S.F. 149 DIVISION I 1 REPEAL OF THE INDIVIDUAL INCOME TAX 2 Section 1. Section 8.57E, subsection 2, Code 2021, is 3 amended to read as follows: 4 2. Moneys in the taxpayer relief fund shall only be used 5 pursuant to appropriations or transfers made by the general 6 assembly for tax relief , including but not limited to increases 7 in the general retirement income exclusion under section 422.7, 8 subsection 31 , or reductions in income tax rates . 9 Sec. 2. Section 12D.9, subsection 2, Code 2021, is amended 10 by striking the subsection. 11 Sec. 3. Section 12I.8, subsection 2, Code 2021, is amended 12 by striking the subsection. 13 Sec. 4. Section 12I.10, subsection 2, Code 2021 is amended 14 by striking the subsection. 15 Sec. 5. Section 15.293A, subsection 1, paragraph a, Code 16 2021, is amended to read as follows: 17 a. A redevelopment tax credit shall be allowed against 18 the taxes imposed in chapter 422, subchapters II, III , and V , 19 and in chapter 432 , and against the moneys and credits tax 20 imposed in section 533.329 , for a portion of a taxpayer’s 21 equity investment, as provided in subsection 3 , in a qualifying 22 redevelopment project. 23 Sec. 6. Section 15.293A, subsection 1, paragraph b, Code 24 2021, is amended by striking the paragraph. 25 Sec. 7. Section 15.293A, subsection 2, paragraphs c and f, 26 Code 2021, are amended to read as follows: 27 c. The tax credit certificate, unless rescinded by the 28 authority, shall be accepted by the department of revenue as 29 payment for taxes imposed pursuant to chapter 422, subchapters 30 II, III , and V , and in chapter 432 , and for the moneys and 31 credits tax imposed in section 533.329 , subject to any 32 conditions or restrictions placed by the authority upon 33 the face of the tax credit certificate and subject to the 34 limitations of this section . 35 -1- LSB 1670XS (5) 89 jm/jh 1/ 48

S.F. 149 f. A tax credit shall not be claimed by a transferee 1 under this section until a replacement tax credit certificate 2 identifying the transferee as the proper holder has been 3 issued. The transferee may use the amount of the tax credit 4 transferred against the taxes imposed in chapter 422, 5 subchapters II, III , and V , and in chapter 432 , and against the 6 moneys and credits tax imposed in section 533.329 , for any tax 7 year the original transferor could have claimed the tax credit. 8 Any consideration received for the transfer of the tax credit 9 shall not be included as income under chapter 422, subchapters 10 II, III , and V . Any consideration paid for the transfer of the 11 tax credit shall not be deducted from income under chapter 422, 12 subchapters II, III , and V . 13 Sec. 8. Section 15.293A, subsection 4, Code 2021, is amended 14 to read as follows: 15 4. For purposes of individual and corporate income taxes and 16 the franchise tax, the increase in the basis of the redeveloped 17 property that would otherwise result from the qualified 18 redevelopment costs shall be reduced by the amount of the 19 credit computed under this part. 20 Sec. 9. Section 15.319, subsection 2, Code 2021, is amended 21 to read as follows: 22 2. The tax credit shall be allowed against taxes imposed 23 under chapter 422, subchapter II or III . 24 Sec. 10. Section 15.319, subsection 4, Code 2021, is amended 25 by striking the subsection. 26 Sec. 11. Section 15.319, subsection 6, paragraph c, Code 27 2021, is amended to read as follows: 28 c. The tax credit certificate, unless rescinded by the 29 authority, shall be accepted by the department of revenue 30 as payment for taxes imposed pursuant to chapter 422, 31 subchapters II and subchapter III , subject to any conditions 32 or restrictions placed by the authority upon the face of the 33 tax credit certificate and subject to the limitations of the 34 program. 35 -2- LSB 1670XS (5) 89 jm/jh 2/ 48

S.F. 149 Sec. 12. Section 15.333, subsection 2, Code 2021, is amended 1 to read as follows: 2 2. An eligible business may claim a tax credit equal to 3 a percentage of the new investment directly related to new 4 jobs created or retained by the project. The tax credit 5 shall be amortized equally over five calendar years. The tax 6 credit shall be allowed against taxes imposed under chapter 7 422, subchapter II, III , or V , and against the moneys and 8 credits tax imposed in section 533.329 . If the business is 9 a partnership, S corporation, limited liability company, 10 cooperative organized under chapter 501 and filing as a 11 partnership for federal tax purposes, or estate or trust 12 electing to have the income taxed directly to the individual, 13 an individual may claim the tax credit allowed. The amount 14 claimed by the individual shall be based upon the pro rata 15 share of the individual’s earnings of the partnership, S 16 corporation, limited liability company, cooperative organized 17 under chapter 501 and filing as a partnership for federal 18 tax purposes, or estate or trust. The percentage shall be 19 determined as provided in section 15.335A . Any tax credit in 20 excess of the tax liability for the tax year may be credited 21 to the tax liability for the following seven years or until 22 depleted, whichever occurs first. 23 Sec. 13. Section 15.335, subsection 5, Code 2021, is amended 24 to read as follows: 25 5. The credit allowed in this section is in addition to 26 the credit authorized in section 422.10 and section 422.33, 27 subsection 5 . However, if the alternative credit computation 28 method is used in section 422.10 or section 422.33, subsection 29 5 , the credit allowed in this section shall also be computed 30 using that method. 31 Sec. 14. Section 15.335, subsection 6, Code 2021, is amended 32 by striking the subsection. 33 Sec. 15. Section 15.355, subsection 3, paragraph b, Code 34 2021, is amended to read as follows: 35 -3- LSB 1670XS (5) 89 jm/jh 3/ 48

S.F. 149 b. The tax credit shall be allowed against the taxes imposed 1 in chapter 422, subchapters II, III , and V , and in chapter 2 432 , and against the moneys and credits tax imposed in section 3 533.329 . 4 Sec. 16. Section 15.355, subsection 3, paragraph c, Code 5 2021, is amended by striking the paragraph. 6 Sec. 17. Section 15.355, subsection 3, paragraph e, 7 subparagraphs (3) and (6), Code 2021, are amended to read as 8 follows: 9 (3) The tax credit certificate, unless rescinded by the 10 authority, shall be accepted by the department of revenue as 11 payment for taxes imposed pursuant to chapter 422, subchapters 12 II, III , and V , and in chapter 432 , and for the moneys and 13 credits tax imposed in section 533.329 , subject to any 14 conditions or restrictions placed by the authority upon 15 the face of the tax credit certificate and subject to the 16 limitations of this program. 17 (6) A tax credit shall not be claimed by a transferee 18 under this section until a replacement tax credit certificate 19 identifying the transferee as the proper holder has been 20 issued. The transferee may use the amount of the tax credit 21 transferred against the taxes imposed in chapter 422, 22 subchapters II, III , and V , and in chapter 432 , and against the 23 moneys and credits tax imposed in section 533.329 , for any tax 24 year the original transferor could have claimed the tax credit. 25 Any consideration received for the transfer of the tax credit 26 shall not be included as income under chapter 422, subchapters 27 II, III , and V . Any consideration paid for the transfer of the 28 tax credit shall not be deducted from income under chapter 422, 29 subchapters II, III , and V . 30 Sec. 18. Section 15.355, subsection 3, paragraph f, Code 31 2021, is amended to read as follows: 32 f. For purposes of the individual and corporate income 33 taxes and the franchise tax, the increase in the basis of the 34 property that would otherwise result from the qualifying new 35 -4- LSB 1670XS (5) 89 jm/jh 4/ 48

S.F. 149 investment shall be reduced by the amount of the tax credit 1 computed under this subsection . 2 Sec. 19. Section 15A.7, subsection 1, Code 2021, is amended 3 to read as follows: 4 1. That the project shall be administered in the same 5 manner as a project under chapter 260E and that a supplemental 6 new jobs credit from withholding in an amount equal to one 7 and one-half percent of the gross wages paid by the employer 8 pursuant to section 422.16 , Code 2021, is authorized to fund 9 the program services for the additional project. 10 Sec. 20. Section 15E.43, subsection 1, Code 2021, is amended 11 to read as follows: 12 1. a. For tax years beginning on or after January 1, 2015, 13 a tax credit shall be allowed against the taxes imposed in 14 chapter 422, subchapters II, III , and V , and in chapter 432 , 15 and against the moneys and credits tax imposed in section 16 533.329 , for a portion of a taxpayer’s equity investment, as 17 provided in subsection 2 , in a qualifying business. 18 b. An individual may claim a tax credit under this section 19 of a partnership, limited liability company, S corporation, 20 estate, or trust electing to have income taxed directly to 21 the individual. The amount claimed by the individual shall 22 be based upon the pro rata share of the individual’s earnings 23 from the partnership, limited liability company, S corporation, 24 estate, or trust. 25 c. b. A tax credit shall be allowed only for an investment 26 made in the form of cash to purchase equity in a qualifying 27 business. 28 d. c. For a tax credit claimed against the taxes imposed 29 in chapter 422, subchapter II , any tax credit in excess 30 of the tax liability is refundable. In lieu of claiming a 31 refund, the taxpayer may elect to have the overpayment shown 32 on the taxpayer’s final, completed return credited to the tax 33 liability for the following tax year. For a tax credit claimed 34 against the taxes imposed in chapter 422, subchapters III and 35 -5- LSB 1670XS (5) 89 jm/jh 5/ 48

S.F. 149 V , and in chapter 432 , and against the moneys and credits tax 1 imposed in section 533.329 , any Any tax credit in excess of the 2 taxpayer’s liability for the tax year may be credited to the 3 tax liability for the following three years or until depleted, 4 whichever is earlier. A tax credit shall not be carried back 5 to a tax year prior to the tax year in which the taxpayer 6 redeems the tax credit. 7 Sec. 21. Section 15E.43, subsection 2, paragraph b, Code 8 2021, is amended by striking the paragraph. 9 Sec. 22. Section 15E.44, subsection 4, Code 2021, is amended 10 to read as follows: 11 4. After verifying the eligibility of a qualifying 12 business, the authority shall issue a tax credit certificate 13 to be included with the equity investor’s tax return. The tax 14 credit certificate shall contain the taxpayer’s name, address, 15 tax identification number, the amount of credit, the name of 16 the qualifying business, and other information required by the 17 department of revenue. The tax credit certificate, unless 18 rescinded by the authority, shall be accepted by the department 19 of revenue as payment for taxes imposed pursuant to chapter 20 422, subchapters II, III , and V , and in chapter 432 , and for 21 the moneys and credits tax imposed in section 533.329 , subject 22 to any conditions or restrictions placed by the authority upon 23 the face of the tax credit certificate and subject to the 24 limitations of section 15E.43 . 25 Sec. 23. Section 15E.52, subsection 2, paragraph a, Code 26 2021, is amended to read as follows: 27 a. A tax credit shall be allowed against the taxes imposed 28 in chapter 422, subchapters II, III , and V , and in chapter 29 432 , and against the moneys and credits tax imposed in section 30 533.329 , for a portion of a taxpayer’s equity investment in the 31 form of cash in an innovation fund. 32 Sec. 24. Section 15E.52, subsection 2, paragraph b, Code 33 2021, is amended by striking the paragraph. 34 Sec. 25. Section 15E.52, subsection 13, Code 2021, is 35 -6- LSB 1670XS (5) 89 jm/jh 6/ 48

