected homes, and for the eviction prevention 1 program pursuant to section 16.57C. 2 (2) Notwithstanding section 12C.7, subsection 2, interest 3 or earnings on moneys deposited in the fund shall be credited 4 to the fund. Notwithstanding section 8.33, moneys credited to 5 the fund shall not revert at the close of a fiscal year. 6 b. Moneys transferred by the authority for deposit in the 7 fund, moneys appropriated to the fund, and any other moneys 8 available to and obtained or accepted by the authority for 9 placement in the fund shall be deposited in the fund. 10 c. The authority shall not use more than five percent of 11 the moneys in the fund on July 1 of a fiscal year for purposes 12 of administrative costs and other program support during the 13 fiscal year. 14 3. Program. 15 a. The authority shall establish and administer a disaster 16 recovery housing assistance program and shall use moneys in 17 the fund to award forgivable loans to eligible homeowners and 18 grants to eligible renters of disaster-affected homes. Moneys 19 in the fund may be expended following a state of disaster 20 emergency proclamation by the governor pursuant to section 21 29C.6 that authorizes disaster recovery housing assistance. 22 b. The authority may enter into an agreement with one or 23 more local program administrators to administer the program. 24 4. Registration required. To be considered for a forgivable 25 loan or grant under the program, a homeowner or renter must 26 register for the disaster case management program established 27 pursuant to section 29C.20B. The disaster case manager may 28 refer the homeowner or renter to the appropriate local program 29 administrator. 30 5. Homeowners. 31 a. To be eligible for a forgivable loan under the program, 32 all of the following requirements shall apply: 33 (1) The homeowner’s disaster-affected home must have 34 sustained damage greater than the damage that is covered by the 35 -16- LSB 2827YC (18) 89 jm/jh 16/ 55
H.F. _____ homeowner’s property and casualty insurance policy insuring the 1 home plus any other state or federal disaster-related financial 2 assistance that the homeowner is eligible to receive. 3 (2) A local program administrator must either deem the 4 disaster-affected home suitable for rehabilitation or damaged 5 beyond reasonable repair. 6 (3) The disaster-affected home is not eligible for buyout by 7 the county or city where the disaster-affected home is located, 8 or the disaster-affected home is eligible for a buyout by the 9 county or city where the disaster-affected home is located, but 10 the homeowner is requesting a forgivable loan for the repair 11 or rehabilitation of the homeowner’s disaster-affected home in 12 lieu of a buyout. 13 (4) Assistance under the program must not duplicate 14 benefits provided by any local, state, or federal disaster 15 recovery assistance program. 16 b. If a homeowner is referred to the authority or to a 17 local program administrator by the disaster case manager of the 18 homeowner, the authority may award a forgivable loan to the 19 eligible homeowner for any of the following purposes: 20 (1) Repair or rehabilitation of the disaster-affected home. 21 (2) (a) Down payment assistance on the purchase of 22 replacement housing, and the cost of reasonable repairs to be 23 performed on the replacement housing to render the replacement 24 housing decent, safe, sanitary, and in good repair. 25 (b) Replacement housing shall not be located in a 26 one-hundred-year floodplain. 27 (c) For purposes of this subparagraph, “decent, safe, 28 sanitary, and in good repair” means the same as described in 24 29 C.F.R. §5.703. 30 c. The authority shall determine the interest rate for the 31 forgivable loan. 32 d. If a homeowner who has been awarded a forgivable loan 33 sells a disaster-affected home or replacement housing for which 34 the homeowner received the forgivable loan prior to the end 35 -17- LSB 2827YC (18) 89 jm/jh 17/ 55
H.F. _____ of the loan term, the remaining principal on the forgivable 1 loan shall be due and payable pursuant to rules adopted by the 2 authority. 3 6. Renters. 4 a. To be eligible for a grant under the program, all of the 5 following requirements shall apply: 6 (1) A local program administrator either deems 7 the disaster-affected home of the renter suitable for 8 rehabilitation but unsuitable for current short-term 9 habitation, or the disaster-affected home is damaged beyond 10 reasonable repair. 11 (2) Assistance under the program must not duplicate 12 benefits provided by any local, state, or federal disaster 13 recovery assistance program. 14 b. If a renter is referred to the authority or to a local 15 program administrator by the disaster case manager of the 16 renter, the authority may award a grant to the eligible renter 17 to provide short-term financial assistance for the payment of 18 rent for replacement housing. 19 7. Report. On or before January 31 of each year, the 20 authority shall submit a report to the general assembly 21 that identifies all of the following for the calendar year 22 immediately preceding the year of the report: 23 a. The date of each state of disaster emergency proclamation 24 by the governor that authorized disaster recovery housing 25 assistance under this section. 26 b. The total number of forgivable loans and grants awarded. 27 c. The total number of forgivable loans, and the amount of 28 each loan awarded for repair or rehabilitation. 29 d. The total number of forgivable loans, and the amount of 30 each loan, awarded for down payment assistance on the purchase 31 of replacement housing and the cost of reasonable repairs to be 32 performed on the replacement housing to render the replacement 33 housing decent, safe, sanitary, and in good repair. 34 e. The total number of grants, and the amount of each grant, 35 -18- LSB 2827YC (18) 89 jm/jh 18/ 55
H.F. _____ awarded for rental assistance. 1 f. The total number of forgivable loans and grants awarded 2 in each county in which at least one homeowner or renter has 3 been awarded a forgivable loan or grant. 4 g. Each local program administrator involved in the 5 administration of the program. 6 h. The total amount of forgivable loan principal repaid. 7 Sec. 34. NEW SECTION . 16.57C Eviction prevention program. 8 1. a. “Eligible renter” means a renter whose income meets 9 the qualifications of the program, who is at risk of eviction, 10 and who resides in a county that is the subject of a state of 11 disaster emergency proclamation by the governor that authorizes 12 the eviction prevention program. 13 b. “Eviction prevention partner” means a qualified local 14 organization or governmental entity as determined by rule by 15 the authority. 16 2. The authority shall establish and administer an eviction 17 prevention program. Under the eviction prevention program, 18 the authority shall award grants to eligible renters and to 19 eviction prevention partners for purposes of this section. 20 Grants may be awarded upon a state of disaster emergency 21 proclamation by the governor that authorizes the eviction 22 prevention program. Eviction prevention assistance shall be 23 paid out of the fund established in section 16.57B. 24 3. a. Grants awarded to eligible renters pursuant to this 25 section shall be used for short-term financial rent assistance 26 to keep eligible renters in the current residences of such 27 renters. 28 b. Grants awarded to eviction prevention partners pursuant 29 to this section shall be used to pay for rent or services 30 provided to eligible renters for the purpose of preventing the 31 eviction of eligible renters. 32 4. The authority may enter into an agreement with one or 33 more local program administrators to administer the program. 34 Sec. 35. NEW SECTION . 16.57D Rules. 35 -19- LSB 2827YC (18) 89 jm/jh 19/ 55
H.F. _____ The authority shall adopt rules pursuant to chapter 17A to 1 implement and administer this part, including rules to do all 2 of the following: 3 1. Establish the maximum forgivable loan and grant amounts 4 awarded under the program. 5 2. Establish the terms of any forgivable loan provided under 6 the program. 7 3. Income qualifications of eligible renters in the 8 eviction prevention program. 9 Sec. 36. CODE EDITOR DIRECTIVE. The Code editor shall 10 designate sections 16.57A through 16.57D, as enacted by 11 this division of this Act, as a new part within chapter 16, 12 subchapter VIII, and may redesignate the new and preexisting 13 parts, replace references to sections 16.57A through 16.57D 14 with references to the new part, and correct internal 15 references as necessary, including references in subchapter or 16 part headnotes. 17 Sec. 37. EFFECTIVE DATE. This division of this Act, being 18 deemed of immediate importance, takes effect upon enactment. 19 DIVISION XV 20 BROWNFIELDS AND GRAYFIELDS 21 Sec. 38. Section 15.119, subsection 3, Code 2021, is amended 22 to read as follows: 23 3. In allocating the amount of tax credits authorized 24 pursuant to subsection 1 among the programs specified in 25 subsection 2 , the authority shall not allocate more than ten 26 fifteen million dollars for purposes of subsection 2 , paragraph 27 “f” . 28 Sec. 39. Section 15.291, subsection 2, Code 2021, is amended 29 to read as follows: 30 2. “Brownfield site” means an abandoned, idled, or 31 underutilized industrial or commercial facility where 32 expansion or redevelopment is complicated by real or perceived 33 environmental contamination. A brownfield site includes 34 property contiguous with the property on which the individual 35 -20- LSB 2827YC (18) 89 jm/jh 20/ 55
