Senate File 181 - Reprinted SENATE FILE 181 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1056) (As Amended and Passed by the Senate February 1, 2023 ) A BILL FOR An Act relating to property taxes and income taxes by modifying 1 the calculation of assessment limitations for certain 2 property, amending provisions relating to certain tax 3 withholding requirements and tax credits, and including 4 effective date and retroactive applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 SF 181 (3) 90 md/jh/mb

S.F. 181 DIVISION I 1 ASSESSMENT LIMITATIONS 2 Section 1. Section 441.21, subsection 4, Code 2023, is 3 amended to read as follows: 4 4. For valuations established as of January 1, 1979, 5 the percentage of actual value at which agricultural and 6 residential property shall be assessed shall be the quotient of 7 the dividend and divisor as defined in this section . 8 a. (1) The dividend for each class of property shall be 9 the dividend as determined for each class of property for 10 valuations established as of January 1, 1978, adjusted by the 11 product obtained by multiplying the percentage determined 12 for that year by the amount of any additions or deletions to 13 actual value, excluding those resulting from the revaluation 14 of existing properties, as reported by the assessors on the 15 abstracts of assessment for 1978, plus six percent of the 16 amount so determined. 17 (2) However, if the difference between the dividend so 18 determined for either class of property and the dividend for 19 that class of property for valuations established as of January 20 1, 1978, adjusted by the product obtained by multiplying 21 the percentage determined for that year by the amount of 22 any additions or deletions to actual value, excluding those 23 resulting from the revaluation of existing properties, as 24 reported by the assessors on the abstracts of assessment for 25 1978, is less than six percent, the 1979 dividend for the other 26 class of property shall be the dividend as determined for that 27 class of property for valuations established as of January 28 1, 1978, adjusted by the product obtained by multiplying 29 the percentage determined for that year by the amount of 30 any additions or deletions to actual value, excluding those 31 resulting from the revaluation of existing properties, as 32 reported by the assessors on the abstracts of assessment for 33 1978, plus a percentage of the amount so determined which is 34 equal to the percentage by which the dividend as determined 35 -1- SF 181 (3) 90 md/jh/mb 1/ 6

S.F. 181 for the other class of property for valuations established 1 as of January 1, 1978, adjusted by the product obtained by 2 multiplying the percentage determined for that year by the 3 amount of any additions or deletions to actual value, excluding 4 those resulting from the revaluation of existing properties, as 5 reported by the assessors on the abstracts of assessment for 6 1978, is increased in arriving at the 1979 dividend for the 7 other class of property. 8 (3) For valuations established for assessment years 9 beginning on or after January 1, 2022, the calculation of the 10 dividend for residential property under this subsection shall 11 exclude the value of all property described in subsection 14, 12 paragraph “a” , subparagraphs (2), (3), (4), (5), and (6), 13 and the property described in subsection 14, paragraph “a” , 14 subparagraph (7), that contains three or more separate dwelling 15 units. 16 b. (1) The divisor for each class of property shall be 17 the total actual value of all such property in the state 18 in the preceding year, as reported by the assessors on the 19 abstracts of assessment submitted for 1978, plus the amount of 20 value added to said total actual value by the revaluation of 21 existing properties in 1979 as equalized by the director of 22 revenue pursuant to section 441.49 . The director shall utilize 23 information reported on abstracts of assessment submitted 24 pursuant to section 441.45 in determining such percentage. 25 (2) For valuations established for assessment years 26 beginning on or after January 1, 2022, the calculation of the 27 divisor for residential property under this subsection shall 28 exclude the value of all property described in subsection 14, 29 paragraph “a” , subparagraphs (2), (3), (4), (5), and (6), 30 and the property described in subsection 14, paragraph “a” , 31 subparagraph (7), that contains three or more separate dwelling 32 units. 33 c. (1) For valuations established as of January 1, 1980, 34 and each assessment year thereafter beginning before January 35 -2- SF 181 (3) 90 md/jh/mb 2/ 6

S.F. 181 1, 2013, the percentage of actual value as equalized by the 1 director of revenue as provided in section 441.49 at which 2 agricultural and residential property shall be assessed shall 3 be calculated in accordance with the methods provided in 4 this subsection , including the limitation of increases in 5 agricultural and residential assessed values to the percentage 6 increase of the other class of property if the other class 7 increases less than the allowable limit adjusted to include 8 the applicable and current values as equalized by the director 9 of revenue, except that any references to six percent in this 10 subsection shall be four percent. 11 (2) For valuations established as of January 1, 2013, and 12 each assessment year thereafter, the percentage of actual 13 value as equalized by the department of revenue as provided in 14 section 441.49 at which agricultural and residential property 15 shall be assessed shall be calculated in accordance with the 16 methods provided in this subsection , including the limitation 17 of increases in agricultural and residential assessed values to 18 the percentage increase of the other class of property if the 19 other class increases less than the allowable limit adjusted 20 to include the applicable and current values as equalized by 21 the department of revenue, except that any references to six 22 percent in this subsection shall be three percent. 23 Sec. 2. IMPLEMENTATION. 24 1. Notwithstanding the requirements of section 441.21, 25 subsection 9, and any other provision of law to the contrary, 26 the director of the department of revenue shall, within two 27 business days following the effective date of this division 28 of this Act, issue an amended order certifying to the county 29 auditor of each county the percentages of actual value at which 30 residential property, commercial property, industrial property, 31 and property valued by the department of revenue pursuant 32 to chapter 434 shall be assessed for taxation under section 33 441.21, subsection 9, for the assessment year beginning January 34 1, 2022. The amended order shall supersede all previous 35 -3- SF 181 (3) 90 md/jh/mb 3/ 6