S.F. 149 amended to read as follows: 1 13. The transferee may use the amount of the tax credit 2 transferred against the taxes imposed in chapter 422, 3 subchapters II, III , and V , and in chapter 432 , and against the 4 moneys and credits tax imposed in section 533.329 , for any tax 5 year the original transferor could have claimed the tax credit. 6 Any consideration received for the transfer of the tax credit 7 shall not be included as income under chapter 422, subchapters 8 II, III , and V . Any consideration paid for the transfer of the 9 tax credit shall not be deducted from income under chapter 422, 10 subchapters II, III , and V . 11 Sec. 26. Section 15E.62, subsection 8, Code 2021, is amended 12 to read as follows: 13 8. “Tax credit” means a contingent tax credit issued 14 pursuant to section 15E.66 that is available against tax 15 liabilities imposed by chapter 422, subchapters II, III , and 16 V , and by chapter 432 and against the moneys and credits tax 17 imposed by section 533.329 . 18 Sec. 27. Section 15E.66, subsection 1, Code 2021, is amended 19 to read as follows: 20 1. The board may issue certificates and related tax credits 21 to designated investors which, if redeemed for the maximum 22 possible amount, shall not exceed a total aggregate of sixty 23 million dollars of tax credits. The certificates shall be 24 issued contemporaneously with a commitment to invest in the 25 Iowa fund of funds by a designated investor. A certificate 26 issued by the board shall have a specific maturity date or 27 dates designated by the board and shall be redeemable only in 28 accordance with the contingencies reflected on the certificate 29 or incorporated therein by reference. A certificate and the 30 related tax credit shall be transferable by the designated 31 investor. A tax credit shall not be claimed or redeemed except 32 by a designated investor or transferee in accordance with the 33 terms of a certificate from the board. A tax credit shall not 34 be claimed for a tax year that begins earlier than the maturity 35 -7- LSB 1670XS (5) 89 jm/jh 7/ 48

S.F. 149 date or dates stated on the certificate. An individual may 1 claim the credit of a partnership, limited liability company, 2 S corporation, estate, or trust electing to have the income 3 taxed directly to the individual. The amount claimed by the 4 individual shall be based upon the pro rata share of the 5 individual’s earnings from the partnership, limited liability 6 company, S corporation, estate, or trust. Any tax credit in 7 excess of the taxpayer’s tax liability for the tax year may be 8 credited to the tax liability for the following seven years, or 9 until depleted, whichever is earlier. 10 Sec. 28. Section 15E.305, subsection 1, Code 2021, is 11 amended to read as follows: 12 1. For tax years beginning on or after January 1, 2003, 13 a tax credit shall be allowed against the taxes imposed in 14 chapter 422, subchapters II, III , and V , and in chapter 432 , 15 and against the moneys and credits tax imposed in section 16 533.329 equal to twenty-five percent of a taxpayer’s endowment 17 gift to an endow Iowa qualified community foundation. An 18 individual may claim a tax credit under this section of 19 a partnership, limited liability company, S corporation, 20 estate, or trust electing to have income taxed directly to 21 the individual. The amount claimed by the individual shall 22 be based upon the pro rata share of the individual’s earnings 23 from the partnership, limited liability company, S corporation, 24 estate, or trust. A tax credit shall be allowed only for 25 an endowment gift made to an endow Iowa qualified community 26 foundation for a permanent endowment fund established to 27 benefit a charitable cause in this state. The amount of the 28 endowment gift for which the tax credit is claimed shall not 29 be deductible in determining taxable income for state income 30 tax purposes. Any tax credit in excess of the taxpayer’s tax 31 liability for the tax year may be credited to the tax liability 32 for the following five years or until depleted, whichever 33 occurs first. A tax credit shall not be carried back to a tax 34 year prior to the tax year in which the taxpayer claims the tax 35 -8- LSB 1670XS (5) 89 jm/jh 8/ 48

S.F. 149 credit. 1 Sec. 29. Section 16.64, subsection 2, Code 2021, is amended 2 to read as follows: 3 2. Bonds and notes issued by the authority for purposes of 4 financing the beginning farmer loan program provided in section 5 16.75 are exempt from taxation by the state, and interest 6 earned on the bonds and notes is deductible in determining 7 net income for purposes of the state individual and corporate 8 income tax under subchapters II and subchapter III of chapter 9 422 . 10 Sec. 30. Section 16.82, subsections 1 and 2, Code 2021, are 11 amended to read as follows: 12 1. A beginning farmer tax credit is authorized under the 13 beginning farmer tax credit program as provided in section 14 16.78 . The beginning farmer tax credit is allowed against 15 the taxes imposed in chapter 422, subchapter II , as provided 16 in section 422.11E , and in chapter 422, subchapter III , as 17 provided in section 422.33, subsection 21 , to facilitate the 18 transfer of agricultural assets from an eligible taxpayer to a 19 qualifying beginning farmer participating in the program. 20 2. An individual may claim a beginning farmer tax credit 21 under this section of a partnership, limited liability company, 22 S corporation, estate, or trust electing to have income 23 taxed directly to the individual. The amount claimed by the 24 individual shall be based upon the pro rata share of the 25 individual’s earnings from the partnership, limited liability 26 company, S corporation, estate, or trust. 27 Sec. 31. Section 16.82, subsection 8, paragraph b, Code 28 2021, is amended to read as follows: 29 b. A tax credit shall not be transferable to any other 30 person other than the eligible taxpayer’s estate or trust upon 31 the eligible taxpayer’s death pursuant to rules adopted by the 32 department . 33 Sec. 32. Section 28A.24, Code 2021, is amended to read as 34 follows: 35 -9- LSB 1670XS (5) 89 jm/jh 9/ 48

S.F. 149 28A.24 Exemption from taxation. 1 Since an authority is performing essential governmental 2 functions, an authority is not required to pay any taxes or 3 assessments of any kind or nature upon any property required 4 or used by it for its purposes, or any rates, fees, rentals, 5 receipts, or incomes at any time received by it, and the 6 bonds issued by an authority, their transfer, and the income, 7 including any profits made on the sale of the bonds, is 8 deductible in determining net income for the purposes of the 9 state individual and corporate income tax under chapter 422, 10 subchapters II and subchapter III , and shall not be taxed by 11 any political subdivision of this state. 12 Sec. 33. Section 29C.24, subsection 3, paragraph a, 13 subparagraph (3), Code 2021, is amended to read as follows: 14 (3) The imposition of income taxes under chapter 422, 15 subchapters II and subchapter III , including the requirement 16 to file tax returns under sections 422.13 through 422.15 or 17 section 422.36 , as applicable, and including the requirement 18 to withhold and remit income tax from out-of-state employees 19 under section 422.16 . In addition, the performance of disaster 20 or emergency-related work during a disaster response period 21 by an out-of-state business or out-of-state employee shall 22 not require an out-of-state business to be included in a 23 consolidated return under section 422.37 , and shall not 24 increase the amount of net income of the out-of-state business 25 allocated and apportioned to the state under section 422.8 or 26 422.33 , as applicable . 27 Sec. 34. Section 29C.24, subsection 3, paragraph b, 28 subparagraph (2), Code 2021, is amended by striking the 29 subparagraph. 30 Sec. 35. Section 35A.13, subsection 2, paragraph b, Code 31 2021, is amended to read as follows: 32 b. Moneys credited to the fund pursuant to an income tax 33 checkoff provided in chapter 422, subchapter II , Code 2021, if 34 applicable. 35 -10- LSB 1670XS (5) 89 jm/jh 10/ 48

S.F. 149 Sec. 36. Section 85.61, subsection 6, paragraph b, Code 1 2021, is amended by striking the paragraph. 2 Sec. 37. Section 96.3, subsection 4, paragraph b, Code 2021, 3 is amended to read as follows: 4 b. The maximum weekly benefit amount, if not a multiple 5 of one dollar, shall be rounded to the lower multiple of one 6 dollar. However, until such time as sixty-five percent of 7 the statewide average weekly wage exceeds one hundred ninety 8 dollars, the maximum weekly benefit amounts shall be determined 9 using the statewide average weekly wage computed on the basis 10 of wages reported for calendar year 1981. As used in this 11 section , “dependent” means dependent as defined in section 12 422.12, subsection 1 , paragraph “a” has the same meaning as 13 provided by the Internal Revenue Code , as if the individual 14 claimant was a taxpayer, except that an individual claimant’s 15 nonworking spouse shall be deemed to be a dependent under this 16 section . “Nonworking spouse” means a spouse who does not earn 17 more than one hundred twenty dollars in gross wages in one 18 week. 19 Sec. 38. Section 99B.8, Code 2021, is amended to read as 20 follows: 21 99B.8 Tax on prizes. 22 All prizes awarded pursuant to a gambling activity under 23 this chapter are Iowa earned income and are subject to state 24 and federal income tax laws. A person conducting a game of 25 skill, game of chance, bingo, or a raffle shall deduct state 26 income taxes, pursuant to section 422.16, subsection 1 , from a 27 cash prize awarded to an individual. An amount deducted from 28 the prize for payment of a state tax shall be remitted to the 29 department of revenue on behalf of the prize winner. 30 Sec. 39. Section 99D.16, Code 2021, is amended to read as 31 follows: 32 99D.16 Withholding tax on winnings. 33 All winnings provided in section 99D.11 are Iowa earned 34 income and are subject to state and federal income tax laws. 35 -11- LSB 1670XS (5) 89 jm/jh 11/ 48

S.F. 149 An amount deducted from winnings for payment of the state tax, 1 pursuant to section 422.16, subsection 1 , shall be remitted to 2 the department of revenue on behalf of the individual who won 3 the wager. 4 Sec. 40. Section 99F.18, Code 2021, is amended to read as 5 follows: 6 99F.18 Tax on winnings. 7 All winnings derived from slot machines operated pursuant to 8 this chapter are Iowa earned income and are subject to state 9 and federal income tax laws. An amount deducted from winnings 10 for payment of the state tax, pursuant to section 422.16, 11 subsection 1 , shall be remitted to the department of revenue 12 on behalf of the winner. 13 Sec. 41. Section 99G.31, subsection 2, paragraph i, Code 14 2021, is amended to read as follows: 15 i. The proceeds of any lottery prize shall be subject to 16 state and federal income tax laws. An amount deducted from the 17 prize for payment of a state tax, pursuant to section 422.16, 18 subsection 1 , shall be transferred by the authority to the 19 department of revenue on behalf of the prize winner. 20 Sec. 42. Section 100B.13, subsection 2, paragraph a, Code 21 2021, is amended to read as follows: 22 a. Moneys credited to the fund pursuant to an income tax 23 checkoff provided in chapter 422, subchapter II , Code 2021, if 24 applicable. 25 Sec. 43. Section 173.22, subsection 2, Code 2021, is amended 26 to read as follows: 27 2. A foundation fund is created within the state treasury 28 composed of moneys appropriated or available to and obtained or 29 accepted by the foundation. The foundation fund shall include 30 moneys credited to the fund as provided in section 422.12I . 31 Sec. 44. Section 190B.103, Code 2021, is amended to read as 32 follows: 33 190B.103 From farm to food donation tax credit. 34 A from farm to food donation tax credit is allowed against 35 -12- LSB 1670XS (5) 89 jm/jh 12/ 48