H.F. _____ or commercial facility is located. A brownfield site does 1 not include property which has been placed, or is proposed 2 for placement, on the national priorities list established 3 pursuant to the federal Comprehensive Environmental Response, 4 Compensation, and Liability Act, 42 U.S.C. §9601 et seq. 5 Sec. 40. Section 15.293A, subsection 8, Code 2021, is 6 amended to read as follows: 7 8. This section is repealed on June 30, 2021 2031 . 8 Sec. 41. Section 15.293B, Code 2021, is amended by adding 9 the following new subsection: 10 NEW SUBSECTION . 5A. a. Tax credits revoked under 11 subsection 3 including tax credits revoked up to five years 12 prior to the effective date of this division of this Act, and 13 tax credits not awarded under subsection 4 or 5, may be awarded 14 in the next annual application period established in subsection 15 1, paragraph “c” . 16 b. Tax credits awarded pursuant to paragraph “a” shall not 17 be counted against the limit under section 15.119, subsection 18 3. 19 Sec. 42. Section 15.293B, subsection 7, Code 2021, is 20 amended to read as follows: 21 7. This section is repealed on June 30, 2021 2031 . 22 Sec. 43. Section 15.352, subsection 1, Code 2021, is amended 23 to read as follows: 24 1. “Brownfield site” means an abandoned, idled, or 25 underutilized property where expansion or redevelopment is 26 complicated by real or perceived environmental contamination. 27 A brownfield site includes property contiguous with the site 28 on which the property is located. A brownfield site does 29 not include property which has been placed, or is proposed 30 for placement, on the national priorities list established 31 pursuant to the federal Comprehensive Environmental Response, 32 Compensation, and Liability Act, 42 U.S.C. §9601 et seq. 33 Sec. 44. EFFECTIVE DATE. The following, being deemed of 34 immediate importance, take effect upon enactment: 35 -21- LSB 2827YC (18) 89 jm/jh 21/ 55
H.F. _____ 1. The section of this division of this Act amending section 1 15.293A, subsection 8. 2 2. The section of this division of this Act amending section 3 15.293B, subsection 7. 4 DIVISION XVI 5 HIGH QUALITY JOBS AND RENEWABLE CHEMICAL PRODUCTION TAX CREDITS 6 Sec. 45. Section 15.119, subsection 2, paragraph a, 7 subparagraphs (2) and (3), Code 2021, are amended to read as 8 follows: 9 (2) In allocating tax credits pursuant to this subsection 10 for each fiscal year of the fiscal period beginning July 1, 11 2016, and ending June 30, 2021 the fiscal year beginning July 12 1, 2021, and for each fiscal year thereafter , the authority 13 shall not allocate more than one hundred five seventy million 14 dollars for purposes of this paragraph. This subparagraph (2) 15 is repealed July 1, 2021. 16 (3) (a) In allocating tax credits pursuant to this 17 subsection for the fiscal year beginning July 1, 2021, and 18 ending June 30, 2022, the authority shall not allocate more 19 than one hundred five million dollars for purposes of this 20 paragraph if the aggregate amount of renewable chemical 21 production tax credits under section 15.319 that were awarded 22 on or after July 1, 2018, but before July 1, 2021, equals or 23 exceeds twenty-seven million dollars. 24 (b) As soon as practicable after June 30, 2021, the 25 authority shall notify the general assembly of the aggregate 26 amount of renewable chemical production tax credits awarded 27 under section 15.319 on or after July 1, 2018, but before 28 July 1, 2021, and whether or not the tax credit allocation 29 limitation described in subparagraph division (a) is 30 applicable. 31 (c) This subparagraph (3) is repealed July 1, 2022. 32 DIVISION XVII 33 BONUS DEPRECIATION 34 Sec. 46. Section 422.7, subsection 39A, Code 2021, is 35 -22- LSB 2827YC (18) 89 jm/jh 22/ 55
H.F. _____ amended by striking the subsection. 1 Sec. 47. Section 422.35, subsection 19A, Code 2021, is 2 amended by striking the subsection. 3 Sec. 48. RETROACTIVE APPLICABILITY. This division of this 4 Act applies retroactively to January 1, 2021, for tax years 5 beginning on or after that date, and for qualified property 6 placed in service on or after that date. 7 DIVISION XVIII 8 ENERGY INFRASTRUCTURE REVOLVING LOAN PROGRAM 9 Sec. 49. Section 476.10A, subsection 2, Code 2021, is 10 amended to read as follows: 11 2. Notwithstanding section 8.33 , any unexpended moneys 12 remitted to the treasurer of state under this section shall be 13 retained for the purposes designated. Notwithstanding section 14 12C.7, subsection 2 , interest or earnings on investments or 15 time deposits of the moneys remitted under this section shall 16 be retained and used for the purposes designated, pursuant to 17 section 476.46 . 18 Sec. 50. Section 476.46, subsection 2, paragraph e, 19 subparagraph (3), Code 2021, is amended to read as follows: 20 (3) Interest on the fund shall be deposited in the fund. 21 A portion of the interest on the fund, not to exceed fifty 22 percent of the total interest accrued, shall be used for 23 promotion and administration of the fund. 24 Sec. 51. Section 476.46, Code 2021, is amended by adding the 25 following new subsections: 26 NEW SUBSECTION . 3. The Iowa energy center shall not 27 initiate any new loans under this section after June 30, 2021. 28 NEW SUBSECTION . 4. Loan payments received under this 29 section on or after July 1, 2021, and any other moneys in the 30 fund on or after July 1, 2021, shall be deposited in the energy 31 infrastructure revolving loan fund created in section 476.46A. 32 Sec. 52. NEW SECTION . 476.46A Energy infrastructure 33 revolving loan program. 34 1. a. An energy infrastructure revolving loan fund is 35 -23- LSB 2827YC (18) 89 jm/jh 23/ 55
H.F. _____ created in the office of the treasurer of state and shall be 1 administered by the Iowa energy center established in section 2 15.120. 3 b. The fund may be administered as a revolving fund and may 4 consist of any moneys appropriated by the general assembly for 5 purposes of this section and any other moneys that are lawfully 6 directed to the fund. 7 c. Moneys in the fund shall be used to provide financial 8 assistance for the development and construction of energy 9 infrastructure, including projects that support electric or gas 10 generation transmission, storage, or distribution; electric 11 grid modernization; energy-sector workforce development; 12 emergency preparedness for rural and underserved areas; the 13 expansion of biomass, biogas, and renewable natural gas; 14 innovative technologies; and the development of infrastructure 15 for alternative fuel vehicles. 16 d. Notwithstanding section 8.33, moneys appropriated in this 17 section that remain unencumbered or unobligated at the close of 18 the fiscal year shall not revert but shall remain available for 19 expenditure for the purposes designated until the close of the 20 succeeding fiscal year. 21 e. Notwithstanding section 12C.7, subsection 2, interest 22 or earnings on moneys in the fund shall be credited to the 23 fund. A percentage of the total interest credited to the fund, 24 not to exceed fifty percent, shall be used for promotion of 25 the energy infrastructure revolving loan program and for the 26 administration of the fund. 27 2. a. The Iowa energy center shall establish and administer 28 an energy infrastructure revolving loan program to encourage 29 the development of energy infrastructure within the state. 30 b. An individual, business, rural electric cooperative, or 31 municipal utility located and operating in this state shall be 32 eligible for financial assistance under the program. With the 33 approval of the Iowa energy center governing board established 34 under section 15.120, subsection 2, the economic development 35 -24- LSB 2827YC (18) 89 jm/jh 24/ 55
H.F. _____ authority shall determine the amount and the terms of all 1 financial assistance awarded to an individual, business, rural 2 electric cooperative, or municipal utility under the program. 3 All agreements and administrative authority sha11 be vested in 4 the Iowa energy center governing board. 5 c. The economic development authority may use not more than 6 five percent of the moneys in the fund at the beginning of each 7 fiscal year for purposes of administrative costs, marketing, 8 technical assistance, and other program support. 9 3. For the purposes of this section: 10 a. “Energy infrastructure” means land, buildings, physical 11 plant and equipment, and services directly related to the 12 development of projects used for, or useful for, electricity or 13 gas generation, transmission, storage, or distribution. 14 b. “Financial assistance” means the same as defined in 15 section 15.102. 16 Sec. 53. ALTERNATE ENERGY REVOLVING LOAN FUND —— MONEYS 17 TRANSFERRED AND APPROPRIATED. Any unencumbered or unobligated 18 moneys remaining after June 30, 2021, in the alternate energy 19 revolving loan fund created pursuant to section 476.46, are 20 transferred and appropriated to the energy infrastructure 21 revolving loan fund created pursuant to section 476.46A, to be 22 used for purposes of the energy infrastructure revolving loan 23 program. 24 DIVISION XIX 25 INVESTMENTS IN QUALIFYING BUSINESSES AND EQUITY INVESTMENTS IN 26 INNOVATION FUNDS 27 Sec. 54. Section 15.119, subsection 2, paragraph d, Code 28 2021, is amended to read as follows: 29 d. (1) The tax credits for investments in qualifying 30 businesses issued pursuant to section 15E.43 and for equity 31 investments in an innovation fund pursuant to section 15E.52 . 32 In allocating tax credits pursuant to this subsection , the 33 authority shall allocate two an aggregate of ten million 34 dollars for purposes of this paragraph subparagraph , unless the 35 -25- LSB 2827YC (18) 89 jm/jh 25/ 55
