H.F. _____ Section 1. NEW SECTION . 15.381 Quantum technology tax 1 credit. 2 1. As used in this part, unless the context otherwise 3 requires: 4 a. “Consortium” means a group of entities for profit or 5 for nonprofit, or both, that are jointly making qualifying 6 investments in an eligible project to create a shared quantum 7 facility. 8 b. “Department” means the department of revenue. 9 c. “Eligible project” means a capital project undertaken 10 in this state to create a shared quantum facility for which a 11 qualified applicant makes qualifying investments approved by 12 the authority. 13 d. “Qualified applicant” means a nonprofit or for-profit 14 entity including a consortium that submits a successful 15 application to the authority for the reservation or issuance 16 of tax credits. 17 e. (1) “Qualifying fixed capital asset” means any of the 18 following: 19 (a) Land in this state. 20 (b) Tangible personal property acquired for use exclusively 21 in this state for which a qualified applicant is allowed a 22 deduction for depreciation pursuant to section 167 of the 23 Internal Revenue Code, including furniture, fixtures, and 24 equipment such as outfitting an office, laboratory machines, 25 refrigeration, HVAC systems, piping, measuring, monitoring 26 and instrumentation equipment, and any hardware and software 27 developed by third parties necessary for quantum technology 28 applications. 29 (c) Computer software acquired for use exclusively in this 30 state for which the qualified applicant is allowed a deduction 31 for depreciation pursuant to section 167 of the Internal 32 Revenue Code. 33 (2) “Qualifying fixed capital asset” is limited to property 34 acquired, constructed, reconstructed, or erected as part of a 35 -1- LSB 1264YC (3) 91 jm/jh 1/ 9

H.F. _____ coordinated plan to create a shared quantum facility. 1 f. “Qualifying investment” means the amount paid by a 2 qualified applicant to acquire, construct, reconstruct, or 3 erect qualifying fixed capital assets to the extent such amount 4 is required to be capitalized pursuant to the Internal Revenue 5 Code or such amount is allowed to be deducted under section 179 6 of the Internal Revenue Code. “Qualifying investment” includes 7 an amount capitalized by a lessee of qualifying fixed capital 8 assets for a lease that is treated as a sale for federal income 9 tax purposes. 10 g. “Quantum business” means a private for-profit business or 11 a nonprofit organization that has quantum technology as a key 12 part of its business model or organizational purpose, including 13 but not limited to manufacturing, testing, production, research 14 and development, or enhancement of hardware or software to 15 perform or use quantum technology as a key input or output 16 of its business model, and companies that produce goods for 17 services that are key inputs for other quantum business. 18 h. “Shared quantum facility” means a primary location in 19 this state where a qualified applicant performs activities 20 and provides economic benefit related to supporting quantum 21 business and a quantum ecosystem. 22 2. a. An applicant shall submit an application to the 23 authority in a manner prescribed by the authority for the 24 quantum technology tax credit. A successful application by a 25 qualified applicant shall include but not be limited to the 26 following: 27 (1) An eligible project placed in service prior to January 28 1, 2031. 29 (2) A federal grant from the economic development 30 administration for the regional technology and innovation 31 program or from a comparable federal grant program where the 32 applicant received at least two million dollars in grant 33 funding. 34 b. (1) If a qualified applicant is a consortium, the 35 -2- LSB 1264YC (3) 91 jm/jh 2/ 9

H.F. _____ amount of the credit allowed by the authority shall include 1 the aggregate qualifying investment by all the members of the 2 consortium. 3 (2) (a) A consortium shall designate and disclose 4 the representative to act on behalf of the consortium for 5 tax matters. The representative shall provide the name 6 and taxpayer identification number of each member of the 7 consortium. 8 (b) The representative is responsible for representing and 9 binding the consortium with respect to all matters involving 10 the credit, including submitting the application, representing 11 the consortium before the authority, notifying the authority 12 the eligible project has been placed in service, submitting 13 proof of compliance, and submitting any other information 14 required by the authority. 15 3. a. Upon review of the application and approval by the 16 authority to receive the tax credit, the authority shall issue 17 a tax credit certificate to a qualified business indicating 18 the amount available to be claimed, or reserve tax credits 19 as provided in paragraph “b” . The authority may authorize 20 a tax credit in an amount equal to the qualified applicant’s 21 estimated qualifying investment. 22 b. (1) The authority may determine that a qualified 23 applicant is entitled to a tax credit reservation. If the 24 authority issues a tax credit reservation for the qualified 25 applicant, the authority shall notify the qualified applicant 26 of the reservation of the tax credit and the amount reserved. 27 The reservation of a tax credit does not entitle the qualified 28 applicant to the issuance of a tax credit certificate until 29 the qualified applicant complies with all other requirements 30 specified in this section for the issuance of the tax credit. 31 When the authority approves a tax credit reservation, the 32 authority may also impose additional requirements on the 33 qualified applicant, which the qualified applicant must satisfy 34 as part of completing the qualifying investment before a tax 35 -3- LSB 1264YC (3) 91 jm/jh 3/ 9