S.F. 149 the taxes imposed in chapter 422, subchapters II and subchapter 1 III , as provided in this chapter . 2 Sec. 45. Section 216B.3, subsection 15, Code 2021, is 3 amended to read as follows: 4 15. Develop a plan to provide telephone yellow pages 5 information without charge to persons declared to be blind 6 under the standards in section 422.12, subsection 2 , paragraph 7 “a” , subparagraph (5) , Code 2021 . The department may apply for 8 federal funds to support the service. The program shall be 9 limited in scope by the availability of funds. 10 Sec. 46. Section 217.39, Code 2021, is amended to read as 11 follows: 12 217.39 Persecuted victims of World War II —— reparations —— 13 heirs. 14 Notwithstanding any other law of this state, payments paid 15 to and income from lost property of a victim of persecution for 16 racial, ethnic, or religious reasons by Nazi Germany or any 17 other Axis regime or as an heir of such victim which is exempt 18 from state income tax as provided in section 422.7, subsection 19 35 , Code 2021, shall not be considered as income or an asset 20 for determining the eligibility for state or local government 21 benefit or entitlement programs. The proceeds are not subject 22 to recoupment for the receipt of governmental benefits or 23 entitlements, and liens, except liens for child support, are 24 not enforceable against these sums for any reason. 25 Sec. 47. Section 235A.2, subsection 1, Code 2021, is amended 26 to read as follows: 27 1. A child abuse prevention program fund is created in 28 the state treasury under the control of the department of 29 human services. The fund is composed of moneys appropriated 30 or available to and obtained or accepted by the treasurer 31 of state for deposit in the fund. The fund shall include 32 moneys transferred to the fund pursuant to an income tax 33 checkoff provided in chapter 422, subchapter II , Code 2021, if 34 applicable. All interest earned on moneys in the fund shall 35 -13- LSB 1670XS (5) 89 jm/jh 13/ 48

S.F. 149 be credited to and remain in the fund. Section 8.33 does not 1 apply to moneys in the fund. 2 Sec. 48. Section 257.19, subsection 2, Code 2021, is amended 3 to read as follows: 4 2. Certification of a board’s intent to participate for 5 a budget year, the method of funding, and the amount to be 6 raised shall be made to the department of management not later 7 than April 15 of the base year. Funding for the instructional 8 support program shall be obtained from instructional support 9 state aid and from local funding using either an instructional 10 support property tax or a combination of an instructional 11 support property tax and an instructional support income 12 surtax . 13 Sec. 49. Section 257.19, subsection 3, Code 2021, is amended 14 by striking the subsection. 15 Sec. 50. Section 257.21, Code 2021, is amended to read as 16 follows: 17 257.21 Computation of instructional support amount. 18 1. The department of management shall establish the amount 19 of instructional support property tax to be levied and the 20 amount of instructional support income surtax to be imposed 21 by a district in accordance with the decision of the board 22 under section 257.19 for each school year for which the 23 instructional support program is authorized. The department 24 of management shall determine these amounts based upon the 25 most recent figures available for the district’s valuation of 26 taxable property , individual state income tax paid, and budget 27 enrollment in the district, and shall certify to the district’s 28 county auditor the amount of instructional support property 29 tax , and to the director of revenue the amount of instructional 30 support income surtax to be imposed if an instructional support 31 income surtax is to be imposed levied . 32 2. The instructional support income surtax shall be imposed 33 on the state individual income tax for the calendar year during 34 which the school’s budget year begins, or for a taxpayer’s 35 -14- LSB 1670XS (5) 89 jm/jh 14/ 48

S.F. 149 fiscal year ending during the second half of that calendar year 1 and after the date the board adopts a resolution to participate 2 in the program or the first half of the succeeding calendar 3 year, and shall be imposed on all individuals residing in the 4 school district on the last day of the applicable tax year. 5 As used in this section , “state individual income tax” means 6 the taxes computed under section 422.5 , less the amounts of 7 nonrefundable credits allowed under chapter 422, subchapter II . 8 Sec. 51. Section 257.29, subsections 3 and 4, Code 2021, are 9 amended to read as follows: 10 3. The educational improvement program shall be funded 11 by either an educational improvement property tax or by a 12 combination of an educational improvement property tax and an 13 educational improvement income surtax . The method of raising 14 the educational improvement moneys shall be determined by the 15 board. Subject to the limitation in section 298.14 , if the 16 board uses a combination of an educational improvement property 17 tax and an educational improvement income surtax, the board 18 shall determine the percent of income surtax to be imposed, 19 expressed as full percentage points, not to exceed twenty 20 percent. 21 4. The department of management shall establish the amount 22 of the educational improvement property tax to be levied or 23 the amount of the combination of the educational improvement 24 property tax to be levied and the amount of the school district 25 income surtax to be imposed for each school year that the 26 educational improvement amount is authorized. The educational 27 improvement property tax and income surtax, if an income 28 surtax is imposed, shall be levied and imposed , collected, 29 and paid to the school district in the manner provided for 30 the instructional support program in sections section 257.21 31 through 257.26 . Moneys received by a school district under the 32 educational improvement program are miscellaneous income. 33 Sec. 52. Section 260E.2, subsection 6, Code 2021, is amended 34 to read as follows: 35 -15- LSB 1670XS (5) 89 jm/jh 15/ 48

S.F. 149 6. “Employee” means the person employed in a new job. 1 “Employee” does not include a person who would not be subject 2 to the withholding of Iowa income pursuant to a reciprocal 3 agreement under section 422.8, subsection 5 , Code 2021 . 4 Sec. 53. Section 260E.5, subsections 2 and 6, Code 2021, are 5 amended to read as follows: 6 2. An amount equal to one and one-half percent of the gross 7 wages paid by the employer to each employee participating in a 8 project shall be credited from the payment made by an employer 9 pursuant to section 422.16 , Code 2021 . If the amount of the 10 withholding by the employer is less than one and one-half 11 percent of the gross wages paid to the employees covered by the 12 agreement, then the employer shall receive a credit against 13 other withholding taxes due by the employer. The employer 14 shall remit the amount of the credit quarterly in the same 15 manner as withholding payments are reported to the department 16 of revenue, to the community college to be allocated to and 17 when collected paid into a special fund of the community 18 college to pay the principal of and interest on certificates 19 issued by the community college to finance or refinance, in 20 whole or in part, the project. When the principal and interest 21 on the certificates have been paid, the employer credits shall 22 cease and any money received after the certificates have 23 been paid shall be remitted to the treasurer of state to be 24 deposited in the general fund of the state. 25 6. An employee participating in a project will receive full 26 credit for the amount withheld as provided in section 422.16 , 27 Code 2021 . 28 Sec. 54. Section 260G.4A, subsections 2 and 5, Code 2021, 29 are amended to read as follows: 30 2. Eligibility for program job credits shall be based on 31 certification of program job positions and program job wages 32 by the employer at the time established in the agreement. An 33 amount up to ten percent of the gross program job wage as 34 certified by the employer in the agreement shall be credited 35 -16- LSB 1670XS (5) 89 jm/jh 16/ 48

S.F. 149 from the total payment made by an employer pursuant to section 1 422.16 , Code 2021 . The employer shall receive a credit against 2 all withholding taxes due by the employer regardless of whether 3 or not the withholding from the employer of current program 4 job wages is less than ten percent. The employer shall remit 5 the amount of the credit quarterly in the same manner as 6 withholding payments are reported to the department of revenue, 7 to the community college to be allocated to and when collected 8 paid into a special fund of the community college to pay, in 9 part, the program costs. When the program costs have been 10 paid, the employer credits shall cease and any moneys received 11 after the program costs have been paid shall be remitted to the 12 treasurer of state to be deposited in the general fund of the 13 state. 14 5. Employees from an employer participating in an agreement 15 shall receive full credit for the amount withheld as provided 16 in section 422.16 , Code 2021 . 17 Sec. 55. Section 279.63, subsection 2, paragraph a, Code 18 2021, is amended to read as follows: 19 a. All property tax levies , income surtaxes, and local 20 option sales taxes in place in the school district, listed by 21 type of levy, rate, amount, duration, and notification of the 22 maximum rate and amount limitations permitted by statute. 23 Sec. 56. Section 298.2, subsection 1, paragraph a, Code 24 2021, is amended to read as follows: 25 a. A physical plant and equipment levy of not exceeding 26 one dollar and sixty-seven cents per thousand dollars of 27 assessed valuation in the district is established except as 28 otherwise provided in this subsection . The physical plant 29 and equipment levy consists of the regular physical plant 30 and equipment levy of not exceeding thirty-three cents per 31 thousand dollars of assessed valuation in the district and 32 a voter-approved physical plant and equipment levy of not 33 exceeding one dollar and thirty-four cents per thousand 34 dollars of assessed valuation in the district. However, the 35 -17- LSB 1670XS (5) 89 jm/jh 17/ 48

S.F. 149 voter-approved physical plant and equipment levy may consist 1 of a combination of a physical plant and equipment property 2 tax levy and a physical plant and equipment income surtax as 3 provided in subsection 4 with the maximum amount levied and 4 imposed limited to an amount that could be raised by a one 5 dollar and thirty-four cent property tax levy. 6 Sec. 57. Section 298.2, subsection 4, Code 2021, is amended 7 to read as follows: 8 4. a. The board may on its own motion, and upon the 9 written request of not less than one hundred eligible electors 10 or thirty percent of the number of eligible electors voting 11 at the last regular school election, whichever is greater, 12 shall, direct the county commissioner of elections to provide 13 for submitting the proposition of levying the voter-approved 14 physical plant and equipment levy for a period of time 15 authorized by the voters at the election, not to exceed ten 16 years. The election shall be held on a date specified in 17 section 39.2, subsection 4 , paragraph “c” . The proposition is 18 adopted if a majority of those voting on the proposition at the 19 election approves it. The voter-approved physical plant and 20 equipment levy shall be funded either by a physical plant and 21 equipment property tax or by a combination of a physical plant 22 and equipment property tax and a physical plant and equipment 23 income surtax, as determined by the board . However, if the 24 board intends to enter into a rental or lease arrangement under 25 section 279.26 , or intends to enter into a loan agreement under 26 section 297.36 , only a property tax shall be levied for those 27 purposes. Subject to the limitations of section 298.14 , if 28 the board uses a combination of a physical plant and equipment 29 property tax and a physical plant and equipment surtax, for 30 each fiscal year the board shall determine the percent of 31 income surtax to be imposed expressed as full percentage 32 points, not to exceed twenty percent. 33 b. If a combination of a property tax and income surtax 34 is used, by April 15 of the previous school year, the board 35 -18- LSB 1670XS (5) 89 jm/jh 18/ 48