H.F. _____ authority determines that the tax credits awarded will be less 1 than that amount. 2 (2) On or before June 30 of each fiscal year the authority 3 shall determine the amount of tax credits to be allocated 4 for the next fiscal year beginning July 1 to investments 5 in qualifying businesses and to equity investments in an 6 innovation fund under subparagraph (1). Any tax credits 7 allocated for purposes of subparagraph (1) and not awarded 8 in that fiscal year shall be reallocated to a purpose under 9 subparagraph (1) for the next fiscal year and shall not be 10 counted against the aggregate maximum of ten million dollars. 11 Sec. 55. Section 15.119, subsection 2, paragraph e, Code 12 2021, is amended by striking the paragraph. 13 Sec. 56. Section 15E.43, subsection 2, paragraphs b and c, 14 Code 2021, are amended to read as follows: 15 b. The maximum amount of a tax credit that may be issued 16 per calendar fiscal year to a natural person and the person’s 17 spouse or dependent shall not exceed one hundred thousand 18 dollars combined. For purposes of this paragraph, a tax 19 credit issued to a partnership, limited liability company, S 20 corporation, estate, or trust electing to have income taxed 21 directly to the individual shall be deemed to be issued to 22 the individual owners based upon the pro rata share of the 23 individual’s earnings from the entity. For purposes of this 24 paragraph, “dependent” has the same meaning as provided by the 25 Internal Revenue Code. 26 c. The maximum amount of tax credits that may be issued 27 per calendar fiscal year for equity investments in any one 28 qualifying business shall not exceed five hundred thousand 29 dollars. 30 Sec. 57. APPLICABILITY. The following applies to tax 31 credits allocated on or after the fiscal year beginning July 1, 32 2021, and for each fiscal year thereafter: 33 The section of this division of this Act amending section 34 15.119, subsection 2, paragraph “d”. 35 -26- LSB 2827YC (18) 89 jm/jh 26/ 55
H.F. _____ Sec. 58. EFFECTIVE DATE. This division of this Act, being 1 deemed of immediate importance, takes effect upon enactment. 2 DIVISION XX 3 RURAL ECONOMIC DEVELOPMENT 4 Sec. 59. Section 15.327, Code 2021, is amended by adding the 5 following new subsection: 6 NEW SUBSECTION . 27. “Rural community” means any city 7 located in this state with a population of thirty thousand 8 or less in a county with a population of fifty thousand or 9 less. A rural community located in more than one county shall 10 be considered to be located in the county having the greatest 11 taxable base within the city. 12 Sec. 60. Section 15.335A, subsection 1, unnumbered 13 paragraph 1, Code 2021, is amended to read as follows: 14 Tax incentives are available to eligible businesses as 15 provided in this section subsection and subsection 1A . The 16 incentives are based upon the number of jobs created or 17 retained that pay at least one hundred twenty percent of the 18 qualifying wage threshold and the amount of the qualifying 19 investment made according to the following schedule: 20 Sec. 61. Section 15.335A, Code 2021, is amended by adding 21 the following new subsection: 22 NEW SUBSECTION . 1A. Tax incentives are available to 23 eligible businesses located in rural communities as provided 24 in this subsection. The incentives are based upon the number 25 of jobs created or retained that pay at least one hundred ten 26 percent of the qualifying wage threshold and the amount of the 27 qualifying investment made according to the following schedule: 28 a. The number of jobs is zero and economic activity is 29 furthered by the qualifying investment and the amount of the 30 qualifying investment is one of the following: 31 (1) Less than fifty thousand dollars, then the tax incentive 32 is the investment tax credit of up to two percent. 33 (2) At least fifty thousand dollars but less than two 34 hundred fifty thousand dollars, then the tax incentives are the 35 -27- LSB 2827YC (18) 89 jm/jh 27/ 55
H.F. _____ investment tax credit of up to two percent and the sales tax 1 refund. 2 (3) At least two hundred fifty thousand dollars, then the 3 tax incentives are the investment tax credit of up to two 4 percent, the sales tax refund, and the additional research and 5 development tax credit. 6 b. The number of jobs is one but not more than five and the 7 amount of the qualifying investment is one of the following: 8 (1) Less than fifty thousand dollars, then the tax incentive 9 is the investment tax credit of up to three percent. 10 (2) At least fifty thousand dollars but less than two 11 hundred fifty thousand dollars, then the tax incentives are the 12 investment tax credit of up to three percent and the sales tax 13 refund. 14 (3) At least two hundred fifty thousand dollars, then the 15 tax incentives are the investment tax credit of up to three 16 percent, the sales tax refund, and the additional research and 17 development tax credit. 18 c. The number of jobs is six but not more than ten and the 19 amount of the qualifying investment is one of the following: 20 (1) Less than fifty thousand dollars, then the tax incentive 21 is the investment tax credit of up to four percent. 22 (2) At least fifty thousand dollars but less than two 23 hundred fifty thousand dollars, then the tax incentives are the 24 investment tax credit of up to four percent and the sales tax 25 refund. 26 (3) At least two hundred fifty thousand dollars, then the 27 tax incentives are the investment tax credit of up to four 28 percent, the sales tax refund, and the additional research and 29 development tax credit. 30 d. The number of jobs is eleven but not more than fifteen 31 and the amount of the qualifying investment is one of the 32 following: 33 (1) Less than fifty thousand dollars, then the tax incentive 34 is the investment tax credit of up to five percent. 35 -28- LSB 2827YC (18) 89 jm/jh 28/ 55
H.F. _____ (2) At least fifty thousand dollars but less than two 1 hundred fifty thousand dollars, then the tax incentives are the 2 investment tax credit of up to five percent and the sales tax 3 refund. 4 (3) At least two hundred fifty thousand dollars, then the 5 tax incentives are the investment tax credit of up to five 6 percent, the sales tax refund, and the additional research and 7 development tax credit. 8 e. The number of jobs is sixteen or more and the amount of 9 the qualifying investment is one of the following: 10 (1) Less than fifty thousand dollars, then the tax incentive 11 is the investment tax credit of up to six percent. 12 (2) At least fifty thousand dollars but less than two 13 hundred fifty thousand dollars, then the tax incentives are the 14 investment tax credit of up to six percent and the sales tax 15 refund. 16 (3) At least two hundred fifty thousand dollars, then the 17 tax incentives are the investment tax credit of up to six 18 percent, the sales tax refund, and the additional research and 19 development tax credit. 20 f. The number of jobs is thirty-one but not more than forty 21 and the amount of the qualifying investment is at least five 22 million dollars, then the tax incentives are the local property 23 tax exemption, the investment tax credit of up to seven 24 percent, the sales tax refund, and the additional research and 25 development tax credit. 26 g. The number of jobs is forty-one but not more than sixty 27 and the amount of the qualifying investment is at least five 28 million dollars, then the tax incentives are the local property 29 tax exemption, the investment tax credit of up to eight 30 percent, the sales tax refund, and the additional research and 31 development tax credit. 32 h. The number of jobs is sixty-one but not more than 33 eighty and the amount of the qualifying investment is at least 34 five million dollars, then the tax incentives are the local 35 -29- LSB 2827YC (18) 89 jm/jh 29/ 55
