Senate File 2470 - Reprinted SENATE FILE 2470 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SF 2085) (As Amended and Passed by the Senate March 31, 2026 ) A BILL FOR An Act relating to event-driven contracts traded on dedicated 1 contract markets by requiring a permit to conduct business 2 in the state, imposing a tax on adjusted revenues or amounts 3 traded, making adjustments to individual and corporate 4 income taxes, providing for fees, and including contingent 5 effective date, applicability, and retroactive applicability 6 provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 SF 2470 (3) 91 jm/jh/mb

S.F. 2470 DIVISION I 1 DESIGNATED CONTRACT MARKET TAX 2 Section 1. NEW SECTION . 99H.1 Definitions. 3 As used in this chapter, unless the context otherwise 4 requires: 5 1. “Adjusted revenues” means for each event-driven contract 6 the amount equal to the total charges and fees collected from 7 all traders participating in the event-driven contract less 8 payouts made to traders participating in the event-driven 9 contract, multiplied by the location percentage. 10 2. “Department” means the department of revenue. 11 3. “Designated contract market” means a digital marketplace 12 for trading event-driven contracts that is also regulated by 13 the federal commodity futures trading commission. 14 4. “Director” means the director of revenue. 15 5. “Economic indicators” means a statistic or data point 16 about an economic activity that allows an analyst to assess 17 current economic performance. 18 6. “Event-driven contract” means a financial derivative 19 traded on a designated contract market that provides a fixed 20 binary payout based upon the occurrence or nonoccurrence of a 21 specific future event that is contingent upon and determined 22 solely by the definitive outcome of a verifiable specific event 23 or external measure rather than being based upon the continuous 24 fluctuation of a security price, commodity value, or interest 25 rate that may or may not correlate with traditional market 26 prices or broad economic measures. An “event-driven contract” 27 is limited to those financial derivatives that provide a fixed 28 binary payout related to sporting activities, lotteries, 29 elections, legislative actions, and economic indicators. 30 7. “Location percentage” means for each event-driven 31 contract, the percentage rounded to the nearest one 32 ten-thousandth of a percent, equal to the total charges and 33 fees collected from all traders located in this state divided 34 by the total charges and fees collected from all traders in the 35 -1- SF 2470 (3) 91 jm/jh/mb 1/ 8

S.F. 2470 event-driven contract. 1 8. “Sporting activities” means the outcome of a sporting 2 event, outcomes within the event, or outcomes surrounding the 3 event. 4 9. “Trader” means any person buying or selling event-driven 5 contracts on a designated contract marketplace. 6 Sec. 2. NEW SECTION . 99H.2 Administration —— rules. 7 1. The department shall administer this chapter. The 8 department shall collect, supervise, and enforce the collection 9 of all fees and taxes imposed under this chapter. 10 2. The director may adopt rules pursuant to chapter 17A that 11 are necessary to enforce this chapter. 12 3. The director may designate employees to administer 13 and enforce the provisions of this chapter, including the 14 collection of all taxes provided for in this chapter. In the 15 enforcement, the director may request aid from the attorney 16 general, the special agents of the state, any county attorney, 17 or any peace officer. The director may appoint clerks and 18 additional help as may be needed to administer this chapter. 19 Sec. 3. NEW SECTION . 99H.3 Scope of provisions. 20 This chapter does not apply to the pari-mutuel system of 21 wagering used or intended to be used in connection with the 22 horse-race or dog-race meetings as authorized under chapter 23 99D, fantasy sports contests as authorized under chapter 24 99E, sports wagering authorized under chapter 99F, or other 25 financial derivatives that are not event-driven contracts. 26 Sec. 4. NEW SECTION . 99H.4 Application —— permit —— 27 registration. 28 1. A person shall not engage in the business of serving as 29 a designated contract market at any place of business in this 30 state or through delivery sales, unless the person obtains a 31 permit through the department. 32 2. An application for a permit under this chapter shall 33 be made to the department in an electronic format or made 34 in any other manner prescribed by the department accompanied 35 -2- SF 2470 (3) 91 jm/jh/mb 2/ 8

