House File 2225 - Introduced HOUSE FILE 2225 BY BARKER , LATHAM , INGELS , BRADLEY , WELDON , HORA , BERGAN , ZABNER , BLOM , WILLIAMS , DUNWELL , MOMMSEN , WOOD , GEARHART , VONDRAN , GUSTOFF , GERHOLD , WENGRYN , LARSON , C. JOHNSON , SIECK , and SMITH A BILL FOR An Act creating a new graduate nonresident tuition tax credit 1 available against the individual income tax, and including 2 retroactive applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5802YH (4) 91 jm/jh

H.F. 2225 Section 1. NEW SECTION . 422.12R New graduate nonresident 1 tuition tax credit. 2 1. For purposes of this section: 3 a. “Health care professional” means an individual who is 4 licensed, certified, or otherwise authorized or permitted by 5 the law of this state to administer health care in the ordinary 6 course of business or in the practice of a profession. 7 b. “Institution” means an institution of higher education 8 governed by the board of regents. 9 c. “Licensed veterinarian” means a person who is validly and 10 currently licensed to practice veterinary medicine in the state 11 of Iowa. 12 d. “New graduate” means an individual who is a graduate 13 of an institution within three years of first claiming the 14 nonresident tuition tax credit, who has been a resident of and 15 employed in this state since graduating, and who is employed as 16 a health care professional, teacher, licensed veterinarian, or 17 professional engineer in this state. 18 e. “Professional engineer” means an individual engaged in 19 the practice of engineering as defined in section 542B.2 who is 20 issued a certificate of licensure as a professional engineer 21 pursuant to section 542B.17. 22 f. “Teacher” means a teacher licensed under chapter 256. 23 2. a. The taxes imposed under this subchapter, less the 24 credits allowed under section 422.12, shall be reduced by 25 a new graduate nonresident tuition tax credit equal to one 26 hundred percent of the difference between the base tuition 27 paid by a new graduate as a nonresident student enrolled at 28 an institution and the base tuition amount paid by a resident 29 student at the same institution for the same school year during 30 the years of attendance by the new graduate. 31 b. The board of regents shall post on the board of regents’ 32 internet site the base tuition amounts for nonresident and 33 resident students at each institution from at least the 34 previous ten-year period. 35 -1- LSB 5802YH (4) 91 jm/jh 1/ 3

H.F. 2225 3. Any new graduate nonresident tuition tax credit in excess 1 of the tax liability is not refundable. Any credit in excess 2 of the tax liability for the tax year may be credited to the tax 3 liability for the following five tax years or until depleted, 4 whichever is the earlier. However, any credit in excess of tax 5 liability shall not be credited to or deplete tax liability on 6 the return of a nonresident. 7 4. Married taxpayers electing to file separate returns or 8 filing separately on a combined return may avail themselves of 9 the new graduate nonresident tuition tax credit by allocating 10 the new graduate nonresident tuition tax credit to each spouse 11 in the proportion that each spouse’s respective earned income 12 bears to the total combined earned income. 13 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 14 retroactively to January 1, 2026, for tax years beginning on 15 or after that date. 16 EXPLANATION 17 The inclusion of this explanation does not constitute agreement with 18 the explanation’s substance by the members of the general assembly. 19 This bill creates a new graduate nonresident tuition tax 20 credit available against the individual income tax. 21 The bill defines “institution” to mean an institution of 22 higher education governed by the board of regents. 23 The bill defines “new graduate” to mean an individual who 24 is a graduate of an institution within three years of claiming 25 the credit, who has been a resident of and employed in this 26 state since graduating, and who is employed as a health care 27 professional, teacher, licensed veterinarian, or professional 28 engineer in this state. 29 The bill specifies that a new graduate may claim the new 30 graduate nonresident tuition tax credit that is equal to 31 100 percent of the difference between the base tuition paid 32 by the new graduate as a nonresident student enrolled at an 33 institution and the base tuition amount paid by a resident 34 student at the same institution for the same school year during 35 -2- LSB 5802YH (4) 91 jm/jh 2/ 3

H.F. 2225 the years of attendance by the new graduate. 1 The bill requires the board of regents to post on the 2 board of regents’ internet site the base tuition amounts for 3 nonresident and resident students at each institution from at 4 least the previous 10-year period. 5 Any new graduate nonresident tax credit in excess of the tax 6 liability is not refundable. The bill specifies any credit in 7 excess of the tax liability for the tax year may be credited 8 to the tax liability for the following five tax years or until 9 depleted, whichever is the earlier. However, any credit in 10 excess of tax liability shall not be credited to or deplete 11 future tax liability on the return of a new graduate who 12 becomes a nonresident. 13 The bill applies retroactively to tax years beginning on or 14 after January 1, 2026. 15 -3- LSB 5802YH (4) 91 jm/jh 3/ 3