H.F. _____ property tax exemption, the investment tax credit of up to nine 1 percent, the sales tax refund, and the additional research and 2 development tax credit. 3 i. The number of jobs is eighty-one but not more than one 4 hundred and the amount of the qualifying investment is at least 5 five million dollars, then the tax incentives are the local 6 property tax exemption, the investment tax credit of up to ten 7 percent, the sales tax refund, and the additional research and 8 development tax credit. 9 j. The number of jobs is at least one hundred one and the 10 amount of the qualifying investment is at least ten million 11 dollars, then the tax incentives are the local property 12 tax exemption, the investment tax credit of up to eleven 13 percent, the sales tax refund, and the additional research and 14 development tax credit. 15 Sec. 62. Section 15.335B, subsection 3, paragraph c, Code 16 2021, is amended to read as follows: 17 c. (1) Consider the amount and type of the local community 18 match . The as follows: 19 (a) In a community with a population of less than five 20 thousand, a community match shall not be required. 21 (b) In a community with a population equal to or greater 22 than five thousand, but less than fifteen thousand, a community 23 match of at least five percent of the projected funds to be 24 expended by the eligible business shall be required. 25 (c) In a community with a population equal to or greater 26 than fifteen thousand, but less than thirty thousand, a 27 community match of at least ten percent of the projected funds 28 to be expended by the eligible business shall be required. 29 (d) In a community with a population equal to or greater 30 than thirty thousand, a community match of at least twenty 31 percent of the projected funds to be expended by the eligible 32 business shall be required. 33 (2) Notwithstanding subparagraph (1), the authority may 34 provide assistance to an early-stage business in a high-growth 35 -30- LSB 2827YC (18) 89 jm/jh 30/ 55
H.F. _____ industry regardless of the amount of local match involved. 1 Sec. 63. NEW SECTION . 15.337A Rules. 2 The authority shall adopt rules pursuant to chapter 17A to 3 administer this part. 4 Sec. 64. EFFECTIVE DATE. This division of this Act, being 5 deemed of immediate importance, takes effect upon enactment. 6 DIVISION XXI 7 TELEHEALTH —— MENTAL HEALTH PARITY 8 Sec. 65. Section 514C.34, subsection 1, Code 2021, is 9 amended by adding the following new paragraphs: 10 NEW PARAGRAPH . 0a. “Covered person” means the same as 11 defined in section 514J.102. 12 NEW PARAGRAPH . 00a. “Facility” means the same as defined in 13 section 514J.102. 14 NEW PARAGRAPH . 0c. “Health carrier” means the same as 15 defined in section 514J.102. 16 Sec. 66. Section 514C.34, subsection 1, paragraph c, Code 17 2021, is amended to read as follows: 18 c. “Telehealth” means the delivery of health care services 19 through the use of real-time interactive audio and video , or 20 other real-time interactive electronic media, regardless of 21 where the health care professional and the covered person are 22 each located . “Telehealth” does not include the delivery of 23 health care services delivered solely through an audio-only 24 telephone, electronic mail message, or facsimile transmission. 25 Sec. 67. Section 514C.34, Code 2021, is amended by adding 26 the following new subsection: 27 NEW SUBSECTION . 3A. a. A health carrier shall reimburse 28 a health care professional and a facility for health care 29 services provided by telehealth to a covered person for a 30 mental health condition, illness, injury, or disease on the 31 same basis and at the same rate as the health carrier would 32 apply to the same health care services for a mental health 33 condition, illness, injury, or disease provided in person to a 34 covered person by the health care professional or the facility. 35 -31- LSB 2827YC (18) 89 jm/jh 31/ 55
H.F. _____ b. As a condition of reimbursement pursuant to paragraph 1 “a” , a health carrier shall not require that an additional 2 health care professional be located in the same room as a 3 covered person while health care services for a mental health 4 condition, illness, injury, or disease are provided via 5 telehealth by another health care professional to the covered 6 person. 7 Sec. 68. EFFECTIVE DATE. This division of this Act, being 8 deemed of immediate importance, takes effect upon enactment. 9 Sec. 69. RETROACTIVE APPLICABILITY. This division of 10 this Act applies to health care services for a mental health 11 condition, illness, injury, or disease provided by a health 12 care professional or a facility to a covered person by 13 telehealth on or after January 1, 2021. 14 DIVISION XXII 15 SEPTIC TANKS 16 Sec. 70. Section 331.301, Code 2021, is amended by adding 17 the following new subsection: 18 NEW SUBSECTION . 18. A county shall not require the payment 19 of a penalty, fine, or fee due to a resident’s noncompliance 20 with rules adopted by the county sanitarian regarding periodic 21 septic tank pumping as part of routine maintenance. 22 DIVISION XXIII 23 EMERGENCY VOLUNTEER —— TAX CREDIT 24 Sec. 71. Section 422.12, subsection 2, paragraph c, 25 subparagraph (1), Code 2021, is amended to read as follows: 26 (1) A volunteer fire fighter and volunteer emergency 27 medical services personnel member credit equal to one two 28 hundred fifty dollars to compensate the taxpayer for the 29 voluntary services if the volunteer served for the entire 30 tax year. A taxpayer who is a paid employee of an emergency 31 medical services program or a fire department and who is also 32 a volunteer emergency medical services personnel member or 33 volunteer fire fighter in a city, county, or area governed 34 by an agreement pursuant to chapter 28E where the emergency 35 -32- LSB 2827YC (18) 89 jm/jh 32/ 55
H.F. _____ medical services program or fire department performs services, 1 shall qualify for the credit provided under this paragraph “c” . 2 Sec. 72. Section 422.12, subsection 2, paragraph d, 3 subparagraph (1), Code 2021, is amended to read as follows: 4 (1) A reserve peace officer credit equal to one two hundred 5 fifty dollars to compensate the taxpayer for services as a 6 reserve peace officer if the reserve peace officer served for 7 the entire tax year. 8 Sec. 73. RETROACTIVE APPLICABILITY. This division of this 9 Act applies retroactively to January 1, 2021, for tax years 10 beginning on or after that date. 11 DIVISION XXIV 12 FOOD BANKS 13 Sec. 74. Section 423.3, Code 2021, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 107. The sales price from the sale or 16 rental of tangible personal property or specified digital 17 products, or services furnished, to a nonprofit food bank, 18 which tangible personal property, specified digital products, 19 or services are to be used by the nonprofit food bank for a 20 charitable purpose. For purposes of this subsection, “nonprofit 21 food bank” means an organization organized under chapter 504 22 and qualifying under section 501(c)(3) of the Internal Revenue 23 Code as an organization exempt from federal income tax under 24 section 501(a) of the Internal Revenue Code that maintains 25 an established operation involving the provision of food or 26 edible commodities or the products thereof on a regular basis 27 to persons in need with distribution through food pantries, 28 soup kitchens, hunger relief centers, or other food or feeding 29 centers that, as an integral part of their normal activities, 30 provide meals or food on a regular basis to persons in need. 31 DIVISION XXV 32 SPECIFIED DIGITAL PRODUCTS SALES AND USE TAX EXEMPTION —— 33 MUNICIPAL UTILITIES AND RURAL ELECTRIC COOPERATIVES 34 Sec. 75. Section 423.3, subsection 31, paragraph a, Code 35 -33- LSB 2827YC (18) 89 jm/jh 33/ 55
H.F. _____ 2021, is amended to read as follows: 1 a. The sales price of tangible personal property or 2 specified digital products sold to, or of services furnished, 3 and used by or in connection with the operation of any 4 municipally owned public utility engaged in selling gas, 5 electricity, heat, pay television service, or communication 6 service to the general public. 7 Sec. 76. Section 423.3, Code 2021, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 47B. The sales price from the sale of 10 specified digital products sold to and used in connection with 11 the operation of a rural electric cooperative. 12 DIVISION XXVI 13 CONSUMER LOANS 14 Sec. 77. Section 537.2401, subsection 1, Code 2021, is 15 amended to read as follows: 16 1. Except as provided with respect to a finance charge for 17 loans pursuant to open-end credit under section 537.2402 and 18 loans secured by a certificate of title of a motor vehicle 19 under section 537.2403 , a lender may contract for and receive 20 a finance charge not exceeding the maximum charge permitted 21 by the laws of this state or of the United States for similar 22 lenders, and, in addition, with respect to a consumer loan, 23 a supervised financial organization or a mortgage lender may 24 contract for and receive a finance charge, calculated according 25 to the actuarial method, not exceeding twenty-one percent 26 the rate authorized under the federal Military Lending Act, 27 10 U.S.C. §987(b), per year on the unpaid balance of the 28 amount financed. Except as provided in section 537.2403 , this 29 subsection does not prohibit a lender from contracting for and 30 receiving a finance charge exceeding twenty-one percent the 31 rate authorized under the federal Military Lending Act, 10 32 U.S.C. §987(b), per year on the unpaid balance of the amount 33 financed on consumer loans if authorized by other provisions 34 of the law. 35 -34- LSB 2827YC (18) 89 jm/jh 34/ 55