S.F. 2470 by any associated fees required for the permit and any other 1 supporting documentation required. The application shall 2 include information that is reasonably necessary to identify 3 the person applying for the permit and to administer and 4 collect the taxes imposed under this chapter. 5 3. a. A person issued a permit shall pay an initial permit 6 fee of twenty million dollars. 7 b. All permits expire June 30 each year. The annual renewal 8 permit fee shall be one hundred thousand dollars. 9 Sec. 5. NEW SECTION . 99H.5 Designated contract market tax. 10 A tax is imposed on the adjusted revenues received each 11 calendar year by a designated contract market from the 12 event-driven contracts authorized under this chapter at the 13 rate of twenty percent. The taxes imposed for event-driven 14 contracts under this chapter shall be paid by the designated 15 contract market to the treasurer of state as determined by the 16 department. 17 Sec. 6. NEW SECTION . 99H.6 Revenues. 18 All revenues generated under this chapter shall be deposited 19 into the general fund of the state. 20 Sec. 7. NEW SECTION . 99H.7 Withholding. 21 All payouts made to traders participating in an event-driven 22 contract are Iowa earned income and are subject to state and 23 federal income tax laws. An amount deducted from revenues 24 for payment of the state tax, pursuant to section 422.16, 25 subsection 2, shall be remitted to the department of revenue on 26 behalf of the trader by the designated contract market. 27 Sec. 8. NEW SECTION . 99H.8 Applicability. 28 This chapter applies to a designated contract market 29 permitting persons in this state to trade event-driven 30 contracts until such time a court of competent jurisdiction, 31 after all appeals have been exhausted, determines that 32 event-driven contracts are subject to regulation under chapter 33 99F. 34 Sec. 9. Section 422.7, Code 2026, is amended by adding the 35 -3- SF 2470 (3) 91 jm/jh/mb 3/ 8

S.F. 2470 following new subsection: 1 NEW SUBSECTION . 41. a. For purposes of this subsection, 2 “event-driven contract” means the same as defined in section 3 99H.1. 4 b. Section 1256 of the Internal Revenue Code, with respect 5 to event-driven contracts, does not apply in computing net 6 income for state tax purposes. If the taxpayer’s federal 7 taxable income for the tax year was increased or decreased 8 by reason of the application of section 1256 of the Internal 9 Revenue Code with regard to event-driven contracts, the 10 taxpayer shall recompute net income for state tax purposes as 11 follows: 12 (1) Subtract net gain or add net loss from event-driven 13 contracts, including any loss carried back from a previous tax 14 year. 15 (2) Add gain from each event-driven contract. 16 (3) If the taxpayer itemized deductions, subtract the total 17 loss from each event-driven contract for the same tax year 18 up to an amount equal to ninety percent of the gain added in 19 subparagraph (2). 20 c. The director shall prescribe rules to carry out the 21 provisions of this subsection, including the creation of forms 22 for a taxpayer to use to report gain and loss for event-driven 23 contracts. 24 Sec. 10. Section 422.16, subsection 2, Code 2026, is amended 25 by adding the following new paragraph: 26 NEW PARAGRAPH . 0e. (1) For purposes of this subsection, 27 state income tax shall be withheld on gains in excess of six 28 hundred dollars derived from an event-driven contract that is 29 subject to federal taxation under section 1256 of the Internal 30 Revenue Code. 31 (2) For purposes of this paragraph, “event-driven contract” 32 means the same as defined in section 99H.1. 33 Sec. 11. Section 422.35, Code 2026, is amended by adding the 34 following new subsection: 35 -4- SF 2470 (3) 91 jm/jh/mb 4/ 8

S.F. 2470 NEW SUBSECTION . 15. a. For purposes of this subsection, 1 “event-driven contract” means the same as defined in section 2 99H.1. 3 b. Section 1256 of the Internal Revenue Code, with respect 4 to event-driven contracts, does not apply in computing net 5 income for state tax purposes. If the taxpayer’s federal 6 taxable income for the tax year was increased or decreased 7 by reason of the application of section 1256 of the Internal 8 Revenue Code with regard to event-driven contracts, the 9 taxpayer shall recompute net income for state tax purposes as 10 follows: 11 (1) Subtract net gain or add net loss from event-driven 12 contracts, including any loss carried back from a previous tax 13 year. 14 (2) Add gain from each event-driven contract. 15 (3) If the taxpayer itemized deductions, subtract the total 16 loss from each event-driven contract for the same tax year 17 up to an amount equal to ninety percent of the gain added in 18 subparagraph (2). 19 c. The director shall prescribe rules to carry out the 20 provisions of this subsection, including the creation of forms 21 for a taxpayer to use to report gain and loss for event-driven 22 contracts. 23 Sec. 12. RETROACTIVE APPLICABILITY. The following apply 24 retroactively to January 1, 2026, for tax years beginning on 25 or after that date: 26 1. The section of this division of this Act enacting section 27 422.7, subsection 41. 28 2. The section of this division of this Act enacting section 29 422.35, subsection 15. 30 Sec. 13. APPLICABILITY. For purposes of the imposition and 31 collection of the designated contract market tax in new Code 32 chapter 99H, if enacted by this Act, the first tax year shall 33 begin July 1, 2026, and end December 31, 2026, and afterwards 34 each tax year shall begin January 1. 35 -5- SF 2470 (3) 91 jm/jh/mb 5/ 8