S.F. 149 shall certify the percent of the income surtax to be imposed 1 and the amount to be raised to the department of management 2 and the department of management shall establish the rate of 3 the property tax and income surtax for the school year. The 4 physical plant and equipment property tax and income surtax 5 shall be levied or imposed , collected, and paid to the school 6 district in the manner provided for the instructional support 7 program in sections section 257.21 through 257.26 . 8 Sec. 58. Section 403.19A, subsection 3, paragraphs b and i, 9 Code 2021, are amended to read as follows: 10 b. An amount equal to three percent of the gross wages paid 11 by an employer to each employee under a withholding agreement 12 shall be credited from the payment made by the employer 13 pursuant to section 422.16 , Code 2021 . If the amount of the 14 withholding by the employer is less than three percent of the 15 gross wages paid to the employees covered by the withholding 16 agreement, the employer shall receive a credit against other 17 withholding taxes due by the employer or may carry the credit 18 forward for up to ten years or until depleted, whichever is 19 the earlier. The employer shall remit the amount of the 20 credit quarterly, in the same manner as withholding payments 21 are reported to the department of revenue, to the pilot 22 project city to be allocated to and when collected paid into 23 a designated withholding project fund for the project. All 24 amounts so deposited shall be used or pledged by the pilot 25 project city for a project related to the employer pursuant to 26 the withholding agreement. 27 i. An employee whose wages are subject to a withholding 28 agreement shall receive full credit for the amount withheld as 29 provided in section 422.16 , Code 2021 . 30 Sec. 59. Section 404A.2, subsection 2, Code 2021, is amended 31 to read as follows: 32 2. The tax credit shall be allowed against the taxes imposed 33 in chapter 422, subchapters II, III , and V , and in chapter 34 432 . An individual may claim a tax credit under this section 35 -19- LSB 1670XS (5) 89 jm/jh 19/ 48

S.F. 149 of a partnership, limited liability company, S corporation, 1 estate, or trust electing to have income taxed directly to the 2 individual. For an individual claiming a tax credit of an 3 estate or trust, the amount claimed by the individual shall be 4 based upon the pro rata share of the individual’s earnings from 5 the estate or trust. For an individual claiming a tax credit 6 of a partnership, limited liability company, or S corporation, 7 the amount claimed by the partner, member, or shareholder, 8 respectively, shall be based upon the amounts designated by 9 the eligible partnership, S corporation, or limited liability 10 company, as applicable. 11 Sec. 60. Section 404A.2, subsection 3, paragraph c, Code 12 2021, is amended to read as follows: 13 c. A tax credit shall not be claimed by a transferee 14 under this section until a replacement tax credit certificate 15 identifying the transferee as the proper holder has been 16 issued. The transferee may use the amount of the tax credit 17 transferred against the taxes imposed in chapter 422, 18 subchapters II, III , and V , and in chapter 432 , for any tax 19 year the original transferor could have claimed the tax credit. 20 Any consideration received for the transfer of the tax credit 21 shall not be included as income under chapter 422, subchapters 22 II, III , and V . Any consideration paid for the transfer of the 23 tax credit shall not be deducted from income under chapter 422, 24 subchapters II, III , and V . 25 Sec. 61. Section 404A.2, subsection 5, paragraph c, Code 26 2021, is amended to read as follows: 27 c. The tax credit certificate, unless rescinded by the 28 authority, shall be accepted by the department of revenue as 29 payment for taxes imposed in chapter 422, subchapters II, 30 III , and V , and in chapter 432 , subject to any conditions 31 or restrictions placed by the authority or the department of 32 revenue upon the face of the tax credit certificate and subject 33 to the limitations of this program. 34 Sec. 62. Section 404A.2, subsection 6, Code 2021, is amended 35 -20- LSB 1670XS (5) 89 jm/jh 20/ 48

S.F. 149 to read as follows: 1 6. For purposes of the individual and corporate income taxes 2 tax and the franchise tax, the increase in the basis of the 3 rehabilitated property that would otherwise result from the 4 qualified rehabilitation expenditures shall be reduced by the 5 amount of the credit computed under this section . 6 Sec. 63. Section 421.27, subsection 2, paragraph c, 7 subparagraph (2), Code 2021, is amended by striking the 8 subparagraph. 9 Sec. 64. Section 421.60, subsection 2, paragraph c, 10 subparagraph (1), Code 2021, is amended to read as follows: 11 (1) If the notice of assessment or denial of a claim for 12 refund relates to a tax return filed pursuant to section 422.14 13 or chapter 450 by the taxpayer which designates an individual 14 as an authorized representative of the taxpayer with respect to 15 that return, or if a power of attorney has been filed with the 16 department by the taxpayer which designates an individual as 17 an authorized representative of the taxpayer with respect to 18 any tax that is included in the notice of assessment or denial 19 of a claim for refund, a copy of the notice together with any 20 additional information required to be sent to the taxpayer 21 shall be sent to the authorized representative as well. 22 Sec. 65. Section 422.1, subsection 2, Code 2021, is amended 23 to read as follows: 24 2. Subchapter II Personal net income tax Provisions 25 related to business tax on corporations . 26 Sec. 66. Section 422.11L, subsection 1, unnumbered 27 paragraph 1, Code 2021, is amended to read as follows: 28 The taxes imposed under this subchapter , less the credits 29 allowed under section 422.12 , III shall be reduced by a solar 30 energy system tax credit equal to the sum of the following: 31 Sec. 67. Section 422.11L, subsection 3, paragraph a, Code 32 2021, is amended by striking the paragraph. 33 Sec. 68. Section 422.11O, subsection 2, unnumbered 34 paragraph 1, Code 2021, is amended to read as follows: 35 -21- LSB 1670XS (5) 89 jm/jh 21/ 48

S.F. 149 The taxes imposed under this subchapter , less the credits 1 allowed under section 422.12 , III shall be reduced by an 2 E-85 gasoline promotion tax credit for each tax year that 3 the taxpayer is eligible to claim the tax credit under this 4 subsection . 5 Sec. 69. Section 422.11O, subsection 7, Code 2021, is 6 amended by striking the subsection. 7 Sec. 70. Section 422.11P, subsection 3, unnumbered 8 paragraph 1, Code 2021, is amended to read as follows: 9 The taxes imposed under this subchapter , less the credits 10 allowed under section 422.12 , III shall be reduced by a 11 biodiesel blended fuel tax credit for each tax year that 12 the taxpayer is eligible to claim a tax credit under this 13 subsection . 14 Sec. 71. Section 422.11P, subsection 7, Code 2021, is 15 amended by striking the subsection. 16 Sec. 72. Section 422.11S, subsection 1, Code 2021, is 17 amended to read as follows: 18 1. The taxes imposed under this subchapter , less the 19 credits allowed under section 422.12 , III shall be reduced by 20 a school tuition organization tax credit equal to sixty-five 21 percent of the amount of the voluntary cash or noncash 22 contributions made by the taxpayer during the tax year to a 23 school tuition organization, subject to the total dollar value 24 of the organization’s tax credit certificates as computed in 25 subsection 8 . The tax credit shall be claimed by use of a tax 26 credit certificate as provided in subsection 7 . 27 Sec. 73. Section 422.11S, subsections 4 and 5, Code 2021, 28 are amended by striking the subsections. 29 Sec. 74. Section 422.11Y, subsection 3, unnumbered 30 paragraph 1, Code 2021, is amended to read as follows: 31 The taxes imposed under this subchapter , less the credits 32 allowed under section 422.12 , III shall be reduced by the 33 amount of the E-15 plus gasoline promotion tax credit for each 34 tax year that the taxpayer is eligible to claim a tax credit 35 -22- LSB 1670XS (5) 89 jm/jh 22/ 48

S.F. 149 under this subsection . 1 Sec. 75. Section 422.11Y, subsection 8, Code 2021, is 2 amended by striking the subsection. 3 Sec. 76. Section 422.15, subsections 2 and 3, Code 2021, are 4 amended by striking the subsections. 5 Sec. 77. Section 422.15, subsection 4, Code 2021, is amended 6 to read as follows: 7 4. Notwithstanding subsections subsection 1 , 2, and 3 , or 8 any other provision of this chapter , withholding of income 9 tax and any reporting requirement shall not be imposed upon 10 a person, corporation, or withholding agent or any payor of 11 deferred compensation, pensions, or annuities with regard to 12 such payments made to a nonresident of the state. 13 Sec. 78. Section 422.21, Code 2021, is amended by striking 14 the section and inserting in lieu thereof the following: 15 422.21 Form and time of return. 16 Returns shall be in the form the director prescribes, and 17 shall be filed with the department on or before the last day 18 of the fourth month after the expiration of the tax year. 19 However, cooperative associations as defined in section 6072(d) 20 of the Internal Revenue Code shall file their returns on or 21 before the fifteenth day of the ninth month following the 22 close of the taxable year and nonprofit corporations subject 23 to the unrelated business income tax imposed by section 24 422.33, subsection 1A, shall file their returns on or before 25 the fifteenth day of the fifth month following the close of 26 the taxable year. If, under the Internal Revenue Code, a 27 corporation is required to file a return covering a tax period 28 of less than twelve months, the state return shall be for the 29 same period and is due forty-five days after the due date of 30 the federal tax return, excluding any extension of time to 31 file. In case of sickness, absence, or other disability, or 32 if good cause exists, the director may allow further time for 33 filing returns. The director shall cause to be prepared blank 34 forms for the returns and shall cause them to be distributed 35 -23- LSB 1670XS (5) 89 jm/jh 23/ 48

S.F. 149 throughout the state and to be furnished upon application, 1 but failure to receive or secure the form does not relieve 2 the taxpayer from the obligation of making a return that is 3 required. The department may as far as consistent with the 4 Code draft income tax forms to conform to the income tax 5 forms of the internal revenue department of the United States 6 government. 7 Sec. 79. Section 422.22, Code 2021, is amended to read as 8 follows: 9 422.22 Supplementary returns. 10 If the director shall be of the opinion that any taxpayer 11 required under this subchapter III to file a return has 12 failed to file such a return or to include in a return filed, 13 either intentionally or through error, items of taxable 14 income, the director may require from such taxpayer a return 15 or supplementary return in such form as the director shall 16 prescribe, of all the items of income which the taxpayer 17 received during the year for which the return is made, whether 18 or not taxable under the provisions of this subchapter III . 19 If from a supplementary return, or otherwise, the director 20 finds that any items of income, taxable under this subchapter 21 III , have been omitted from the original return, the director 22 may require the items so omitted to be added to the original 23 return. Such supplementary return and the correction of the 24 original return shall not relieve the taxpayer from any of 25 the penalties to which the taxpayer may be liable under any 26 provisions of this subchapter III , whether or not the director 27 required a return or a supplementary return under this section . 28 Sec. 80. Section 422.25, subsection 1, paragraph a, 29 subparagraph (2), Code 2021, is amended to read as follows: 30 (2) “Federal adjustments report” means the method or form 31 required by the department by rule to report final federal 32 adjustments or final federal partnership adjustments as defined 33 in section 422.25A , and in the case of any entity taxed as a 34 partnership or S corporation for federal income tax purposes, 35 -24- LSB 1670XS (5) 89 jm/jh 24/ 48

