HF 2323 (LSB 5051YH (9) 91)

HOUSE FILE 2323

BY  BARKER

A BILL FOR

An Act relating to tax credits by creating the maternity group home and the strong families tax credits available against the individual, corporate, franchise, insurance premium, and moneys and credits taxes, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
MATERNITY GROUP HOME TAX CREDIT

    Section 1.  NEW SECTION.  135E.1  Maternity group home tax credit.
   1.  As used in this section unless the context otherwise requires:
   a.  “Department” means the department of revenue.
   b.  “Donation” means a voluntary cash or noncash contribution to a maternity group home made by the taxpayer during the tax year.
   c.  “Maternity group home” means the same as defined in section 414.27.
   2.  For tax years beginning on or after January 1, 2026, a tax credit shall be allowed against the taxes imposed in chapter 422, subchapters II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, equal to one hundred percent of a person’s donation to a maternity group home. An individual may claim a tax credit under this section of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
   3.  The amount of the donation for which the tax credit is claimed shall not be deductible in determining taxable income for state income tax purposes.
   4.  Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following five years or until depleted, whichever is earlier.
   5.  a.  The cumulative value of the amount of tax credits authorized pursuant to this section shall not annually exceed three million five hundred thousand dollars.
   b.  The maximum value of tax credits granted for donations per an organization operating a maternity group home shall not annually exceed five hundred thousand dollars.
   6.  a.  A taxpayer must submit an application to the department in a manner approved by the department for each separate and distinct donation. The application must be approved by the department in order to claim the tax credit. The application must be filed within six months following the tax year the donation was made.
   b.  The department shall accept and approve applications on a first-come, first-served basis until the maximum value amount of tax credits that may be claimed pursuant to subsection 5 is reached. If for a tax year the aggregate amount of tax credits applied for exceeds the maximum amount specified in subsection 5, paragraph “a” or “b”, the department shall establish a wait list when applicable. Valid applications filed by the taxpayer within six months following the tax year of the donation but not approved by the department shall be placed on a wait list in the order the applications were received and those applicants shall be given priority for having their applications approved in succeeding years. Placement on a wait list pursuant to this paragraph shall not constitute a promise binding the state. The availability of a tax credit and approval of a tax credit application pursuant to this section in a future year is contingent upon the availability of tax credits in that particular year.
   7.  The department shall adopt rules pursuant to chapter 17A to administer this section.
    Sec. 2.  NEW SECTION.  422.10D  Maternity group home tax credit.
   The tax imposed under this subchapter, less the credits allowed under section 422.12, shall be reduced by a maternity group home tax credit authorized pursuant to section 135E.1.
    Sec. 3.  Section 422.33, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  11.  The tax imposed under this subchapter shall be reduced by a maternity group home tax credit authorized pursuant to section 135E.1.
    Sec. 4.  Section 422.60, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  16.  The tax imposed under this subchapter shall be reduced by a maternity group home tax credit authorized pursuant to section 135E.1.
    Sec. 5.  NEW SECTION.  432.12P  Maternity group home tax credit.
   The tax imposed under this chapter shall be reduced by a maternity group home tax credit authorized pursuant to section 135E.1.
    Sec. 6.  Section 533.329, subsection 2, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  m.  The moneys and credits tax imposed under this section shall be reduced by a maternity group home tax credit allowed under section 135E.1.
    Sec. 7.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2027.
DIVISION II
STRONG FAMILIES TAX CREDIT