S.F. 2470 DIVISION II 1 EVENT-DRIVEN CONTRACT EXCISE TAX 2 Sec. 14. NEW SECTION . 453F.1 Definitions. 3 As used in this chapter, unless the context otherwise 4 requires: 5 1. “Department” means the department of revenue. 6 2. “Designated contract market” means a digital marketplace 7 for trading event-driven contracts that is also regulated by 8 the federal commodity futures trading commission. 9 3. “Director” means the director of revenue. 10 4. “Economic indicators” means a statistic or data point 11 about an economic activity that allows an analyst to assess 12 current economic performance. 13 5. “Event-driven contract” means a financial derivative 14 traded on a designated contract market that provides a fixed 15 binary payout based upon the occurrence or nonoccurrence of a 16 specific future event that is contingent upon and determined 17 solely by the definitive outcome of a verifiable specific event 18 or external measure rather than being based upon the continuous 19 fluctuation of a security price, commodity value, or interest 20 rate that may or may not correlate with traditional market 21 prices or broad economic measures. An “event-driven contract” 22 is limited to those financial derivatives that provide a fixed 23 binary payout related to sporting activities, lotteries, 24 elections, legislative actions, and economic indicators. 25 6. “Sporting activities” means the outcome of a sporting 26 event, outcomes within the event, or outcomes surrounding the 27 event. 28 7. “Trader” means any person buying or selling event-driven 29 contracts on a designated contract market. 30 Sec. 15. NEW SECTION . 453F.2 Scope of chapter. 31 This chapter does not apply to the pari-mutuel system of 32 wagering used or intended to be used in connection with the 33 horse-race or dog-race meetings as authorized under chapter 34 99D, fantasy sports contests as authorized under chapter 35 -6- SF 2470 (3) 91 jm/jh/mb 6/ 8

S.F. 2470 99E, sports wagering authorized under chapter 99F, or other 1 financial derivatives that are not event-driven contracts. 2 Sec. 16. NEW SECTION . 453F.3 Event-driven contract excise 3 tax. 4 For the privilege of doing business in the state as a 5 designated contract market, a tax is imposed on the amount 6 to buy an event-driven contract on a designated contract 7 market at the rate of twenty percent of the amount to buy the 8 event-driven contract. The taxes imposed for event-driven 9 contracts under this chapter shall be collected by the 10 designated contract market and paid to the treasurer of state 11 as determined by the department. 12 Sec. 17. NEW SECTION . 453F.4 Revenues. 13 All revenues generated under this chapter shall be deposited 14 into the general fund of the state. 15 Sec. 18. NEW SECTION . 453F.5 Administration. 16 1. The director shall administer the excise tax imposed 17 under this chapter as nearly as possible in conjunction with 18 the administration of the state sales and use tax law, except 19 that portion of the law that implements the streamlined sales 20 and use tax agreement. The director shall provide appropriate 21 forms, or provide on the regular state tax forms, for reporting 22 event-driven contract excise tax liability, and for ease 23 of administration may require event-driven contract excise 24 tax liability to be identified, reported, and remitted to 25 the department as sales and use tax liability, provided the 26 department has the ability to properly identify such amounts as 27 event-driven contract excise tax revenues upon receipt. 28 2. The director may require all persons who are engaged 29 in the business of deriving any sales price or purchase 30 price subject to tax under this chapter to register with 31 the department. The director may also require a tax permit 32 applicable only to this section for any designated contract 33 market not collecting, or any trader not paying, taxes under 34 chapter 423. 35 -7- SF 2470 (3) 91 jm/jh/mb 7/ 8

S.F. 2470 3. Section 422.25, subsection 4, sections 422.30, 422.67, 1 and 422.68, section 422.69, subsection 1, sections 422.70, 2 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 3 1, and sections 423.23, 423.24, 423.25, 423.31 through 423.35, 4 423.37, 423.39 through 423.42, and 423.47, consistent with 5 the provisions of this chapter, shall apply with respect to 6 the tax authorized under this chapter in the same manner and 7 with the same effect as if the excise taxes on the trades 8 were retail sales taxes within the meaning of those statutes. 9 Notwithstanding this subsection, the director shall provide for 10 monthly filing of returns and for other than monthly filing of 11 returns both as prescribed in section 423.31. 12 4. The tax imposed by this chapter shall not apply with 13 respect to any trades which under the constitution and laws of 14 the United States may not be made the subject of taxation by 15 this state. 16 5. The tax imposed by this chapter shall be in addition to 17 any other taxes imposed by law. 18 6. All excise taxes collected under this chapter by any 19 person are deemed to be held in trust for the state of Iowa. 20 7. The department shall adopt rules pursuant to chapter 17A 21 to administer this chapter. 22 Sec. 19. CONTINGENT EFFECTIVE DATE. This division of this 23 Act takes effect six months from the date the attorney general 24 notifies the general assembly and the Code editor that the tax 25 imposed in section 99H.5, if enacted by this Act, has been 26 declared unconstitutional or is otherwise unenforceable by the 27 state, and all appeals have been exhausted. 28 -8- SF 2470 (3) 91 jm/jh/mb 8/ 8