H.F. _____ DIVISION XXVII 1 INDIVIDUAL INCOME TAX —— CHECKOFFS 2 Sec. 78. Section 422.12E, subsection 1, Code 2021, is 3 amended to read as follows: 4 1. There shall be allowed no more than four income tax 5 return checkoffs on each income tax return. For tax years 6 beginning on or after January 1, 2017 2024 , when the same four 7 income tax return checkoffs have been provided on the income 8 tax return for two consecutive tax years, the two checkoffs for 9 which the least amount has been contributed, in the aggregate 10 for the first tax year and through March 15 after the end of the 11 second tax year, are repealed on December 31 after the end of 12 the second tax year and shall be removed from the return form. 13 Sec. 79. CHECKOFFS —— REPEAL —— APPLICABILITY. The 14 checkoffs receiving the least amount of contributions for tax 15 years 2019 and 2020 shall not be repealed on December 31, 16 2021. The individual income tax return shall contain the 17 same four income tax return checkoffs that were on the 2020 18 individual income tax return form until such time the two-year 19 contribution calculation for inclusion on the individual income 20 tax form is made pursuant to section 422.12E, subsection 1, as 21 amended by this division of this Act. 22 EXPLANATION 23 The inclusion of this explanation does not constitute agreement with 24 the explanation’s substance by the members of the general assembly. 25 This bill relates to state taxation matters and economic 26 development activities, including future tax contingencies, 27 state income tax deductions, tax credits, the state inheritance 28 tax, the sales and use tax, disaster recovery housing, energy 29 infrastructure, telehealth parity, local regulations, and other 30 properly related matters. The bill is divided into divisions. 31 DIVISION I —— FUTURE TAX CHANGES. The bill amends 2018 Iowa 32 Acts, chapter 1161, section 133 (trigger), by striking the two 33 conditions necessary for the trigger to occur, and specifies 34 the provisions in 2018 Iowa Acts, chapter 1161, sections 35 -35- LSB 2827YC (18) 89 jm/jh 35/ 55
H.F. _____ 99-132, take effect January 1, 2023. 1 Currently, the two conditions are necessary for the trigger 2 to occur include net general fund revenues for the fiscal year 3 ending June 30, 2022, equaling or exceeding $8.3146 billion, 4 and also equaling or exceeding 104 percent of the net general 5 fund revenues for the fiscal year ending June 30, 2021. If 6 these two conditions are not satisfied, current law institutes 7 the changes for tax years beginning on or after the January 1 8 following the first fiscal year for which the two conditions 9 do occur. By striking the “trigger”, the bill sets in motion 10 numerous tax changes for tax years beginning on or after 11 January 1, 2023, described below. 12 INDIVIDUAL INCOME TAX. The tax changes include reducing the 13 number of individual income tax brackets from nine to four, and 14 modifying the taxable income amounts and tax rates as follows: 15 Income over: But not over: Tax Rate: 16 1) $0 $6,000 4.40% 17 2) $6,000 $30,000 4.82% 18 3) $30,000 $75,000 5.70% 19 4) $75,000 6.50% 20 For a married couple filing a joint return, the taxable 21 income amounts in each bracket above are doubled. Also, the 22 taxable income amounts in each bracket above will be indexed to 23 inflation and increased in future tax years, beginning in the 24 tax year following the 2023 tax year. 25 INDIVIDUAL INCOME TAX CALCULATION. Under current law, the 26 starting point for computing the Iowa individual income tax is 27 federal adjusted gross income before the net operating loss 28 deduction, which is generally a taxpayer’s gross income minus 29 several deductions. From that point, Iowa requires several 30 adjustments and then provides taxpayers with a deduction 31 for federal income taxes paid, and the option to deduct a 32 standard deduction or itemized deductions. The bill changes 33 the starting point for computing the individual income tax 34 to federal taxable income, which includes all deductions and 35 -36- LSB 2827YC (18) 89 jm/jh 36/ 55
H.F. _____ adjustments taken at the federal level in computing tax, 1 including a standard deduction or itemized deductions, and the 2 qualified business income deduction allowed for certain income 3 earned from a pass-through entity. Because the starting point 4 changes to federal taxable income, and federal law does not 5 provide for the filing status of married filing separately 6 on a combined return, the bill repeals that filing status 7 option for Iowa tax purposes. Because net operating loss is 8 no longer calculated at the state level, the bill requires a 9 taxpayer to add back any federal net operating loss deduction 10 carried over from a taxable year beginning prior to the 2023 11 tax year, but allows taxpayers to deduct any remaining Iowa net 12 operating loss from a prior taxable year. The bill repeals the 13 individual alternative minimum tax (AMT), allows an individual 14 to claim any remaining AMT credit against the individual’s 15 regular tax liability for the 2023 tax year, and then repeals 16 the AMT credit in the tax year following the 2023 tax year. 17 The bill repeals most Iowa-specific deductions, exemptions, 18 and adjustments currently available when computing net income 19 and taxable income under Iowa law, including the Iowa optional 20 standard deduction and all itemized deductions, and the ability 21 to deduct federal income taxes, except for a one-year phase 22 out in the 2023 tax year for taxes paid, or refunds received, 23 that relate to a prior year. The bill maintains the add-back 24 for income from securities that are federally exempt but not 25 state-exempt, and for bonus depreciation amounts. The bill 26 maintains the general pension exclusion and the deduction 27 for income from federal securities. The bill maintains the 28 deduction for contributions to the Iowa 529 plan, the Iowa ABLE 29 plan, a first-time homebuyer savings account, and an individual 30 development account. The bill also maintains the deductions 31 for military pension income, military active duty pay, social 32 security retirement benefits, certain payments received for 33 providing unskilled in-home health care, certain amounts 34 received from the veterans trust fund, victim compensation 35 -37- LSB 2827YC (18) 89 jm/jh 37/ 55
H.F. _____ awards, biodiesel production refunds, certain wages paid 1 to individuals with disabilities or individuals previously 2 convicted of a felony, certain organ donations, and Segal 3 AmeriCorps education award payments. The bill modifies the 4 existing deduction for health insurance payments in Code 5 section 422.7(29) to make the deduction only applicable to 6 taxpayers who are at least 65 years old and who have net 7 income below $100,000. The bill also modifies the existing 8 capital gain deduction in Code section 422.7(21) to restrict 9 the deduction to the sale of real property used in farming 10 businesses by permitting the taxpayer to take the deduction 11 if either of the following apply: the taxpayer materially 12 participated in the farming business for at least 10 years and 13 held the real property for at least 10 years; or the taxpayer 14 sold the real property to a relative. The bill expands the 15 definition of “relative” to include an entity in which a 16 relative of the taxpayer has a legal or equitable interest in 17 the entity as an owner, member, partner, or beneficiary. The 18 bill provides a new deduction for any income of an employee 19 resulting from the payment by an employer, whether paid to 20 the employee or a lender, of principal or interest on the 21 employee’s qualified education loan. The bill also modifies 22 the calculation of net income for purposes of the alternate 23 tax calculation in Code section 422.5(3) and (3B), and the tax 24 return filing thresholds in Code section 422.13, to require 25 that any amount of itemized deduction, standard deduction, 26 personal exemption deduction, or qualified business income 27 deduction that was allowed in computing federal taxable income 28 shall be added back. 29 CORPORATE INCOME TAX AND FRANCHISE TAX CALCULATION. Under 30 current law, the starting point for calculating the corporate 31 income tax and franchise tax is federal taxable income before 32 the net operating loss deduction, because net operating loss is 33 calculated at the state level. The bill repeals the separate 34 calculation of net operating loss at the state level. As a 35 -38- LSB 2827YC (18) 89 jm/jh 38/ 55
