SF 2299 (LSB 5051XS (2) 89)

SENATE FILE 2299

BY  BOULTON

A BILL FOR

An Act relating to the disabled veteran homestead tax credit and the military service property tax exemption and credit and including effective date, applicability, and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
DISABLED VETERAN HOMESTEAD CREDIT

    Section 1.  Section 425.15, Code 2022, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  If the owner of a homestead allowed a credit under this subchapter does not meet the criteria of subsection 1 and is any of the following, the amount of the credit allowed on the homestead from the homestead credit fund shall be the greater of the amount of the credit authorized under section 425.1, subsection 2, or a percentage of the entire amount of the tax levied on the homestead that is equivalent to the owner’s permanent service-connected disability rating percentage: 
   a.  A veteran as defined in section 35.1 with a permanent service-connected disability rating that is less than one hundred percent, as certified by the United States department of veterans affairs.
   b.  A former member of the national guard of any state who otherwise meets the service requirements of section 35.1, subsection 2, paragraph “b”, subparagraph (2) or (7), with a permanent service-connected disability rating of less than one hundred percent, as certified by the United States department of veterans affairs.
    Sec. 2.  Section 425.15, subsection 2, paragraph a, Code 2022, is amended to read as follows:
   a.  For an owner described in subsection 1, paragraph “a”, “b”, or “c”, or subsection 1A, the credit allowed shall be continued to the estate of an owner who is deceased or the surviving spouse and any child, as defined in section 234.1, who are the beneficiaries of a deceased owner, so long as the surviving spouse remains unmarried. 
    Sec. 3.  Section 425.15, subsection 3, Code 2022, is amended to read as follows:
   3.  An owner or a beneficiary of an owner who elects to secure the credit provided in this section under the conditions described in subsection 1 is not eligible for any other real property tax exemption provided by law for veterans of military service.
    Sec. 4.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 5.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to homestead credit claims filed on or after January 1, 2022, for credits allowed against property taxes due and payable in fiscal years beginning on or after July 1, 2023.
DIVISION II
MILITARY SERVICE CREDIT

    Sec. 6.  Section 426A.11, subsection 1, Code 2022, is amended by striking the subsection.
    Sec. 7.  Section 426A.11, subsection 2, Code 2022, is amended to read as follows:
   2.  The property, not to exceed one thousand eight hundred fifty-two fifteen thousand dollars in taxable value, of an honorably separated, retired, furloughed to a reserve, placed on inactive status, or discharged veteran, as defined in section 35.1, subsection 2, paragraph “a” or “b”.
    Sec. 8.  APPLICABILITY.  This division of this Act applies to property taxes due and payable in fiscal years beginning on or after July 1, 2022.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the disabled veteran homestead credit and the military service property tax exemption and credit.
   Current Code section 425.15 provides a homestead credit to the owner of a homestead for the full amount of property tax levied if the owner is any of the following: (1) a veteran of any of the military forces of the United States who acquired the homestead under specified federal programs; (2) a veteran with a permanent service-connected disability rating of 100 percent or a permanent and total disability rating based on individual unemployability that is compensated at the 100 percent disability rate; (3) a former member of the national guard of any state who meets specified service requirements with a permanent service-connected disability rating of 100 percent or a permanent and total disability rating based on individual unemployability that is compensated at the 100 percent disability rate; or (4) an individual who is a surviving spouse or a child and who is receiving federal dependency and indemnity compensation.
   Division I of the bill creates two additional categories of disabled veterans who qualify for a homestead credit under Code section 425.15. Under the bill, if the owner of a homestead does not meet the criteria under current law for a disabled veteran homestead tax credit and is either of the following, the amount of the credit allowed on the homestead is the greater of the amount of the regular homestead credit (an amount equal to the actual levy on the first $4,850 dollars of actual value) or a percentage of the entire amount of the tax levied on the homestead that is equivalent to the owner’s service-connected disability rating percentage: (1) a veteran with a permanent service-connected disability rating that is less than 100 percent or (2) a former member of the national guard of any state who meets specified service requirements with a permanent service-connected disability rating of less than 100 percent.
   Division I of the bill takes effect upon enactment and applies retroactively to homestead credit claims filed on or after January 1, 2022, for credits allowed against property taxes due and payable in fiscal years beginning on or after July 1, 2023.
   Under current law, veterans of World War I are entitled to a property tax exemption of $2,778 in taxable value and honorably discharged veterans who served during other specific time periods are entitled to a property tax exemption of $1,852 in taxable value. Division II of the bill increases the exemption amount for all eligible veterans to $15,000.
   Under current law, the state provides funding to local governments for the military service property tax exemption and credit up to $6.92 per $1,000 of assessed value of the exempt property. Code section 25B.7 provides that if a state appropriation made to fund a credit or exemption is not sufficient to fully fund the credit or exemption, the political subdivision shall be required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by the state appropriation. The requirement for fully funding and the consequences of not fully funding under Code section 25B.7 apply to the military service property tax credit and exemption to the extent of $6.92 per $1,000 of assessed value of the exempt property.
   Division II of the bill applies to property taxes due and payable in fiscal years beginning on or after July 1, 2022.