S.F. 149 identifies all owners that hold an interest directly in such 1 entity and provides the effect of the final federal adjustments 2 on such owner’s Iowa income. 3 Sec. 81. Section 422.25, subsection 1, paragraph e, 4 subparagraph (1), Code 2021, is amended to read as follows: 5 (1) In addition to the applicable period of limitation for 6 examination and determination in paragraph “b” , “c” , or “d” , 7 the department may make an examination and determination at any 8 time within one year from the date of receipt by the department 9 of a federal adjustments report with respect to a final 10 federal adjustment or final federal partnership adjustment 11 as defined in section 422.25A for a particular tax year. In 12 order to begin the running of the one-year period, the federal 13 adjustments report related to the final federal adjustment or 14 final federal partnership adjustment shall be transmitted to 15 the department by the taxpayer in the form and manner specified 16 by the department by rule. 17 Sec. 82. Section 422.32, Code 2021, is amended to read as 18 follows: 19 422.32 Definitions. 20 1. For the purpose of this subchapter and unless otherwise 21 required by the context: 22 a. 1. “Affiliated group” means a group of corporations as 23 defined in section 1504(a) of the Internal Revenue Code. 24 b. 2. a. “Business income” means income arising from 25 transactions and activity in the regular course of the 26 taxpayer’s trade or business; or income from tangible and 27 intangible property if the acquisition, management, and 28 disposition of the property constitute integral parts of the 29 taxpayer’s regular trade or business operations; or gain or 30 loss resulting from the sale, exchange, or other disposition of 31 real property or of tangible or intangible personal property, 32 if the property while owned by the taxpayer was operationally 33 related to the taxpayer’s trade or business carried on in 34 Iowa or operationally related to sources within Iowa, or the 35 -25- LSB 1670XS (5) 89 jm/jh 25/ 48

S.F. 149 property was operationally related to sources outside this 1 state and to the taxpayer’s trade or business carried on in 2 Iowa; or gain or loss resulting from the sale, exchange, or 3 other disposition of stock in another corporation if the 4 activities of the other corporation were operationally related 5 to the taxpayer’s trade or business carried on in Iowa while 6 the stock was owned by the taxpayer. A taxpayer may have more 7 than one regular trade or business in determining whether 8 income is business income. 9 (1) b. It is the intent of the general assembly to treat as 10 apportionable business income all income that may be treated 11 as apportionable business income under the Constitution of the 12 United States. 13 (2) c. The filing of an Iowa income tax return on a 14 combined report basis is neither allowed nor required by this 15 paragraph “b” subsection 2 . 16 c. 3. “Commercial domicile” means the principal place from 17 which the trade or business of the taxpayer is directed or 18 managed. 19 d. 4. “Corporation” includes joint stock companies, and 20 associations organized for pecuniary profit, and partnerships 21 and limited liability companies taxed as corporations under the 22 Internal Revenue Code. 23 e. 5. “Domestic corporation” means any corporation 24 organized under the laws of this state. 25 6. “Fiduciary” means a guardian, trustee, executor, 26 administrator, receiver, conservator, or any person, whether 27 individual or corporate, acting in any fiduciary capacity for 28 any person, trust, or estate. 29 7. “Fiscal year” means an accounting period of twelve 30 months, ending on the last day of any month other than 31 December. 32 f. 8. “Foreign corporation” means any corporation other 33 than a domestic corporation. 34 9. “Foreign country” means any jurisdiction other than one 35 -26- LSB 1670XS (5) 89 jm/jh 26/ 48

S.F. 149 embraced within the United States. The words “United States” , 1 when used in a geographical sense, include the states, the 2 District of Columbia, and the possessions of the United States. 3 g. 10. “Income from sources within this state” means income 4 from real, tangible, or intangible property located or having 5 a situs in this state. 6 11. “Income year” means the calendar year or the fiscal year 7 upon the basis of which the net income is computed under this 8 subchapter. 9 12. “Individual” means a natural person. 10 h. 13. “Internal Revenue Code” means one of the following: 11 (1) a. For tax years beginning during the 2019 calendar 12 year, “Internal Revenue Code” means the Internal Revenue Code of 13 1954, prior to the date of its redesignation as the Internal 14 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 15 the Internal Revenue Code of 1986 as amended and in effect on 16 March 24, 2018. This definition shall not be construed to 17 include any amendment to the Internal Revenue Code enacted 18 after the date specified in the preceding sentence, including 19 any amendment with retroactive applicability or effectiveness. 20 (2) b. For tax years beginning on or after January 1, 21 2020, “Internal Revenue Code” means the Internal Revenue Code of 22 1954, prior to the date of its redesignation as the Internal 23 Revenue Code of 1986 by the Tax Reform Act of 1986, or means the 24 Internal Revenue Code of 1986, as amended. 25 i. 14. “Nonbusiness income” means all income other than 26 business income. 27 15. “Paid” , for the purposes of the deductions under this 28 subchapter, means “paid or accrued” or “paid or incurred” , and 29 the terms “paid or incurred” and “paid or accrued” shall be 30 construed according to the method of accounting upon the basis 31 of which the net income is computed under this subchapter. 32 The term “received” , for the purpose of the computation of net 33 income under this subchapter, means “received or accrued” , and 34 the term “received or accrued” shall be construed according to 35 -27- LSB 1670XS (5) 89 jm/jh 27/ 48

S.F. 149 the method of accounting upon the basis of which the net income 1 is computed under this subchapter. 2 16. “Resident” applies only to individuals and includes, 3 for the purpose of determining liability to the tax imposed by 4 this subchapter upon or with reference to the income of any 5 tax year, any individual domiciled in the state, and any other 6 individual who maintains a permanent place of abode within the 7 state. 8 j. 17. “State” means any state of the United States, the 9 District of Columbia, the Commonwealth of Puerto Rico, any 10 territory or possession of the United States, and any foreign 11 country or political subdivision thereof. 12 18. a. “Tax year” means the calendar year, or the fiscal 13 year ending during such calendar year, upon the basis of which 14 the net income is computed under this subchapter. 15 b. If a taxpayer has made the election provided by section 16 441(f) of the Internal Revenue Code, “tax year” means the annual 17 period so elected, varying from fifty-two to fifty-three weeks. 18 c. If the effective date or the applicability of a provision 19 of this subchapter is expressed in terms of a tax year 20 beginning, including, or ending with reference to a specified 21 date which is the first or last day of a month, a tax year 22 described in paragraph “a” of this subsection shall be treated 23 as beginning with the first day of the calendar month beginning 24 nearest to the first day of the tax year or as ending with the 25 last day of the calendar month ending nearest to the last day 26 of the tax year. 27 k. 19. “Taxable in another state”. For purposes of 28 allocation and apportionment of income under this subchapter , a 29 taxpayer is “taxable in another state” if: 30 (1) a. In that state the taxpayer is subject to a net 31 income tax, a franchise tax measured by net income, a franchise 32 tax for the privilege of doing business, or a corporate stock 33 tax; or 34 (2) b. That state has jurisdiction to subject the taxpayer 35 -28- LSB 1670XS (5) 89 jm/jh 28/ 48

S.F. 149 to a net income tax regardless of whether, in fact, the state 1 does or does not. 2 l. 20. “Unitary business” means a business carried on 3 partly within and partly without a state where the portion 4 of the business carried on within the state depends on or 5 contributes to the business outside the state. 6 2. The words, terms, and phrases defined in section 422.4, 7 subsections 4, 5, 6, 8, 9, 13, 15, 16, and 17 , when used in this 8 subchapter , shall have the meanings ascribed to them in section 9 422.4, except where the context clearly indicates a different 10 meaning. 11 Sec. 83. Section 422.35, subsection 2, Code 2021, is amended 12 to read as follows: 13 2. Add interest and dividends from foreign securities, from 14 securities of state and other political subdivisions, and from 15 regulated investment companies exempt from federal income tax 16 under the Internal Revenue Code, except for those securities 17 the interest and dividends from which are exempt from taxation 18 by the state of Iowa as otherwise provided by law, including 19 those set forth in section 422.7, subsection 2 . : 20 a. School infrastructure program bonds pursuant to section 21 12.81, subsection 8. 22 b. Iowa jobs program revenue bonds pursuant to section 23 12.87, subsection 8. 24 c. Iowa utility board and Iowa consumer advocate building 25 project bonds pursuant to section 12.91, subsection 9. 26 d. Iowa finance authority beginning farmer loan program 27 bonds pursuant to section 16.64, subsection 2. 28 e. Water pollution control works and drinking facilities 29 financing program bonds pursuant to section 16.131, subsection 30 5. 31 f. Iowa prison infrastructure revenue bonds pursuant to 32 section 12.80, subsection 3, and section 16.177, subsection 8. 33 g. Quad cities interstate metropolitan authority bonds 34 pursuant to section 28A.24. 35 -29- LSB 1670XS (5) 89 jm/jh 29/ 48

S.F. 149 h. Iowa finance authority E911 program bonds pursuant to 1 section 34A.20, subsection 6. 2 i. Soil and water conservation subdistrict bonds pursuant 3 to section 161A.22. 4 j. Community college residence hall and dormitory bonds 5 pursuant to section 260C.61. 6 k. Community college bond program bonds pursuant to section 7 260C.71, subsection 6. 8 l. Higher education loan authority bonds pursuant to section 9 261A.27. 10 m. State board of regents bonds pursuant to sections 262.41, 11 262.51, 262.60, 262A.8, and 263A.6. 12 n. Interstate bridges bonds pursuant to section 313A.36. 13 o. Aviation authority bonds pursuant to section 330A.16. 14 p. County health center bonds pursuant to section 331.441, 15 subsection 2, paragraph “c” , subparagraph (7). 16 q. Rural water district bonds pursuant to section 357A.15. 17 r. Urban renewal bonds pursuant to section 403.9, subsection 18 2. 19 s. Municipal housing project bonds pursuant to section 20 403A.12. 21 t. Comprehensive petroleum underground storage tank fund 22 bonds pursuant to section 455G.6, subsection 14. 23 Sec. 84. Section 422.39, Code 2021, is amended to read as 24 follows: 25 422.39 Statutes applicable to corporations and corporation 26 tax. 27 All the provisions of sections 422.24 through 422.27 422.26 28 of subchapter II , respecting payment, collection, reporting, 29 examination, and assessment, shall apply in respect to a 30 corporation subject to the provisions of this subchapter and 31 to the tax due and payable by a corporation taxable under this 32 subchapter . This includes but is not limited to a corporation 33 that is a pass-through entity as defined in section 422.25A . 34 Sec. 85. Section 422.73, subsections 2, 3, and 4, Code 2021, 35 -30- LSB 1670XS (5) 89 jm/jh 30/ 48