H.F. _____ result, the bill requires taxpayers to add back any federal 1 net operating loss deduction carried over from a taxable year 2 beginning prior to the trigger year, but allows taxpayers to 3 deduct any remaining Iowa net operating loss from a prior 4 taxable year. The bill also repeals most Iowa-specific 5 deductions, exemptions, and adjustments currently available 6 when computing net income and taxable income under Iowa law. 7 The bill maintains the add-back for income from securities 8 that are federally exempt but not state exempt, and for bonus 9 depreciation amounts. The bill maintains the deductions for 10 income from federal securities, for foreign dividend and 11 subpart F income, for certain wages paid to individuals with 12 disabilities or individuals previously convicted of a felony, 13 and for biodiesel production refunds. 14 DIVISION II —— CHILD DEPENDENT AND DEVELOPMENT TAX CREDITS. 15 Currently, an individual may claim 30 percent of the federal 16 child and dependent care credit provided in section 21 of 17 the Internal Revenue Code against the individual income tax 18 if the individual’s net income is less than $45,000. Under 19 the bill, an individual may claim 30 percent of the federal 20 child and dependent care credit provided in section 21 of the 21 Internal Revenue Code against the individual income tax if the 22 individual’s net income is less than $90,000. 23 The bill increases the income threshold determining the 24 eligibility of a taxpayer for the early childhood development 25 tax credit. The bill increases the eligibility threshold from 26 a taxpayer whose net income is less than $45,000 per year to 27 less than $90,000 per year. By increasing the eligibility 28 threshold, taxpayers whose net income is less than $90,000 are 29 now eligible to take the early childhood development tax credit 30 equaling 25 percent of the first $1,000 which the taxpayer has 31 paid to others for early childhood development expenses for 32 each dependent ages three through five. 33 RETROACTIVE APPLICABILITY. The division applies 34 retroactively to tax years beginning on or after January 1, 35 -39- LSB 2827YC (18) 89 jm/jh 39/ 55
H.F. _____ 2021. 1 The division takes effect upon enactment. 2 DIVISION III —— COVID-19 RELATED GRANTS —— TAXATION. The 3 bill excludes from the calculation of Iowa individual and 4 corporate income tax any qualifying COVID-19 grant issued to an 5 individual or business by the economic development authority, 6 the Iowa finance authority, or the department of agriculture 7 and land stewardship. 8 Under the bill, a “qualifying COVID-19 grant” includes 9 any grant identified by the department of revenue by rule 10 that was issued under a grant program administered by the 11 economic development authority, Iowa finance authority, or 12 the department of agriculture and land stewardship to provide 13 financial assistance to individuals and businesses economically 14 impacted by the COVID-19 pandemic. 15 Under current law, financial assistance grants provided to 16 small businesses by the economic development authority under 17 the Iowa small business COVID-19 relief grant program are 18 excluded from the calculation of Iowa individual and corporate 19 income tax. 20 The COVID-19 grant income tax exclusion provided in the bill 21 is repealed on January 1, 2024, and does not apply to tax years 22 beginning on or after that date. 23 The division takes effect upon enactment and applies 24 retroactively to March 23, 2020, for tax years ending on or 25 after that date. 26 DIVISION IV —— FEDERAL PAYCHECK PROTECTION PROGRAM. Under 27 current law, for the tax year 2020 and later, Iowa law fully 28 conforms with the federal treatment of forgiven paycheck 29 protection program loans and excludes such amounts from net 30 income and allows certain deductions for business expenses 31 paid using those loans. For fiscal-year filers who received 32 paycheck protection program loans during the 2019 tax year, 33 current law excludes such amounts from net income, but does 34 not allow certain deductions for business expenses paid using 35 -40- LSB 2827YC (18) 89 jm/jh 40/ 55
H.F. _____ those loans. The bill fully conforms with federal law for 1 those fiscal-year filers who previously were excluded from such 2 conformity and allows such filers to take business expense 3 deductions using federal paycheck protection program loan 4 proceeds that were forgiven. 5 DIVISION V —— SCHOOL TUITION ORGANIZATION TAX CREDIT. The 6 bill changes the school tuition organization tax credit in two 7 ways. 8 First, the bill modifies the amount of a voluntary cash 9 or noncash contribution that may be claimed as a tax credit 10 during a tax year. Currently, 65 percent of the amount of the 11 voluntary cash or noncash contribution may be claimed as a tax 12 credit, subject to the total aggregate amount of credits that 13 may be claimed in one calendar year. For tax years beginning 14 on or after January 1, 2022, the bill increases the amount of 15 the contribution that may be claimed as a tax credit from 65 16 percent to 72 percent, for tax years beginning on or after 17 January 1, 2023, but before January 1, 2024, the amount of the 18 contribution that may be claimed as a tax credit increases from 19 72 percent to 78 percent, for tax years beginning on or after 20 January 1, 2024, but before January 1, 2025, the amount of the 21 contribution that may be claimed as a tax credit increases 22 from 78 percent to 85 percent, and for tax years beginning on 23 or after January 1, 2025, the amount of the contribution that 24 may be claimed as a tax credit increases from 85 percent to 87 25 percent. 26 Second, the bill increases the maximum amount of allowable 27 school tuition organization tax credits that may be claimed in 28 the aggregate as follows: beginning in calendar year 2022, the 29 maximum amount of allowable credits increases from $15 million 30 to $16.5 million; for calendar year 2023, the maximum amount of 31 allowable credits increases from $16.5 million to $18 million; 32 for calendar year 2024, the maximum amount of allowable credits 33 increases from $18 million to $19.5 million; and for calendar 34 years beginning on or after January 1, 2025, the maximum amount 35 -41- LSB 2827YC (18) 89 jm/jh 41/ 55
H.F. _____ of allowable credits is set at $20 million. 1 This division applies retroactively to tax years beginning 2 on or after January 1, 2021. 3 DIVISION VI —— TARGETED JOBS WITHHOLDING CREDIT. The 4 bill extends by five years the deadline for entering into 5 withholding agreements under the targeted jobs withholding 6 credit pilot project from June 30, 2021, to June 30, 2026. 7 DIVISION VII —— ECONOMIC EMERGENCY FUND —— EXCESS MONEYS. 8 The bill provides that after the surplus existing in the 9 general fund of the state at the conclusion of a fiscal year 10 is appropriated to the cash reserve fund, the elimination of 11 Iowa’s GAAP deficit, and the Iowa economic emergency fund as 12 provided under current law, an amount equal to not more than 13 five percent of the adjusted revenue estimate for the fiscal 14 year is transferred to the general fund of the state and any 15 remaining moneys are transferred to the taxpayer relief fund. 16 This division takes effect July 1, 2022. 17 DIVISION VIII —— TAXPAYER RELIEF FUND —— TAX CREDIT. The 18 bill provides that if the amount in the taxpayer relief fund 19 equals or exceeds $120 million, the entire balance of the 20 taxpayer relief fund is transferred to the Iowa taxpayer relief 21 tax credit fund to be used by the department of revenue to 22 provide Iowa taxpayer relief tax credits in equal amounts to 23 eligible taxpayers who filed individual income tax returns. 24 This division takes effect upon enactment and applies 25 retroactively to January 1, 2021, for tax years beginning on 26 or after that date. 27 DIVISION IX —— STATE INHERITANCE TAX. The bill 28 proportionally reduces over a nine-year fiscal period the rates 29 of tax applicable to the state inheritance tax, beginning for 30 estates of decedents dying on or after July 1, 2021. The 31 bill then repeals the state inheritance tax and the state 32 qualified use inheritance tax effective July 1, 2030, for 33 property of estates of decedents dying on or after July 1, 34 2030. Inheritance tax will not be imposed on any property in 35 -42- LSB 2827YC (18) 89 jm/jh 42/ 55
H.F. _____ the event of the death of an individual on or after July 1, 1 2030. The bill directs the Code editor to remove Code chapters 2 450 (inheritance tax) and 450B (qualified use inheritance tax) 3 from the Code effective July 1, 2040. 4 DIVISION X —— HIGH QUALITY JOBS —— ELIGIBILITY REQUIREMENTS. 5 To be eligible to receive incentives or assistance under the 6 high quality jobs program, a business cannot be in the process 7 of reducing operations in one community while simultaneously 8 apply for assistance under the program. Under current law, 9 a reduction in operations within 12 months before or after 10 a business submits an application to the high quality jobs 11 program is presumed to be a reduction in operations while 12 simultaneously applying for assistance under the program. 13 Under the bill, the economic development authority (authority) 14 cannot presume that a reduction in operations is a reduction 15 while simultaneously applying for assistance under the program 16 with regard to a business that submits an application on or 17 before June 30, 2022, if the business demonstrates to the 18 satisfaction of the authority that the reduction in operations 19 occurred after March 1, 2020, and that it was a result of the 20 COVID-19 pandemic. The authority must consider whether the 21 benefit of the project proposed by the business outweighs any 22 negative impact related to the reduction in operations. The 23 business remains subject to all other eligibility requirements. 24 This division of the bill is repealed July 1, 2022. 25 DIVISION XI —— HOUSING TRUST FUND. Under current law, 30 26 percent of the real estate transfer tax receipts paid by county 27 recorders to the treasurer of state are transferred to the 28 housing trust fund in any one fiscal year, subject to a $3 29 million cap; moneys in excess of the cap are deposited in the 30 general fund of the state. The bill increases the cap to $7 31 million. 32 DIVISION XII —— HIGH QUALITY JOBS PROGRAM —— DAY CARE 33 CENTERS. The bill permits the economic development authority 34 to consider whether a proposed project under the high quality 35 -43- LSB 2827YC (18) 89 jm/jh 43/ 55