H.F. _____ credit certificate is issued to the qualified applicant. 1 (2) A reserved tax credit shall be provided to the qualified 2 applicant as a tax credit certificate on an ongoing basis as 3 the qualified applicant incurs qualifying expenses, subject to 4 approval by the authority. 5 4. For tax years beginning on or after January 1, 2026, but 6 before January 1, 2033, the quantum technology tax credit is 7 available to a qualified applicant that has been approved for 8 a tax credit by the authority. 9 5. To claim a tax credit under this section, a taxpayer 10 shall include one or more tax credit certificates with 11 the taxpayer’s tax return. The tax credit certificate, 12 unless rescinded by the authority, shall be accepted by the 13 department as payment for taxes imposed pursuant to chapter 14 422, subchapters II and III, subject to any conditions or 15 restrictions placed by the authority upon the face of the tax 16 credit certificate and subject to any other limitations. 17 6. An individual may claim a quantum technology tax credit 18 incurred by a partnership, S corporation, limited liability 19 company, estate, or trust electing to have the income taxed 20 directly to the individual. The amount claimed by the 21 individual shall be based upon the pro rata share of the 22 individual’s earnings of a partnership, S corporation, limited 23 liability company, estate, or trust. 24 7. Any tax credit in excess of the qualified applicant’s 25 tax liability is refundable. In lieu of claiming a refund, 26 the taxpayer may elect to have the overpayment shown on the 27 taxpayer’s final completed return credited to the tax liability 28 for the following year. 29 8. Tax credit certificates issued pursuant to this section 30 shall not be transferred to any other person. 31 9. a. In each fiscal year beginning on or after July 32 1, 2026, the authority may award an amount of tax credits 33 and reserved tax credits under the program not to exceed 34 twenty-four million dollars each fiscal year, subject to 35 -4- LSB 1264YC (3) 91 jm/jh 4/ 9

H.F. _____ paragraph “b” . 1 b. The total tax credits awarded pursuant to this section 2 shall not exceed forty-four million dollars in the aggregate. 3 c. The authority may limit the total amount of tax credits 4 reserved or awarded to a qualified applicant to an amount less 5 than the estimated qualifying investment or the qualifying 6 investment. 7 10. In determining which eligible project to award a tax 8 credit to, the authority may prioritize eligible projects 9 that demonstrate an ability to meet application requirements, 10 have received a substantial federal award for purposes of 11 cultivating and expanding a quantum-related ecosystem within 12 this state, and have provided detailed explanations of the ways 13 the shared quantum facility benefits the quantum industry in 14 this state. 15 11. The failure of a qualified applicant in fulfilling any 16 requirement under this section or any terms and obligations of 17 any agreement entered pursuant to this section may result in 18 the reduction, termination, or rescission of the tax credits 19 claimed. The repayment or recapture of tax credits pursuant 20 to this subsection shall be accomplished in the same manner as 21 provided in section 15.330, subsection 2. 22 12. a. If, prior to completion of the eligible project, 23 the qualified applicant sells, transfers, or abandons, or 24 repurposes a substantial portion of the qualifying fixed 25 capital assets for which the qualified applicant was allowed 26 a tax credit pursuant to this section, or otherwise ceases 27 to operate the shared quantum facility in this state, the 28 qualified applicant shall notify the authority of such an 29 event, and the authority shall notify the department that the 30 tax credit awarded pursuant to this section is to be rescinded. 31 b. This subsection does not apply if the quantum facility 32 experiences a casualty loss and if the qualifying fixed capital 33 assets are restored within a reasonable amount of time. 34 13. Beginning January 15, 2028, and every two years 35 -5- LSB 1264YC (3) 91 jm/jh 5/ 9