S.F. 149 are amended to read as follows: 1 2. a. If it appears that an amount of tax, penalty, or 2 interest has been paid which was not due under subchapter II, 3 III or V of this chapter , then that amount shall be credited 4 against any tax due on the books of the department by the 5 person who made the excessive payment, or that amount shall be 6 refunded to the person or with the person’s approval, credited 7 to tax to become due. A claim for refund or credit that has 8 not been filed with the department within three years after 9 the return upon which a refund or credit claimed became due, 10 or within one year after the payment of the tax upon which a 11 refund or credit is claimed was made, whichever time is the 12 later, shall not be allowed by the director. If, as a result of 13 a carryback of a net operating loss or a net capital loss, the 14 amount of tax in a prior period is reduced and an overpayment 15 results, the claim for refund or credit of the overpayment 16 shall be filed with the department within the three years after 17 the return for the taxable year of the net operating loss or 18 net capital loss became due. 19 b. Notwithstanding the period of limitation specified in 20 paragraph “a” , the taxpayer shall have one year from the final 21 determination date of any final federal adjustment arising from 22 an internal revenue service audit or other similar action by 23 the internal revenue service with respect to the particular tax 24 year to claim an income tax refund or credit arising from that 25 final federal adjustment. 26 3. Notwithstanding subsection 2 , a claim for refund or 27 credit of the individual income tax paid which resulted from a 28 reduction in a person’s federal adjusted gross income due to 29 section 1106 of the FAA Modernization and Reform Act of 2012 , 30 Pub. L. No. 112-95 , shall be considered timely if the claim is 31 filed with the department on or before June 30, 2013. 32 4. The department shall enter into an agreement with the 33 internal revenue service for the transmission of federal 34 income tax reports on individuals required to file an Iowa 35 -31- LSB 1670XS (5) 89 jm/jh 31/ 48

S.F. 149 income tax return who have been involved in an income tax 1 matter with the internal revenue service. After the final 2 determination date of the income tax matter that involves a 3 final federal adjustment between the taxpayer and the internal 4 revenue service, the department shall determine whether the 5 individual is due a state income tax refund as a result of that 6 final federal adjustment from such income tax matter. If the 7 individual is due a state income tax refund, the department 8 shall notify the individual within thirty days and request 9 the individual to file a claim for refund or credit with the 10 department. 11 Sec. 86. Section 422.110, Code 2021, is amended to read as 12 follows: 13 422.110 Income tax credit in lieu of refund. 14 1. In lieu of the fuel tax refund provided in section 15 452A.17 , a person or corporation subject to taxation under 16 subchapter II or III of this chapter may elect to receive an 17 income tax credit. The person or corporation which elects to 18 receive an income tax credit shall cancel its refund permit 19 obtained under section 452A.18 within thirty days after the 20 first day of its tax year or the permit becomes invalid at that 21 time. For the purposes of this section , “person” includes a 22 person claiming a tax credit based upon the person’s pro rata 23 share of the earnings from a partnership, limited liability 24 company, or corporation which is not subject to a tax under 25 subchapter II or III of this chapter as a partnership, limited 26 liability company, or corporation “corporation” means the same 27 as defined in section 422.32 . If the election to receive 28 an income tax credit has been made, it remains effective for 29 at least one tax year, and for subsequent tax years unless 30 a change is requested and a new refund permit applied for 31 within thirty days after the first day of the person’s or 32 corporation’s tax year. The income tax credit shall be the 33 amount of the Iowa fuel tax paid on fuel purchased by the 34 person or corporation and is subject to the conditions provided 35 -32- LSB 1670XS (5) 89 jm/jh 32/ 48

S.F. 149 in section 452A.17 with the exception that the income tax 1 credit is not available for refunds relating to casualty 2 losses, transport diversions, pumping credits, blending 3 errors, idle time, power takeoffs, reefer units, and exports by 4 distributors. 5 2. The right to a credit under this section is not 6 assignable and the credit may be claimed only by the person or 7 corporation that purchased the fuel. 8 Sec. 87. Section 422D.1, Code 2021, is amended to read as 9 follows: 10 422D.1 Authorization —— election —— imposition and repeal —— 11 use of revenues. 12 1. a. A county board of supervisors may offer for voter 13 approval any of the following taxes or a combination of the 14 following taxes: 15 (1) Local option income surtax. 16 (2) An an ad valorem property tax. 17 b. Revenues generated from these taxes the ad valorem 18 property tax shall be used for emergency medical services as 19 provided in section 422D.6 . 20 2. a. The taxes property tax for emergency medical services 21 shall only be imposed after an election at which a majority of 22 those voting on the question of imposing the tax or combination 23 of taxes specified in subsection 1 , paragraph “a” , subparagraph 24 (1) or (2), vote in favor of the question. However, the tax 25 or combination of taxes specified in subsection 1 shall not 26 be imposed on property within or on residents of a benefited 27 emergency medical services district under chapter 357F . The 28 question of imposing the tax or combination of the taxes may 29 be submitted at the regular city election, a special election, 30 or the general election. Notice of the question shall be 31 provided by publication at least sixty days before the time of 32 the election and shall identify the tax or combination of taxes 33 and the levy rate or rates, as applicable . If a majority of 34 those voting on the question approve the imposition of the tax 35 -33- LSB 1670XS (5) 89 jm/jh 33/ 48

S.F. 149 or combination of taxes , the tax or combination of taxes shall 1 be imposed as follows: 2 (1) A local option income surtax shall be imposed for tax 3 years beginning on or after January 1 of the fiscal year in 4 which the favorable election was held. 5 (2) An ad valorem property tax shall be imposed levied for 6 the fiscal year in which the election was held. 7 b. Before a county imposes an income surtax as specified 8 in subsection 1 , paragraph “a” , subparagraph (1), a benefited 9 emergency medical services district in the county shall be 10 dissolved, and the county shall be liable for the outstanding 11 obligations of the benefited district. If the benefited 12 district extends into more than one county, the county imposing 13 the income surtax shall be liable for only that portion of the 14 obligations relating to the portion of the benefited district 15 in the county. 16 3. Revenues received by the county from the taxes imposed 17 tax levied under this chapter shall be deposited into the 18 emergency medical services trust fund created pursuant to 19 section 422D.6 and shall be used as provided in that section. 20 4. Any tax or combination of taxes imposed levied under this 21 chapter shall be for a maximum period of five years. 22 Sec. 88. Section 423.14A, subsection 3, paragraph e, 23 subparagraph (2), subparagraph division (c), subparagraph 24 subdivision (ii), Code 2021, is amended to read as follows: 25 (ii) “Resident” includes an individual who is a resident 26 of this state, as defined in section 422.4 422.32 , and any 27 business that owns any tangible or intangible property with 28 a situs in this state, or that has one or more employees 29 performing or providing services for the business in this 30 state. 31 Sec. 89. Section 425.17, subsection 7, Code 2021, is amended 32 to read as follows: 33 7. “Income” means the sum of Iowa net income as defined 34 in section 422.7 , Code 2021, plus all of the following to 35 -34- LSB 1670XS (5) 89 jm/jh 34/ 48

S.F. 149 the extent not already included in Iowa net income: capital 1 gains, alimony, child support money, cash public assistance 2 and relief, except property tax relief granted under this 3 subchapter , amount of in-kind assistance for housing expenses, 4 the gross amount of any pension or annuity, including but not 5 limited to railroad retirement benefits, payments received 6 under the federal Social Security Act, except child insurance 7 benefits received by a member of the claimant’s household, and 8 all military retirement and veterans’ disability pensions, 9 interest received from the state or federal government or 10 any of its instrumentalities, workers’ compensation and the 11 gross amount of disability income or “loss of time” insurance. 12 “Income” does not include gifts from nongovernmental sources, 13 or surplus foods or other relief in kind supplied by a 14 governmental agency. In determining income, net operating 15 losses and net capital losses shall not be considered. 16 Sec. 90. Section 425.23, subsection 4, paragraph b, Code 17 2021, is amended to read as follows: 18 b. The annual adjustment factor for the 1998 base year is 19 one hundred percent. For each subsequent base year, the annual 20 adjustment factor equals the annual inflation factor for the 21 calendar year, in which the base year begins, as computed in 22 section 422.4 for purposes of the individual income tax , Code 23 2021 . 24 Sec. 91. Section 476.20, subsection 2, Code 2021, is amended 25 to read as follows: 26 2. The board shall establish rules requiring a regulated 27 public utility furnishing gas or electricity to include in 28 the utility’s notice of pending disconnection of service a 29 written statement advising the customer that the customer 30 may be eligible to participate in the low income home energy 31 assistance program or weatherization assistance program 32 administered by the division of community action agencies of 33 the department of human rights. The written statement shall 34 list the address and telephone number of the local agency 35 -35- LSB 1670XS (5) 89 jm/jh 35/ 48

S.F. 149 which is administering the customer’s low income home energy 1 assistance program and the weatherization assistance program. 2 The written statement shall also state that the customer 3 is advised to contact the public utility to settle any of 4 the customer’s complaints with the public utility, but if a 5 complaint is not settled to the customer’s satisfaction, the 6 customer may file the complaint with the board. The written 7 statement shall include the address and phone number of the 8 board. If the notice of pending disconnection of service 9 applies to a residence, the written statement shall advise 10 that the disconnection does not apply from November 1 through 11 April 1 for a resident who is a “head of household”, as 12 defined in section 422.4 , head of household and who has been 13 certified to the public utility by the local agency which is 14 administering the low income home energy assistance program and 15 weatherization assistance program as being eligible for either 16 the low income home energy assistance program or weatherization 17 assistance program, and that if such a resident resides within 18 the serviced residence, the customer should promptly have 19 the qualifying resident notify the local agency which is 20 administering the low income home energy assistance program and 21 weatherization assistance program. The board shall establish 22 rules requiring that the written notice contain additional 23 information as it deems necessary and appropriate. 24 Sec. 92. Section 476.20, subsection 3, paragraph b, Code 25 2021, is amended to read as follows: 26 b. A qualified applicant for the low income home energy 27 assistance program or the weatherization assistance program who 28 is also a “head of household”, as defined in section 422.4, 29 subsection 7 , head of household shall be promptly certified 30 by the local agency administering the applicant’s program to 31 the applicant’s public utility that the resident is a “head 32 of household” as defined in section 422.4, subsection 7 , head 33 of household and is qualified for the low income home energy 34 assistance program or weatherization assistance program. 35 -36- LSB 1670XS (5) 89 jm/jh 36/ 48