H.F. _____ jobs program will include a licensed child care center for use 1 by a business’s employees when determining the eligibility of 2 the business to participate in the program. 3 DIVISION XIII —— WORKFORCE HOUSING TAX CREDITS. Code 4 section 15.119 sets an aggregate tax credit amount limit for 5 certain economic development programs. Under current law, the 6 workforce housing tax incentives program administered under 7 Code sections 15.351 through 15.356 shall not be allocated 8 more than $25 million in tax credits, and of the tax credits 9 allocated to this program, $10 million is reserved for 10 allocation to qualified housing projects in small cities. This 11 division increases the workforce housing tax credit allocations 12 from $25 million to $30 million. Of the moneys allocated 13 to workforce housing tax credits, the bill increases the tax 14 credits reserved for qualified housing projects in small cities 15 from $10 million to $15 million. 16 DIVISION XIV —— DISASTER RECOVERY HOUSING ASSISTANCE PROGRAM 17 AND FUND. 18 TRANSFERS. The bill permits the authority to transfer 19 unobligated moneys in Code section 16.46 (senior living 20 revolving loan program fund), 16.47 (home and community-based 21 services revolving loan program fund), 16.48 (transitional 22 housing revolving loan program fund), or 16.49 (community 23 housing and services for persons with disabilities revolving 24 loan program fund) to the disaster recovery housing assistance 25 fund created in the bill. 26 After the prior written consent and approval of the 27 governor, the bill permits the executive director of the Iowa 28 finance authority to transfer any unobligated moneys in any 29 fund created pursuant to Code section 16.5(1)(s), for deposit 30 in the fund. The bill waives the prior written consent and 31 approval of the director of the department of management to 32 transfer the unobligated moneys. 33 After prior written approval of the governor, the bill 34 permits the director of the Iowa economic development authority 35 -44- LSB 2827YC (18) 89 jm/jh 44/ 55
H.F. _____ to transfer any unobligated and unencumbered moneys in any fund 1 created pursuant to Code section 15.106A(1)(o), for deposit in 2 the fund. 3 The bill requires any transfer to be reported to the 4 legislative fiscal committee of the legislative council on a 5 monthly basis. 6 DISASTER RECOVERY HOUSING ASSISTANCE PROGRAM —— FUND. The 7 bill creates a disaster recovery housing assistance fund 8 (fund) within the authority. The purpose of the fund is for 9 the development and operation of a forgivable loan and grant 10 program for homeowners and renters with disaster-affected 11 homes, and for an eviction prevention program created in the 12 bill. The bill prohibits the authority from using more than 13 5 percent of the moneys in the fund on July 1 of a fiscal year 14 for purposes of administrative costs and other program support 15 during the fiscal year. 16 The bill directs the authority to establish and administer 17 a disaster recovery assistance program (program) and to 18 use the moneys in the fund to provide forgivable loans to 19 eligible homeowners and grants to eligible renters with 20 disaster-affected homes. “Disaster-affected home” is defined 21 in the bill as a primary residence that is destroyed or damaged 22 due to a natural disaster that occurs on or after the effective 23 date of the division, and that is located in a county that due 24 to the natural disaster is the subject of a state of disaster 25 emergency proclamation by the governor that authorizes disaster 26 recovery housing assistance; or a primary residence that is 27 destroyed or damaged due to a natural disaster that occurred 28 on or after March 12, 2019, but before the effective date of 29 the division, and is located in a county that has been declared 30 a major disaster by the president of the United States on or 31 after March 12, 2019, but before the effective date of the 32 division, and is located in a county where individuals are 33 eligible for federal individual assistance. 34 The authority may enter into an agreement with one or 35 -45- LSB 2827YC (18) 89 jm/jh 45/ 55
H.F. _____ more local program administrators to administer the program 1 and moneys in the fund may be expended following a state of 2 disaster emergency proclamation by the governor that authorizes 3 disaster recovery housing assistance or the eviction prevention 4 program. “Local program administrator” is defined in the bill 5 as cities of Ames, Cedar Falls, Cedar Rapids, Council Bluffs, 6 Davenport, Des Moines, Dubuque, Iowa City, Waterloo, and West 7 Des Moines; a council of governments whose territory includes 8 at least one county that is the subject of the state of 9 disaster emergency proclamation by the governor that authorizes 10 disaster recovery housing assistance or the eviction prevention 11 program; a community action agency as defined in Code section 12 216A.91 and whose territory includes at least one county that 13 is the subject of the state of disaster emergency proclamation 14 by the governor that authorizes disaster recovery housing 15 assistance or the eviction prevention program; or a qualified 16 local organization or governmental entity as determined by rule 17 by the authority. 18 To be considered for a forgivable loan or grant under the 19 program, the homeowner or renter must register for the disaster 20 case management program established pursuant to Code section 21 29C.20B. The disaster case manager may refer the homeowner or 22 renter to the appropriate local program administrator. 23 DISASTER RECOVERY HOUSING ASSISTANCE PROGRAM —— HOMEOWNERS. 24 To be eligible for a forgivable loan under the program, 25 the bill requires a homeowner to own a disaster-affected 26 home located in a county that has been proclaimed a state 27 of disaster emergency by the governor; the home must have 28 sustained damage greater than the damage that is covered by the 29 homeowner’s property and casualty insurance policy insuring the 30 home plus any other state or federal disaster-related financial 31 assistance that the homeowner is eligible to receive; an 32 administrator must deem the home suitable for rehabilitation or 33 damaged beyond reasonable repair; if the homeowner is seeking 34 a forgivable loan for the repair or rehabilitation of the 35 -46- LSB 2827YC (18) 89 jm/jh 46/ 55
H.F. _____ homeowner’s disaster-affected home, the home cannot be proposed 1 for buyout by the county or city in which the home is located, 2 or the disaster-affected home is eligible for a buyout, but 3 the homeowner is requesting a forgivable loan for the repair 4 or rehabilitation of the homeowner’s disaster-affected home 5 in lieu of a buyout; and the assistance does not duplicate 6 benefits provided by other disaster assistance programs. 7 If a homeowner is referred to an administrator by the 8 homeowner’s case manager, the bill allows the authority to 9 award a forgivable loan to the eligible homeowner for repair 10 or rehabilitation of the disaster-affected home, or for down 11 payment assistance on the purchase of replacement housing, 12 and the cost of reasonable repairs to be performed on the 13 replacement housing to render it decent, safe, sanitary, and 14 in good repair. Replacement housing purchased by a homeowner 15 cannot be located in a 100-year floodplain. “Decent, safe, 16 sanitary, and in good repair” is defined in the bill to mean 17 the same as described in 24 C.F.R. §5.703. “Replacement 18 housing” is defined in the bill as housing purchased by a 19 homeowner to replace a disaster-affected home that is destroyed 20 or damaged beyond reasonable repair as determined by a local 21 program administrator. 22 The authority shall determine the interest rate for the 23 forgivable loan. 24 If a homeowner who has been awarded a forgivable loan sells 25 a disaster-affected home or replacement housing for which the 26 homeowner received the forgivable loan prior to the end of the 27 loan term, the remaining principal on the forgivable loan shall 28 be due and payable. 29 DISASTER RECOVERY HOUSING ASSISTANCE PROGRAM —— RENTERS. 30 To be eligible for a grant under the program, the bill 31 requires the local program administrator to either deem 32 the disaster-affected home of the renter suitable for 33 rehabilitation but unsuitable for current short-term 34 habitation, or damaged beyond reasonable repair; and the 35 -47- LSB 2827YC (18) 89 jm/jh 47/ 55
