H.F. 532 Section 1. NEW SECTION . 422.10C Solar installation tax 1 credits. 2 1. For installations occurring on or after January 1, 2022, 3 the taxes imposed under this subchapter, less the credits 4 allowed under section 422.12, shall be reduced by a solar 5 installation tax credit equal to the sum of the following: 6 a. Fifty percent of the federal residential energy efficient 7 property credit related to solar energy provided in section 8 25D(a)(1) and section 25D(a)(2) of the Internal Revenue Code, 9 not to exceed five thousand dollars. 10 b. Fifty percent of the federal energy credit related to 11 solar energy systems provided in section 48(a)(2)(A)(i)(II) and 12 section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not 13 to exceed twenty thousand dollars. 14 2. Any credit in excess of the tax liability is not 15 refundable but the excess for the tax year may be credited 16 to the tax liability for the following ten years or until 17 depleted, whichever is earlier. The director of revenue shall 18 adopt rules to implement this section. 19 3. a. An individual may claim the tax credit allowed a 20 partnership, limited liability company, S corporation, estate, 21 or trust electing to have the income taxed directly to the 22 individual. The amount claimed by the individual shall be 23 based upon the pro rata share of the individual’s earnings of 24 the partnership, limited liability company, S corporation, 25 estate, or trust. 26 b. (1) A taxpayer who is eligible to claim a credit under 27 this section shall not be eligible to claim a renewable energy 28 tax credit under chapter 476C. 29 (2) A taxpayer shall not be eligible to claim both the tax 30 credit under this section and the solar energy tax credit under 31 section 422.11L for the same installation. 32 c. A taxpayer may claim more than one credit under this 33 section, but may claim only one credit per separate and 34 distinct solar installation. The department shall establish 35 -1- LSB 2329YH (3) 90 jm/jh 1/ 5

H.F. 532 criteria, by rule, for determining what constitutes a separate 1 and distinct installation. 2 d. (1) A taxpayer must submit an application to the 3 department for each separate and distinct solar installation. 4 The application must be approved by the department in order to 5 claim the tax credit. The application must be filed by May 6 1 following the year of the installation of the solar energy 7 system. 8 (2) The department shall accept and approve applications 9 on a first-come, first-served basis until the maximum amount 10 of tax credits that may be claimed pursuant to subsection 4 11 is reached. If for a tax year the aggregate amount of tax 12 credits applied for exceeds the amount specified in subsection 13 4, the department shall establish a wait list for tax credits. 14 Valid applications filed by the taxpayer by May 1 following the 15 year of the installation but not approved by the department 16 shall be placed on a wait list in the order the applications 17 were received and those applicants shall be given priority 18 for having their applications approved in succeeding years. 19 Placement on a wait list pursuant to this subparagraph shall 20 not constitute a promise binding the state. The availability 21 of a tax credit and approval of a tax credit application 22 pursuant to this section in a future year is contingent upon 23 the availability of tax credits in that particular year. 24 4. a. The cumulative value of tax credits claimed annually 25 by applicants pursuant to this section shall not exceed five 26 million dollars. Of this amount, at least one million dollars 27 shall be reserved for claims associated with or resulting from 28 residential solar energy system installations. In the event 29 that the total amount of claims submitted for residential solar 30 energy system installations in a tax year is an amount less 31 than one million dollars, the remaining unclaimed reserved 32 amount shall be made available for claims associated with or 33 resulting from nonresidential solar energy system installations 34 received for the tax year. 35 -2- LSB 2329YH (3) 90 jm/jh 2/ 5