S.F. 149 Notwithstanding subsection 1 , a public utility furnishing gas 1 or electricity shall not disconnect service from November 1 2 through April 1 to a residence which has a resident that has 3 been certified under this paragraph. For purposes of this 4 section, “head of household” has the same meaning as provided 5 by the Internal Revenue Code. 6 Sec. 93. Section 476B.2, Code 2021, is amended to read as 7 follows: 8 476B.2 General rule. 9 The owner of a qualified facility shall, for each 10 kilowatt-hour of qualified electricity that the owner sells 11 or uses for on-site consumption during the ten-year period 12 beginning on the date the qualified facility was originally 13 placed in service, be allowed a wind energy production tax 14 credit to the extent provided in this chapter against the tax 15 imposed in chapter 422, subchapters II, III , and V, and chapter 16 432 , and may claim a refund of tax imposed by chapter 423 or 17 437A for any tax year within the time period set forth in 18 section 423.47 or 437A.14 . 19 Sec. 94. Section 476B.6, subsection 5, paragraphs a, b, and 20 c, Code 2021, are amended to read as follows: 21 a. If the tax credit application is filed by a partnership, 22 limited liability company, S corporation, estate, trust, or 23 other reporting entity all of the income of which is taxed 24 directly to its equity holders or beneficiaries, for the taxes 25 imposed under chapter 422, subchapter II or III, the tax credit 26 certificate shall be issued directly to equity holders or 27 beneficiaries of the applicant in proportion to their pro rata 28 share of the income of such entity. The applicant shall, in 29 the application made under this section , identify its equity 30 holders or beneficiaries, and the percentage of such entity’s 31 income that is allocable to each equity holder or beneficiary. 32 b. If the tax credit applicant under this section is 33 eligible to receive renewable electricity production credits 34 authorized under section 45 of the Internal Revenue Code, 35 -37- LSB 1670XS (5) 89 jm/jh 37/ 48

S.F. 149 as amended, and the tax credit applicant is a partnership, 1 limited liability company, S corporation, estate, trust, or 2 other reporting entity all of the income of which is taxed 3 directly to its equity holders or beneficiaries, for the taxes 4 imposed under chapter 422, subchapter II or III , the tax credit 5 certificate may be issued to a partner if the business is a 6 partnership, a shareholder if the business is an S corporation, 7 or a member if the business is a limited liability company 8 in the amounts designated by the eligible partnership, S 9 corporation, or limited liability company. In absence of 10 such designation, the credits under this section shall flow 11 through to the partners, shareholders, or members in accordance 12 with their pro rata share of the income of the entity. The 13 applicant shall, in the application made under this section , 14 identify the holders or beneficiaries that are to receive the 15 tax credit certificates and the percentage of the tax credit 16 that is allocable to each holder or beneficiary. 17 c. If an applicant under this section is eligible to 18 receive renewable electricity production credits authorized 19 under section 45 of the Internal Revenue Code, as amended, and 20 the tax credit applicant is a partnership, limited liability 21 company, S corporation, estate, trust, or other reporting 22 entity all of the income of which is taxed directly to its 23 equity holders or beneficiaries, for the taxes imposed under 24 chapter 422, subchapter II or III , the tax credit certificates 25 and all future rights to the tax credit in this section may be 26 distributed to an equity holder or beneficiary as a liquidating 27 distribution or portion thereof, of a holder or beneficiary’s 28 interest in the applicant entity. The applicant shall, in the 29 application made under this section , designate the percentage 30 of the tax credit allocable to the liquidating equity holder 31 or beneficiary that is to receive the current and future tax 32 credit certificates under this section . 33 Sec. 95. Section 476B.7, subsection 2, Code 2021, is amended 34 to read as follows: 35 -38- LSB 1670XS (5) 89 jm/jh 38/ 48

S.F. 149 2. The tax credit shall be freely transferable. The 1 transferee may use the amount of the tax credit transferred 2 against the taxes imposed under chapter 422, subchapters II, 3 III , and V , and chapter 432 for any tax year the original 4 transferor could have claimed the tax credit. The transferee 5 may claim a refund under chapter 423 or 437A for any tax year 6 within the time period set forth in section 423.47 or 437A.14 7 for which the original transferor could have claimed a refund. 8 Any consideration received for the transfer of the tax credit 9 shall not be included as income under chapter 422, subchapters 10 II, III , and V . Any consideration paid for the transfer of the 11 tax credit shall not be deducted from income under chapter 422, 12 subchapters II, III , and V . 13 Sec. 96. Section 476C.4, subsection 4, paragraph a, Code 14 2021, is amended to read as follows: 15 a. If the tax credit application is filed by a partnership, 16 limited liability company, S corporation, estate, trust, or 17 other reporting entity all of the income of which is taxed 18 directly to its equity holders or beneficiaries, for the taxes 19 imposed under chapter 422, subchapter II or III , the tax credit 20 certificate shall be issued directly to equity holders or 21 beneficiaries of the applicant in proportion to their pro rata 22 share of the income of such entity. The applicant shall, in 23 the application made under this section , identify its equity 24 holders or beneficiaries, and the percentage of such entity’s 25 income that is allocable to each equity holder or beneficiary. 26 Sec. 97. Section 476C.4, subsection 4, paragraph b, 27 subparagraph (1), Code 2021, is amended to read as follows: 28 (1) If the tax credit applicant under this section is 29 eligible to receive renewable electricity production credits 30 authorized under section 45 of the Internal Revenue Code, 31 as amended, and the tax credit applicant is a partnership, 32 limited liability company, S corporation, estate, trust, or 33 other reporting entity all of the income of which is taxed 34 directly to its equity holders or beneficiaries, for the taxes 35 -39- LSB 1670XS (5) 89 jm/jh 39/ 48

S.F. 149 imposed under chapter 422, subchapter II or III , the tax credit 1 certificate may be issued to a partner if the business is a 2 partnership, a shareholder if the business is an S corporation, 3 or a member if the business is a limited liability company 4 in the amounts designated by the eligible partnership, S 5 corporation, or limited liability company. In absence of such 6 designation, the credits under this section shall flow through 7 to the partners, shareholders, or members in accordance with 8 their pro rata share of the income of the entity. 9 Sec. 98. Section 476C.4, subsection 4, paragraph c, 10 subparagraph (1), Code 2021, is amended to read as follows: 11 (1) If an applicant under this section is eligible to 12 receive renewable electricity production credits authorized 13 under section 45 of the Internal Revenue Code, as amended, and 14 the tax credit applicant is a partnership, limited liability 15 company, S corporation, estate, trust, or other reporting 16 entity all of the income of which is taxed directly to its 17 equity holders or beneficiaries, for the taxes imposed under 18 chapter 422, subchapter II or III , the tax credit certificates 19 and all future rights to the tax credit in this section may be 20 distributed to an equity holder or beneficiary as a liquidating 21 distribution or portion thereof, of a holder or beneficiary’s 22 interest in the applicant entity. 23 Sec. 99. Section 476C.6, subsection 1, paragraph b, Code 24 2021, is amended to read as follows: 25 b. The transferee may use the amount of the tax credit 26 transferred against taxes imposed under chapter 422, 27 subchapters II, III , and V , and chapter 432 for any tax year 28 the original transferor could have claimed the tax credit. The 29 transferee may claim a refund under chapter 423 or 437A for any 30 tax year within the time period set forth in section 423.47 or 31 437A.14 for which the original transferor could have claimed 32 the refund. Any consideration received for the transfer of the 33 tax credit shall not be included as income under chapter 422, 34 subchapters II, III , and V . Any consideration paid for the 35 -40- LSB 1670XS (5) 89 jm/jh 40/ 48

S.F. 149 transfer of the tax credit shall not be deducted from income 1 under chapter 422, subchapters II, III , and V . 2 Sec. 100. Section 483A.1A, subsection 10, paragraph 3 e, subparagraph (1), Code 2021, is amended by striking the 4 subparagraph. 5 Sec. 101. Section 541A.2, subsection 6, unnumbered 6 paragraph 1, Code 2021, is amended to read as follows: 7 An individual development account closed in accordance 8 with this subsection is not subject to the limitations and 9 benefits provided by this chapter but is subject to state tax 10 in accordance with the provisions of section 422.7, subsection 11 28 , and section 450.4, subsection 6 . An individual development 12 account may be closed for any of the following reasons: 13 Sec. 102. Section 541A.3, subsection 2, Code 2021, is 14 amended by striking the subsection. 15 Sec. 103. Section 541B.2, subsection 10, Code 2021, is 16 amended to read as follows: 17 10. “Resident” means the same as defined in section 422.4 18 422.32 . 19 Sec. 104. Section 633.479, subsection 2, paragraph a, 20 subparagraph (5), Code 2021, is amended to read as follows: 21 (5) Compliance with sections section 422.27 , Code 2021, and 22 section 450.58 have been fulfilled. 23 Sec. 105. Section 635.7, subsection 1, Code 2021, is amended 24 to read as follows: 25 1. The personal representative is required to file the 26 report and inventory for which provision is made in section 27 633.361 , including all probate and nonprobate assets. This 28 chapter does not exempt the personal representative from 29 complying with the requirements of section 422.27 , Code 2021, 30 450.22 , 450.58 , 633.480 , or 633.481 , and the administration of 31 an estate whether converted to or from a small estate shall be 32 considered one proceeding pursuant to section 633.330 . 33 Sec. 106. Section 904.809, subsection 5, paragraph a, 34 subparagraph (2), Code 2021, is amended to read as follows: 35 -41- LSB 1670XS (5) 89 jm/jh 41/ 48

S.F. 149 (2) The inmate’s employer shall provide each employed 1 inmate with the withholding statement required under section 2 422.16 , and any other employment information necessary for the 3 receipt of the remainder of an inmate’s payroll earnings. 4 Sec. 107. REPEAL. Sections 99B.8, 99D.16, 99F.18, 5 190B.105, 257.22 through 257.26, 298.14, 422.4 through 422.11F, 6 422.11H, 422.11J, 422.11Q, 422.11R, 422.11V, 422.11W, 422.11Z, 7 422.12, 422.12A through 422.12E, 422.12G, 422.12H, 422.12I, 8 422.12K, 422.12N, 422.13, 422.14, 422.16, 422.17, 422.19, 9 422.23, 422.25A, 422.25B, 422.25C, 422.27, 422.31, 422D.2 10 through 422D.4, 456A.16, 541B.6, Code 2021, are repealed. 11 Sec. 108. EFFECTIVE DATE. This division of this Act takes 12 effect January 1, 2023. 13 Sec. 109. APPLICABILITY. This division of this Act applies 14 to tax years beginning on or after January 1, 2023. 15 DIVISION II 16 SALES AND USE TAX 17 Sec. 110. Section 423.2, subsection 1, unnumbered paragraph 18 1, Code 2021, is amended to read as follows: 19 There is imposed a tax of six eleven percent upon the sales 20 price of all sales of tangible personal property, consisting 21 of goods, wares, or merchandise, sold at retail in the state 22 to consumers or users except as otherwise provided in this 23 subchapter . 24 Sec. 111. Section 423.2, subsections 2 and 3, Code 2021, are 25 amended to read as follows: 26 2. A tax of six eleven percent is imposed upon the sales 27 price of the sale or furnishing of gas, electricity, water, 28 heat, pay television service, and communication service, 29 including the sales price from such sales by any municipal 30 corporation or joint water utility furnishing gas, electricity, 31 water, heat, pay television service, and communication service 32 to the public in its proprietary capacity, except as otherwise 33 provided in this subchapter , when sold at retail in the state 34 to consumers or users. 35 -42- LSB 1670XS (5) 89 jm/jh 42/ 48