    Sec. 8.  NEW SECTION.  217.41D  Strong families tax credit.
   1.  As used in this section:
   a.  “Department” means the department of revenue.
   b.  “Organization” means an organization that is exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code that provides comprehensive case management services for at-risk families or fatherhood parenting services in this state.
   2.  The taxes imposed in chapter 422, subchapters II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, shall be reduced by a strong families tax credit equal to one hundred percent of the amount of the voluntary cash contribution made by the taxpayer during the tax year to an organization.
   3.  To be eligible to claim this credit, all of the following shall apply:
   a.  A deduction pursuant to section 170 of the Internal Revenue Code for any amount of the contribution is not taken for state tax purposes.
   b.  The contribution does not designate that any part of the contribution be used for the direct benefit of the taxpayer, any dependent of the taxpayer, or any other person designated by the taxpayer.
   c.  The organization does not receive more than fifty percent of annual revenues from governmental entities.
   d.  The organization allocates at least ninety-five percent of annual revenues to provide comprehensive case management to at-risk families or fatherhood parenting services.
   e.  The organization has provided comprehensive case management services for at-risk families or fatherhood parenting services in this state for at least three consecutive years.
   f.  The organization does not provide counseling for abortion services.
   4.  Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following five tax years or until depleted, whichever is the earlier.
   5.  Married taxpayers who file separate returns must determine the tax credit under subsection 2 based upon their combined net income and allocate the total credit amount to each spouse in the proportion that each spouse’s respective net income bears to the total combined net income. Nonresidents or part-year residents of Iowa must determine their tax credit in the ratio of their Iowa source net income to their all-source net income. Nonresidents or part-year residents who are married and elect to file separate returns must allocate the tax credit between the spouses in the ratio of each spouse’s Iowa source net income to the combined Iowa source net income of the taxpayers.
   6.  An individual may claim the tax credit allowed a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, limited liability company, S corporation, estate, or trust.
   7.  a.  In order for the taxpayer to claim the strong families tax credit, a taxpayer must submit an application to the department detailing the contribution made to the organization. The application must be approved by the department in order to claim the tax credit. The application must be filed with the department by December 31 of the tax year for which the credit is claimed.
   b.  The department shall accept and approve applications on a first-come, first-served basis until the maximum amount of tax credits that may be claimed pursuant to subsection 8 is reached. If for a tax year the maximum value of tax credits applied for exceeds the amount specified in subsection 8, the department shall establish a wait list for the tax credit.
   8.  The cumulative value of tax credits approved by the department annually pursuant to this section shall not exceed five million dollars. The department shall not approve applications made to any organization that exceed one million dollars in the aggregate in a calendar year. In the event less than five million dollars in credits in the aggregate are approved in a calendar year, the department may approve applications for the tax credit that exceed one million dollars in the aggregate to any organization from the remaining unclaimed credits for the calendar year on a first-come, first-served basis.
   9.  An organization shall initially register with the department. The organization’s registration shall include proof of section 501(c)(3) status, a list of the services the organization provides, and the members of the governing board of the organization. Once the organization has registered, the organization is not required to subsequently register unless the services provided change or members of the organization’s governing board change.
   10.  An organization that is registered pursuant to this section shall report to the department, on a form prescribed by the department, by January 10 of each calendar year, the total number of families receiving services in the previous calendar year.
   11.  By January 31, 2028, and each January 31 thereafter, the department shall report to the general assembly the name of each organization that has registered under this section, the number of families receiving services from each organization, and the amount of tax credits approved from contributions made to each organization.
   12.  The department shall adopt rules pursuant to chapter 17A to administer this section.
    Sec. 9.  NEW SECTION.  422.12R  Strong families tax credit.
   The taxes imposed under this subchapter, less the credits allowed under section 422.12, shall be reduced by a strong families tax credit allowed pursuant to section 217.41D.
    Sec. 10.  Section 422.33, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  33.  The taxes imposed under this subchapter shall be reduced by a strong families tax credit allowed pursuant to section 217.41D.
    Sec. 11.  Section 422.60, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  17.  The taxes imposed under this subchapter shall be reduced by a strong families tax credit allowed pursuant to section 217.41D.
    Sec. 12.  NEW SECTION.  432.12Q  Strong families tax credit.