H.F. _____ thereafter through January 15, 2032, the authority shall 1 provide a report to the general assembly detailing the issuance 2 of the tax credits. The report shall include a description of 3 each eligible project placed in service, a description of the 4 uses of each eligible project, the number of jobs supported in 5 the quantum industry in the state as a result of the eligible 6 project, an overview of the types of intellectual property that 7 have been advanced through the eligible project, the qualified 8 applicant’s name, and the amount of credits awarded to the 9 qualified applicant. 10 14. The authority shall adopt rules pursuant to chapter 17A 11 to administer this section. 12 15. This section is repealed January 1, 2038. 13 Sec. 2. NEW SECTION . 422.10C Quantum technology credit. 14 The taxes imposed under this subchapter, less the credits 15 allowed under section 422.12, shall be reduced by a quantum 16 technology credit allowed under section 15.381. This section 17 is repealed January 1, 2038. 18 Sec. 3. Section 422.33, Code 2025, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 27. The taxes imposed under this subchapter 21 shall be reduced by a quantum technology tax credit allowed 22 under section 15.381. This subsection is repealed January 1, 23 2038. 24 Sec. 4. APPLICABILITY. This Act applies to tax years 25 beginning on or after January 1, 2026. 26 EXPLANATION 27 The inclusion of this explanation does not constitute agreement with 28 the explanation’s substance by the members of the general assembly. 29 This bill creates the quantum technology tax credit (credit) 30 available against the individual and corporate income taxes for 31 eligible projects. 32 The bill defines “eligible project” to mean a capital 33 project undertaken in this state to create a shared quantum 34 facility for which a qualified applicant makes qualifying 35 -6- LSB 1264YC (3) 91 jm/jh 6/ 9

H.F. _____ investments approved by the Iowa economic development authority 1 (authority). 2 An applicant for the credit may include a group of entities 3 for profit or for nonprofit, or both, including a consortium 4 that are jointly making qualifying investments in an eligible 5 project to create a shared quantum facility. 6 The bill defines “shared quantum facility” to mean a primary 7 location in this state where a qualified applicant performs 8 activities and provides economic benefit related to supporting 9 quantum business and a quantum ecosystem. 10 An applicant for the credit shall submit an application to 11 the authority in a manner prescribed by the authority. The 12 application of a qualified applicant shall include but not 13 be limited to an eligible project placed in service prior 14 to January 1, 2031, and a multimillion dollar federal grant 15 from the economic development administration for the regional 16 technology and innovation program or from a comparable federal 17 grant program. If a qualified applicant is a consortium, the 18 amount of the credit allowed by the authority shall include 19 the aggregate qualifying investment by all the members of the 20 consortium. The bill requires a consortium to designate and 21 disclose the representative to act on behalf of the consortium 22 for tax matters. The representative shall provide the name 23 and taxpayer identification number of each member of the 24 consortium. 25 Upon review of the application and approval by the authority 26 to receive the credit, the authority shall issue a tax credit 27 certificate to a qualified business indicating the amount 28 available to be claimed. The authority may authorize a 29 tax credit in an amount equal to the qualified applicant’s 30 estimated qualifying investment. 31 The bill defines “qualifying investment” to mean the 32 amount paid by a qualified applicant to acquire, construct, 33 reconstruct, or erect qualifying fixed capital assets to the 34 extent such amount is required to be capitalized pursuant 35 -7- LSB 1264YC (3) 91 jm/jh 7/ 9

H.F. _____ to the Internal Revenue Code or such amount is allowed to 1 be deducted under section 179 of the Internal Revenue Code. 2 The bill defines “qualifying fixed capital assets” to mean 3 land, tangible personal property, and computer software used 4 exclusively in this state as part of a coordinated plan to 5 create a shared quantum facility. 6 The authority may determine that a qualified applicant 7 is entitled to a credit reservation. The reservation of a 8 credit does not entitle the qualified applicant to the issuance 9 of a tax credit certificate until the qualified applicant 10 complies with all other requirements specified in the bill 11 for the issuance of the credit. When the authority approves 12 a tax credit reservation under the bill, the authority may 13 also impose additional requirements on the qualified applicant 14 before a tax credit certificate is issued to the qualified 15 applicant. 16 The credit is available for tax years beginning on or after 17 January 1, 2026, but before January 1, 2033. The bill limits 18 the aggregate amount of credits and reserved credits awarded 19 each fiscal year to $24 million, and restricts the total tax 20 credits that may be awarded to $44 million in the aggregate. 21 In determining which eligible project to award a credit to, 22 the authority may prioritize eligible projects that demonstrate 23 an ability to meet application requirements, have received 24 a substantial federal award for purposes of cultivating and 25 expanding a quantum-related ecosystem within this state, and 26 have provided detailed explanations of the ways the shared 27 quantum facility benefits the quantum industry in the state. 28 The failure of a qualified applicant in fulfilling any 29 requirement under the bill or any terms and obligations of 30 any agreement may result in the reduction, termination, or 31 rescission of the tax credits claimed. The bill also specifies 32 the procedures for the repayment or recapture of credits. 33 The bill requires the authority to adopt rules to administer 34 the credit. 35 -8- LSB 1264YC (3) 91 jm/jh 8/ 9