S.F. 149 3. A tax of six eleven percent is imposed upon the 1 sales price of all sales of tickets or admissions to places 2 of amusement, fairs, and athletic events except those of 3 elementary and secondary educational institutions. A tax 4 of six eleven percent is imposed on the sales price of an 5 entry fee or like charge imposed solely for the privilege of 6 participating in an activity at a place of amusement, fair, or 7 athletic event unless the sales price of tickets or admissions 8 charges for observing the same activity are taxable under this 9 subchapter . A tax of six eleven percent is imposed upon that 10 part of private club membership fees or charges paid for the 11 privilege of participating in any athletic sports provided club 12 members. 13 Sec. 112. Section 423.2, subsection 4, paragraph a, Code 14 2021, is amended to read as follows: 15 a. A tax of six eleven percent is imposed upon the sales 16 price derived from the operation of all forms of amusement 17 devices and games of skill, games of chance, raffles, and bingo 18 games as defined in chapter 99B , and card game tournaments 19 conducted under section 99B.27 , that are operated or conducted 20 within the state, the tax to be collected from the operator in 21 the same manner as for the collection of taxes upon the sales 22 price of tickets or admission as provided in this section . 23 Nothing in this subsection shall legalize any games of skill 24 or chance or slot-operated devices which are now prohibited by 25 law. 26 Sec. 113. Section 423.2, subsection 5, Code 2021, is amended 27 to read as follows: 28 5. There is imposed a tax of six eleven percent upon the 29 sales price from the furnishing of services as defined in 30 section 423.1 . 31 Sec. 114. Section 423.2, subsection 7, paragraph a, 32 unnumbered paragraph 1, Code 2021, is amended to read as 33 follows: 34 A tax of six eleven percent is imposed upon the sales 35 -43- LSB 1670XS (5) 89 jm/jh 43/ 48

S.F. 149 price from the sales, furnishing, or service of solid waste 1 collection and disposal service. 2 Sec. 115. Section 423.2, subsection 8, paragraph a, Code 3 2021, is amended to read as follows: 4 a. A tax of six eleven percent is imposed on the sales 5 price from sales of bundled transactions. For the purposes of 6 this subsection , a “bundled transaction” is the retail sale of 7 two or more distinct and identifiable products, except real 8 property and services to real property, which are sold for one 9 nonitemized price. A “bundled transaction” does not include 10 the sale of any products in which the sales price varies, or 11 is negotiable, based on the selection by the purchaser of the 12 products included in the transaction. 13 Sec. 116. Section 423.2, subsection 9, Code 2021, is amended 14 to read as follows: 15 9. A tax of six eleven percent is imposed upon the 16 sales price from any mobile telecommunications service, 17 including all paging services, that this state is allowed 18 to tax pursuant to the provisions of the federal Mobile 19 Telecommunications Sourcing Act, Pub. L. No. 106-252, 4 U.S.C. 20 §116 et seq. For purposes of this subsection , taxes on mobile 21 telecommunications service, as defined under the federal Mobile 22 Telecommunications Sourcing Act that are deemed to be provided 23 by the customer’s home service provider, shall be paid to 24 the taxing jurisdiction whose territorial limits encompass 25 the customer’s place of primary use, regardless of where the 26 mobile telecommunications service originates, terminates, 27 or passes through and shall in all other respects be taxed 28 in conformity with the federal Mobile Telecommunications 29 Sourcing Act. All other provisions of the federal Mobile 30 Telecommunications Sourcing Act are adopted by the state of 31 Iowa and incorporated into this subsection by reference. With 32 respect to mobile telecommunications service under the federal 33 Mobile Telecommunications Sourcing Act, the director shall, if 34 requested, enter into agreements consistent with the provisions 35 -44- LSB 1670XS (5) 89 jm/jh 44/ 48

S.F. 149 of the federal Act. 1 Sec. 117. Section 423.2, subsection 10, paragraph a, Code 2 2021, is amended to read as follows: 3 a. A tax of six eleven percent is imposed on the sales price 4 of specified digital products sold at retail in the state. The 5 tax applies whether the purchaser obtains permanent use or less 6 than permanent use of the specified digital product, whether 7 the sale is conditioned or not conditioned upon continued 8 payment from the purchaser, and whether the sale is on a 9 subscription basis or is not on a subscription basis. 10 Sec. 118. Section 423.2, subsection 12, Code 2021, is 11 amended to read as follows: 12 12. The sales tax rate of six eleven percent is reduced to 13 five ten percent on January 1, 2051. 14 Sec. 119. Section 423.2A, subsection 2, paragraph c, Code 15 2021, is amended to read as follows: 16 c. Transfer one-sixth nine and four thousand one hundred 17 eighteen ten-thousandths percent of the remaining revenues to 18 the secure an advanced vision for education fund created in 19 section 423F.2 . This paragraph “c” is repealed January 1, 2051. 20 Sec. 120. Section 423.5, subsection 1, unnumbered paragraph 21 1, Code 2021, is amended to read as follows: 22 Except as provided in paragraph “b” , an excise tax at the 23 rate of six eleven percent of the purchase price or installed 24 purchase price is imposed on the following: 25 Sec. 121. Section 423.5, subsection 1, paragraph b, Code 26 2021, is amended to read as follows: 27 b. An excise tax at the rate of five ten percent is imposed 28 on the use of vehicles subject only to the issuance of a 29 certificate of title and the use of manufactured housing, and 30 on the use of leased vehicles, if the lease transaction does 31 not require titling or registration of the vehicle, on the 32 amount subject to tax as calculated pursuant to section 423.26, 33 subsection 2 . 34 Sec. 122. Section 423.5, subsection 4, Code 2021, is amended 35 -45- LSB 1670XS (5) 89 jm/jh 45/ 48

S.F. 149 to read as follows: 1 4. The use tax rate of six eleven percent is reduced to five 2 ten percent on January 1, 2051. 3 Sec. 123. Section 423.43, subsection 1, paragraph b, Code 4 2021, is amended to read as follows: 5 b. Subsequent to the deposit into the general fund of 6 the state and after the transfer of such revenues collected 7 under chapter 423B , the department shall transfer one-sixth 8 one-eleventh of such remaining revenues to the secure an 9 advanced vision for education fund created in section 423F.2 . 10 This paragraph is repealed January 1, 2051. 11 Sec. 124. EFFECTIVE DATE. This division of this Act takes 12 effect January 1, 2023. 13 DIVISION III 14 FUTURE INDIVIDUAL INCOME TAX CHANGES —— REPEAL 15 Sec. 125. REPEAL. 2018 Iowa Acts, chapter 1161, sections 99 16 through 127, 131, and 132, are repealed. 17 Sec. 126. REPEAL. 2019 Iowa Acts, chapter 162, is repealed. 18 Sec. 127. EFFECTIVE DATE. This division of this Act takes 19 effect January 1, 2023. 20 DIVISION IV 21 CORRESPONDING AMENDMENTS LEGISLATION 22 Sec. 128. IMPLEMENTATION OF ACT. Additional legislation 23 is required to fully implement this Act. The director of the 24 department of revenue shall, in compliance with section 2.16, 25 prepare draft legislation for submission to the legislative 26 services agency, as necessary, to implement the repeal of the 27 individual income tax under this Act and under other provisions 28 of law. 29 EXPLANATION 30 The inclusion of this explanation does not constitute agreement with 31 the explanation’s substance by the members of the general assembly. 32 This bill relates to state taxes by repealing the individual 33 income tax and increasing the state sales and use tax rates. 34 Division I repeals the individual income tax and makes 35 -46- LSB 1670XS (5) 89 jm/jh 46/ 48

S.F. 149 numerous conforming changes to the Code to remove references 1 to the individual income tax and to update or move provisions 2 of the individual income tax that are also applicable by 3 reference to the corporate income tax and the franchise tax. 4 The division also repeals the emergency medical services income 5 surtax in Code chapter 422D, the instructional support income 6 surtax in Code section 257.21, the educational improvement 7 income surtax in Code section 257.29, and the physical plant 8 and equipment income surtax in Code section 298.2, because 9 income surtax revenues will no longer be generated without the 10 state individual income tax. 11 The repeal of the individual income tax will also affect the 12 industrial new jobs training program in Code chapter 260E, the 13 accelerated career education program in Code chapter 260G, and 14 the targeted jobs withholding credit in Code section 403.19A, 15 because those programs rely on income tax amounts withheld from 16 employee wages by employers. 17 The division provides that additional legislation is 18 required to fully implement the division and requires the 19 director of the department of revenue to prepare draft 20 legislation in compliance with Code section 2.16 for submission 21 to the legislative services agency to implement the repeal of 22 the individual income tax. 23 The division takes effect January 1, 2023, and applies to tax 24 years beginning on or after that date. 25 Division II increases the state sales and use tax rate to 26 11 percent from 6 percent. By operation of law as provided in 27 Article VII, section 10 of the Iowa Constitution, a portion 28 (0.375 percent) of the state sales tax generated and collected 29 from the rate increase provided in this division will be 30 transferred to the natural resources and outdoor recreation 31 trust fund in Code section 461.31. The division amends the 32 transfer of state sales tax revenues to the secure an advanced 33 vision for education fund (SAVE) in Code section 423.2A from 34 one-sixth (approximately 16.66 percent) of the revenues to 35 -47- LSB 1670XS (5) 89 jm/jh 47/ 48

S.F. 149 9.4118 percent of the revenues to ensure that SAVE receives 1 approximately the same amounts of sales tax revenue as it did 2 prior to the sales tax rate increase provided in the division. 3 The division takes effect January 1, 2023. 4 Division III strikes future contingent individual income tax 5 changes in 2018 Iowa Acts, chapter 1161, and 2019 Iowa Acts, 6 chapter 162 due to the repeal of the individual income tax in 7 the bill. Currently, the future individual income tax changes 8 are set to begin in tax year 2023 or in a later tax year, 9 contingent upon the satisfaction of certain net general fund 10 revenue amount and growth targets. 11 The division takes effect January 1, 2023, and applies to tax 12 years beginning on or after that date. 13 Division IV requires the director of the department of 14 revenue to prepare draft legislation for submission to the 15 legislative services agency, as necessary, to implement the 16 repeal of the individual income tax. 17 The division takes effect July 1, 2021. 18 -48- LSB 1670XS (5) 89 jm/jh 48/ 48