H.F. _____ assistance does not duplicate benefits provided by any other 1 disaster assistance program. 2 DISASTER RECOVERY HOUSING ASSISTANCE PROGRAM —— REPORT. The 3 bill requires the authority to annually submit a report to 4 the general assembly detailing the disaster recovery housing 5 assistance program. 6 EVICTION PREVENTION PROGRAM. The bill requires the 7 authority to establish and administer an eviction prevention 8 program. Under the eviction prevention program, the authority 9 awards grants from the disaster recovery housing assistance 10 fund to eligible renters and eviction prevention partners. 11 Grants may be awarded upon a state of disaster emergency 12 proclamation by the governor that authorizes the eviction 13 prevention program. The bill defines “eligible renter” to mean 14 a renter whose income meets the qualifications of the program, 15 who is at risk of eviction, and who resides in a county that 16 is the subject of a state of disaster emergency proclamation 17 by the governor that also authorizes the eviction prevention 18 program. The bill defines “eviction prevention partner” to 19 mean a qualified local organization or governmental entity as 20 determined by rule by the authority. 21 The bill requires grants awarded to eligible renters to be 22 used for short-term financial rent assistance to keep eligible 23 renters in the current residence of the renter. Grants awarded 24 to eviction prevention partners are to be used to pay for rent 25 or services provided to eligible renters for the purpose of 26 preventing the eviction of eligible renters. 27 DISASTER RECOVERY HOUSING ASSISTANCE PROGRAM —— RULES. The 28 authority shall adopt rules pursuant to Code chapter 17A to 29 implement and administer the program including establishing 30 the maximum forgivable loan and grant amounts, the terms of 31 forgivable loans, and income qualifications of eligible renters 32 in the eviction prevention program. 33 DIVISION XV —— BROWNFIELD REDEVELOPMENT PROGRAM. Current 34 law provides that the economic development authority 35 -48- LSB 2827YC (18) 89 jm/jh 48/ 55
H.F. _____ (authority) cannot allocate more than $10 million in tax 1 credits in a fiscal year to the brownfield redevelopment 2 program (brownfields). The division increases the maximum 3 allocation to $15 million. The division provides that tax 4 credits that are not awarded or that are revoked (including 5 revoked within the previous five years) under brownfields may 6 be awarded during the next annual application period, and those 7 tax credits do not count against the $15 million tax credit 8 maximum. 9 Under current law, the definition of “brownfield site” 10 excludes a property which has been placed, or is proposed 11 for placement, on the national priorities list established 12 pursuant to the federal Comprehensive Environmental Response, 13 Compensation, and Liability Act, 42 U.S.C. §9601 et seq. The 14 division removes this exclusion. 15 Under current law, Code section 15.293A, redevelopment tax 16 credits, is repealed on June 30, 2021. The division changes 17 the repeal date to June 30, 2031, and the repeal date is 18 effective upon enactment of the division. Under current law, 19 Code section 15.293B, related to the application, review, 20 registration, and authorization of projects awarded tax credits 21 under brownfields is repealed on June 30, 2021. The division 22 changes the repeal date to June 30, 2031, and the repeal date 23 is effective upon enactment of the division. 24 DIVISION XVI —— HIGH QUALITY JOBS AND RENEWABLE CHEMICAL 25 PRODUCTION TAX CREDITS. The division reduces the maximum 26 amount of tax credits that the economic development authority 27 (authority) may allocate to the high quality jobs program for 28 the fiscal year beginning July 1, 2021, and for each fiscal 29 year thereafter, from $105 million to $70 million. 30 DIVISION XVII —— BONUS DEPRECIATION. Currently, when a 31 business buys equipment and other capital assets, the business 32 is allowed to deduct a portion of the cost of such property 33 as depreciation over a certain period for federal and state 34 individual or corporate income tax purposes. Federal taxpayers 35 -49- LSB 2827YC (18) 89 jm/jh 49/ 55
H.F. _____ are allowed to immediately deduct a higher portion of the cost 1 of such property by claiming additional first-year depreciation 2 (bonus depreciation). Iowa has recently adopted “rolling 3 conformity” with federal tax law but did not conform with 4 federal bonus depreciation provisions, meaning a taxpayer 5 deducts the cost of the equipment or other capital assets by 6 claiming depreciation over a longer time period for Iowa income 7 tax purposes. The bill applies retroactively by conforming 8 Iowa tax provisions with federal bonus depreciation provisions 9 for equipment or other capital assets placed in service on or 10 after January 1, 2021, for tax years beginning on or after 11 that date. By conforming with federal bonus depreciation 12 provisions for tax years beginning on or after January 1, 2021, 13 Iowa automatically conforms with the federal limitation on 14 business interest expense deductions in Code sections 422.7(60) 15 and 422.35(27). Currently, if a taxpayer does not claim 16 “bonus depreciation”, Iowa does not conform with the federal 17 limitation on business expenses. 18 DIVISION XVIII —— ENERGY INFRASTRUCTURE REVOLVING LOAN 19 PROGRAM. The division modifies Code section 476.46, alternate 20 energy revolving loan program, to prohibit the Iowa energy 21 center from initiating any new loans after June 30, 2021. The 22 division also requires that all loan payments received after 23 June 30, 2021, be deposited, and any moneys remaining in the 24 alternate energy revolving loan fund after June 30, 2021, 25 be transferred, to the newly created energy infrastructure 26 revolving loan fund. 27 The division creates an energy infrastructure revolving 28 fund (fund) in the office of the treasurer of state to be 29 administered by the Iowa energy center (center). Moneys in 30 the fund are to be used to provide financial assistance for 31 the development and construction of energy infrastructure, 32 including projects as described in the bill. “Energy 33 infrastructure” and “financial assistance” are defined in the 34 bill. 35 -50- LSB 2827YC (18) 89 jm/jh 50/ 55
H.F. _____ The center is required to establish and administer an energy 1 infrastructure revolving loan program (program) to encourage 2 the development of energy infrastructure within the state. An 3 individual, business, rural electric cooperative, or municipal 4 utility located and operating in this state is eligible for 5 financial assistance under the program. With the approval of 6 the center’s governing board, the authority must determine the 7 amount and the terms of all financial assistance awarded to an 8 individual, business, rural electric cooperative, or municipal 9 utility under the program. All agreements and administrative 10 authority are vested in the center’s governing board. The 11 authority may use not more than 5 percent of the moneys in 12 the fund at the beginning of each fiscal year for purposes of 13 administrative costs, marketing, technical assistance, and 14 other program support. 15 DIVISION XIX —— INVESTMENTS IN QUALIFYING BUSINESSES AND 16 EQUITY INVESTMENTS IN INNOVATION FUNDS. Under current law, 17 the authority must allocate $2 million to investments in 18 qualifying businesses and $8 million to equity investments in 19 innovation funds (equity investments). The division limits 20 the authority’s tax credit allocations for investments in 21 qualifying businesses and equity investments to a maximum 22 aggregate of $10 million. 23 The division requires the authority to determine on or 24 before June 30 of each fiscal year the amount of tax credits 25 to be allocated to each. In addition, any amount of tax 26 credits allocated and not awarded in that fiscal year must be 27 reallocated to either investments in qualifying businesses 28 or to equity investments for the next fiscal year, and those 29 tax credits do not count towards the maximum aggregate of $10 30 million. This applies to tax credits allocated on or after the 31 fiscal year beginning July 1, 2021, and for each fiscal year 32 thereafter. 33 The division modifies the maximum amount of an investment 34 tax credit that may be issued to a natural person and the 35 -51- LSB 2827YC (18) 89 jm/jh 51/ 55
H.F. _____ person’s spouse or dependent from a calendar year basis to a 1 fiscal year basis. The maximum amount of tax credits that may 2 be issued for equity investments in any one qualifying business 3 is also modified from a calendar year to a fiscal year. 4 This division of the bill is effective upon enactment. 5 DIVISION XX —— RURAL ECONOMIC DEVELOPMENT. The bill 6 provides for tax incentives for eligible businesses in rural 7 communities. “Rural community” is defined in the bill. The 8 tax