HSB 306 (LSB 2304YC (5) 91)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN)

A BILL FOR

An Act modifying the research activities tax credit available against the individual and corporate income taxes, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.10, subsection 1, paragraph b, subparagraph (1), unnumbered paragraph 1, Code 2025, is amended to read as follows:
   For Except as provided in subsection 5A, for individuals, the credit equals the sum of the following:
    Sec. 2.  Section 422.10, Code 2025, is amended by adding the following new subsection:
   NEW SUBSECTION.  5A.  a.  Notwithstanding any other provision of law to the contrary, an individual that has claimed a tax credit pursuant to this section and that has incurred an aggregate amount of mass layoffs and business closings that equal the sum of the following amount of laid-off persons during the taxable year for which the credit is claimed shall have the credit claimed in that taxable year reduced by the following percentage:
   (1)  One thousand five hundred or more, fifty percent.
   (2)  At least one thousand but not exceeding one thousand five hundred, twenty-five percent.
   (3)  At least five hundred but not exceeding one thousand, twelve and one-half percent.
   (4)  Less than five hundred, six and twenty-five hundredths percent.
   b.  The department of revenue shall review notices provided pursuant to the department of workforce development under chapter 84C, and any other relevant information available, prior to allowing a credit pursuant to this section. A credit that has already been claimed that is subject to this subsection shall be recaptured by the department of revenue in the same manner as provided in section 15.330, subsection 2.
   c.  As used in this subsection:
   (1)  “Business closing” means the same as defined in section 84C.2.
   (2)  “Mass layoff” means the same as defined in section 84C.2.
    Sec. 3.  Section 422.33, subsection 5, paragraph a, unnumbered paragraph 1, Code 2025, is amended to read as follows:
   The Except as provided in paragraph “0i”, the taxes imposed under this subchapter shall be reduced by a state tax credit for increasing research activities in this state equal to the sum of the following:
    Sec. 4.  Section 422.33, subsection 5, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0i.  (1)  Notwithstanding any other provision of law to the contrary, a corporation that has claimed a tax credit pursuant to this subsection and that has incurred an aggregate amount of mass layoffs and business closings that equal the sum of the following amount of laid-off persons during the taxable year for which the credit is claimed shall have the credit claimed in that taxable year reduced by the following percentage:
   (a)  One thousand five hundred or more, fifty percent.
   (b)  At least one thousand but not exceeding one thousand five hundred, twenty-five percent.
   (c)  At least five hundred but not exceeding one thousand, twelve and one-half percent.
   (d)  Less than five hundred, six and twenty-five hundredths percent.
   (2)  The department of revenue shall review notices provided pursuant to the department of workforce development under chapter 84C, and any other relevant information available, prior to allowing a credit pursuant to this subsection. A credit that has already been claimed that is subject to this paragraph shall be recaptured by the department of revenue in the same manner as provided in section 15.330, subsection 2.
   (3)  As used in this paragraph:
   (a)  “Business closing” means the same as defined in section 84C.2.
   (b)  “Mass layoff” means the same as defined in section 84C.2.
    Sec. 5.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 6.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2024, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill modifies the research activities tax credit (credit) available against the individual and corporate income taxes.
   Under the bill, an individual or corporation that has claimed the credit and has incurred an aggregate amount of mass layoffs and business closings, as defined in Code section 84C.2, during the taxable year for which the credit is claimed, shall have the credit claimed in that taxable year reduced by the following percentages: for layoffs of 1,500 or more, 50 percent; for layoffs of at least 1,000 but not exceeding 1,500, 25 percent; for layoffs of at least 500 but not exceeding 1,000, 12.5 percent; and for layoffs of less than 500, 6.25 percent.
   The bill requires the department of revenue to review mass layoff notices provided pursuant to the department of workforce development under Code chapter 84C, and any other relevant information available, prior to allowing the credit. A credit that has already been claimed that is subject to the provisions of the bill shall be recaptured by the department of revenue in the same manner as provided in Code section 15.330(2).
   The bill takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2024.