   The taxes imposed under this chapter shall be reduced by a strong families tax credit allowed pursuant to section 217.41D.
    Sec. 13.  Section 533.329, subsection 2, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  n.  The moneys and credits tax imposed under this section shall be reduced by a strong families tax credit as provided in section 217.41D.
    Sec. 14.  APPLICABILITY.  This division of this Act applies to tax years beginning on or after January 1, 2027.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates maternity group home and strong families tax credits available against the individual, corporate, franchise, insurance premium, and moneys and credits taxes.
   MATERNITY HOME TAX CREDIT. The bill defines “maternity group home” to mean a community-based residential home that provides room and board, personal care, supervision, training, support, and education in a family environment for women who are either pregnant or who have given birth within the preceding 24 months and live with their children, and includes overnight room accommodations and administrative and office space for those persons who provide such services.
   The amount of the credit shall equal 100 percent of a person’s donation to a maternity group home.
   The bill specifies that the amount of the donation for which the tax credit is claimed shall not be deductible for state income tax purposes.
   Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following five years or until depleted, whichever is earlier.
   The aggregate amount of tax credits authorized pursuant to the bill shall not annually exceed $3.5 million.
   The maximum amount of tax credits granted for donations to an organization operating a maternity group home shall not annually exceed $500,000.
   The bill requires the department of revenue to administer the credit and to approve applications on a first-come, first-served basis until the maximum amount of tax credits authorized for the year has been reached. A taxpayer must submit an application to the department for each separate and distinct donation within six months following the tax year of the donation in such a manner approved by the department. The bill also requires the department to develop a wait list in the order the applications are received if applications for the credit exceed the annual maximum amounts authorized.
   The department shall adopt rules to administer the tax credit.
   The tax credit applies to tax years beginning on or after January 1, 2027.
   STRONG FAMILIES TAX CREDIT. The bill creates a strong families tax credit available against the individual, corporate, franchise, insurance premium, and moneys and credit taxes.
   The strong families tax credit is equal to 100 percent of the amount of a voluntary cash contribution made by the taxpayer to an organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code that provides comprehensive case management services for at-risk families or fatherhood parenting services in this state.
   To be eligible to claim the credit, all of the following must apply: (1) a deduction is not taken for any amount of the contribution for state tax purposes, (2) the contribution is not designated to personally benefit the taxpayer, (3) the organization does not receive more than 50 percent of revenues from governmental entities, (4) 95 percent of annual revenues are allocated to providing core services, (5) the organization has provided services in this state for at least three consecutive years, and (6) the organization does not provide abortion services.
   Any credit in excess of the tax liability is not refundable but the excess for the tax year may be credited to the tax liability for the following five tax years or until depleted, whichever is the earlier.
   In order for the taxpayer to claim the strong families tax credit, a taxpayer must submit an application to the department of revenue (department) detailing the contribution made to the organization. The application must be approved by the department in order to claim the tax credit. The application must be filed with the department by December 31 of the tax year for which the credit is claimed.
   The department shall accept and approve applications on a first-come, first-served basis until the maximum amount of tax credits that may be claimed pursuant to the bill is reached. If for a tax year the maximum value of tax credits applied for exceeds the maximum amount, the department is required to establish a wait list for the tax credit.
   The cumulative value of tax credits approved by the department annually pursuant to the bill shall not exceed $5 million. The department shall not approve applications made to any organization that exceed $1 million in the aggregate in a calendar year, unless credits from the $5 million maximum remain unclaimed.
   The bill requires an organization to initially register with the department. The organization’s registration shall include proof of section 501(c)(3) status, a list of the services the organization provides, and the members of the governing board of the organization. Once the organization has registered, it is not required to subsequently register unless the services provided change or members of the organization’s governing board change.
   Beginning January 31, 2028, and each January 31 thereafter, the department shall report information about the tax credit to the general assembly the name of each organization that has registered with the department, the number of families receiving services from each organization, and the amount of tax credits approved from contributions made to each organization.
   The department is required to adopt rules to administer the tax credit.
   The tax credit applies to tax years beginning on or after January 1, 2027.