H.F. 532 b. If an amount of tax credits available for a tax year 1 pursuant to paragraph “a” goes unclaimed, the amount of the 2 unclaimed tax credits shall be made available for the following 3 tax year in addition to, and cumulated with, the amount 4 available pursuant to paragraph “a” for the following tax year. 5 5. On or before January 1, annually, the department shall 6 submit a written report to the governor and the general 7 assembly regarding the number and value of tax credits claimed 8 under this section, and any other information the department 9 may deem relevant and appropriate. 10 Sec. 2. Section 422.33, Code 2023, is amended by adding the 11 following new subsection: 12 NEW SUBSECTION . 33. The taxes imposed under this subchapter 13 shall be reduced by a solar installation tax credit allowed 14 under section 422.10C. 15 Sec. 3. Section 422.60, Code 2023, is amended by adding the 16 following new subsection: 17 NEW SUBSECTION . 16. The taxes imposed under this subchapter 18 shall be reduced by a solar installation tax credit allowed 19 under section 422.10C. 20 Sec. 4. Section 476C.2, subsection 3, Code 2023, is amended 21 to read as follows: 22 3. A taxpayer who is eligible to claim a renewable energy 23 tax credit under this chapter shall not be eligible to claim a 24 solar installation tax credit under section 422.10C, 422.33, 25 422.60, or 533.329, or the solar energy system tax credit under 26 section 422.11L , or 422.33 , 422.60, or 533.329 . 27 Sec. 5. Section 533.329, subsection 2, Code 2023, is amended 28 by adding the following new paragraph: 29 NEW PARAGRAPH . n. The moneys and credits tax imposed under 30 this section shall be reduced by a solar installation tax 31 credit allowed under section 422.10C. 32 Sec. 6. EFFECTIVE DATE. This Act, being deemed of immediate 33 importance, takes effect upon enactment. 34 Sec. 7. RETROACTIVE APPLICABILITY. This Act applies 35 -3- LSB 2329YH (3) 90 jm/jh 3/ 5

H.F. 532 retroactively to January 1, 2022, for tax years beginning on 1 or after that date. 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill establishes a solar installation tax credit 6 available against the individual and corporate income taxes, 7 the moneys and credits tax, and the franchise tax. 8 The solar installation credit is similar to the solar energy 9 systems tax credit in Code section 422.11L, except the solar 10 installation credit established in the bill couples with 11 current federal law. 12 The credit is equal to 50 percent of the federal residential 13 energy efficient property credit related to solar energy 14 provided in section 25D of the Internal Revenue Code, not to 15 exceed $5,000, and 50 percent of the federal energy credit 16 related to solar energy systems provided in section 48 of the 17 Internal Revenue Code, not to exceed $20,000. The credit is 18 nonrefundable, but may be carried forward for 10 years, or 19 until depleted. 20 The bill provides that an individual may claim the tax 21 credit allowed a partnership, limited liability company, S 22 corporation, estate, or trust based upon the individual’s pro 23 rata share of the earnings. A taxpayer who is eligible to 24 claim a credit under the bill shall not be eligible to claim 25 a renewable energy tax credit under Code chapter 476C. A 26 taxpayer shall not be eligible to both claim the tax credit 27 under the bill and the solar energy tax credit under Code 28 section 422.11L for the same installation. 29 Further, the bill restricts the cumulative total of solar 30 energy systems tax credits issued for all taxpayers to an 31 amount not exceeding $5 million annually. Of this amount, 32 at least $1 million shall be reserved for claims associated 33 with or resulting from residential solar installations. In 34 the event that the total amount of claims submitted for 35 -4- LSB 2329YH (3) 90 jm/jh 4/ 5

H.F. 532 residential solar installations in a tax year is an amount 1 less than $1 million, the remaining unclaimed reserved amount 2 shall be made available for claims associated with or resulting 3 from nonresidential solar installations received for the tax 4 year. If an amount of tax credits available for a tax year 5 goes unclaimed, the amount of the unclaimed tax credits shall 6 be made available for the following tax year in addition to, 7 and cumulated with, the $5 million amount available for the 8 following tax year. 9 The bill contains reporting requirements regarding the 10 number and value of tax credits claimed, and any other 11 information the department may deem relevant and appropriate. 12 The bill takes effect upon enactment, and applies 13 retroactively to tax years beginning on or after January 1, 14 2023. 15 -5- LSB 2329YH (3) 90 jm/jh 5/ 5