S.F. 181 orders certifying percentages for assessment limitations for 1 residential property, commercial property, industrial property, 2 and property valued by the department of revenue pursuant to 3 chapter 434 for the assessment year beginning January 1, 2022. 4 2. Notwithstanding the requirements of section 441.21, 5 subsection 9, and any other provision of law to the contrary, 6 upon receipt of the amended order under subsection 1, each 7 county auditor shall proceed to determine the assessed values 8 of residential property, commercial property, industrial 9 property, and property valued by the department of revenue 10 pursuant to chapter 434 for the assessment year beginning 11 January 1, 2022, by applying the percentages from the amended 12 order to the actual value of such property reported to the 13 county auditor by the assessor. The assessed values so 14 determined shall be the taxable values of such properties upon 15 which the applicable levy shall be made. 16 3. Notwithstanding any provision of law to the contrary, 17 each county auditor, within fifteen days after issuance of 18 the order under subsection 1, shall report the valuation by 19 class of property for each taxing district in the county 20 for the assessment year beginning January 1, 2022, to the 21 department of management on forms provided by the department of 22 management. The valuations reported shall be the valuations 23 used for determining the levy rates necessary to fund political 24 subdivision budgets for the fiscal year beginning July 1, 2023. 25 4. In order to implement this division of this Act, 26 political subdivision budgets for the fiscal year beginning 27 July 1, 2023, notwithstanding any other provision of law 28 relating to the timing of certifying budgets, shall be 29 certified on or before April 30, 2023. If a political 30 subdivision certifies or recertifies its applicable budget 31 after March 31, 2023, all relevant protest and appeal time 32 limits shall be extended to correspond to allowances for a 33 timely filing. If a political subdivision has certified its 34 budget for the fiscal year beginning July 1, 2023, before the 35 -4- SF 181 (3) 90 md/jh/mb 4/ 6

S.F. 181 effective date of this division of this Act, the political 1 subdivision may recertify its budget on or before April 30, 2 2023. 3 Sec. 3. EFFECTIVE DATE. This division of this Act, being 4 deemed of immediate importance, takes effect upon enactment. 5 Sec. 4. RETROACTIVE APPLICABILITY. This division of this 6 Act applies retroactively to assessment years beginning on or 7 after January 1, 2022. 8 DIVISION II 9 EMPLOYER CHILD CARE TAX CREDIT 10 Sec. 5. Section 237A.31, subsection 1, Code 2023, is amended 11 to read as follows: 12 1. The taxes imposed under chapter 422, subchapter II or 13 III , the franchise tax imposed under chapter 422, subchapter 14 V , the gross premiums tax under chapter 432 , or the moneys and 15 credits tax imposed under section 533.329 shall be reduced 16 by an employer child care tax credit equal to the amount 17 proportion of the federal employer-provided child care tax 18 credit provided in section 45F of the Internal Revenue Code the 19 taxpayer was eligible for in the same tax year attributable to 20 expenditures made in this state . 21 Sec. 6. EFFECTIVE DATE. This division of this Act, being 22 deemed of immediate importance, takes effect upon enactment. 23 Sec. 7. RETROACTIVE APPLICABILITY. This division of this 24 Act applies retroactively to January 1, 2023, for tax years 25 beginning on or after that date. 26 DIVISION III 27 RETIREMENT INCOME —— WITHHOLDING 28 Sec. 8. Section 422.16, subsection 1, paragraph c, Code 29 2023, is amended to read as follows: 30 c. For the purposes of this subsection , at a rate specified 31 by the department, state income tax shall be withheld from 32 pensions, annuities, other similar periodic payments, and other 33 income payments of those persons whose primary residence is in 34 Iowa in those circumstances in which those persons have federal 35 -5- SF 181 (3) 90 md/jh/mb 5/ 6

S.F. 181 income tax withheld from pensions, annuities, other similar 1 periodic payments, and other income payments under sections 2 3402(o), 3402(p), 3402(s), 3405(a), 3405(b), and 3405(c) of 3 the Internal Revenue Code at a rate to be specified by the 4 department made to Iowa residents if the payments are subject 5 to Iowa tax . 6 Sec. 9. EFFECTIVE DATE. This division of this Act, being 7 deemed of immediate importance, takes effect upon enactment. 8 Sec. 10. RETROACTIVE APPLICABILITY. This division of this 9 Act applies retroactively to January 1, 2023, for tax years 10 beginning on or after that date. 11 -6- SF 181 (3) 90 md/jh/mb 6/ 6