House File 221 - IntroducedA Bill ForAn Act 1relating to the solar energy system tax credit available
2against the individual and corporate income tax, the
3franchise tax, the moneys and credits tax, and including
4effective date and retroactive applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2solar energy system tax credit
3   Section 1.  Section 422.11L, Code 2021, is amended by
4striking the section and inserting in lieu thereof the
5following:
   6422.11L  Solar energy system tax credits.
   71.  As used in this section:
   8a.  “Commercial solar energy system” means a solar energy
9system on nonresidential property.
   10b.  “Residential solar energy system” means a solar energy
11system on residential property or multiresidential property.
   12c.  “Solar energy system” means a system of equipment capable
13of collecting and converting incident solar radiation into
14thermal, mechanical, or electrical energy and transporting the
15energy by a separate apparatus to storage or to a point of use.
   162.  Beginning with installations completed on or after
17January 1, 2021, but before December 31, 2030, the taxes
18imposed under this subchapter, less the credits allowed under
19section 422.12, shall be reduced by a solar energy system tax
20credit equal to fifteen percent of the gross cost of the solar
21energy system, not to exceed the following amounts:
   22a.  For a residential solar energy system, five thousand
23dollars.
   24b.  For a commercial solar energy system, twenty thousand
25dollars.
   263.  Any credit in excess of the tax liability is not
27refundable but the excess for the tax year may be credited
28to the tax liability for the following ten years or until
29depleted, whichever is earlier.
   304.  a.  An individual may claim the tax credit allowed a
31partnership, limited liability company, S corporation, estate,
32or trust electing to have the income taxed directly to the
33individual. The amount claimed by the individual shall be
34based upon the pro rata share of the individual’s earnings of
35the partnership, limited liability company, S corporation,
-1-1estate, or trust.
   2b.  A taxpayer who is eligible to claim a credit under this
3section shall not be eligible to claim a renewable energy tax
4credit under chapter 476C.
   5c.  A taxpayer may claim more than one credit under this
6section, but may claim only one credit per separate and
7distinct solar energy system installation. The department
8shall establish criteria, by rule, for determining what
9constitutes a separate and distinct installation.
   10d.  (1)  A taxpayer must submit an application to the
11department for each separate and distinct solar energy
12system installation. The application must be approved by the
13department in order to claim the tax credit. The application
14must be filed by May 1 following the year of the installation
15of the solar energy system.
   16(2)  The department shall accept and approve applications
17on a first-come, first-served basis until the maximum amount
18of tax credits that may be claimed pursuant to subsection 5
19is reached. If for a tax year the aggregate amount of tax
20credits applied for exceeds the amount specified in subsection
215, the department shall establish a wait list for tax credits.
22Valid applications filed by the taxpayer by May 1 following the
23year of the installation but not approved by the department
24shall be placed on a wait list in the order the applications
25were received and those applicants shall be given priority
26for having their applications approved in succeeding years.
27Placement on a wait list pursuant to this subparagraph shall
28not constitute a promise binding the state. The availability
29of a tax credit and approval of a tax credit application
30pursuant to this section in a future year is contingent upon
31the availability of tax credits in that particular year.
   325.  a.  The cumulative value of tax credits claimed annually
33by applicants pursuant to this section shall not exceed ten
34million dollars.
   35b.  If an amount of tax credits available for a tax year
-2-1pursuant to paragraph “a” goes unclaimed, the amount of the
2unclaimed tax credits shall be made available for the following
3tax year in addition to, and cumulated with, the amount
4available pursuant to paragraph “a” for the following tax year.
   56.  On or before January 1, annually, the department shall
6submit a written report to the governor and the general
7assembly regarding the number and value of tax credits claimed
8under this section, and any other information the department
9may deem relevant and appropriate.
   107.  This section is repealed January 1, 2041.
   118.  The director shall adopt rules pursuant to chapter 17A to
12administer this section.
13   Sec. 2.  Section 422.33, subsection 29, paragraph a, Code
142021, is amended to read as follows:
   15a.  The Beginning with installations completed on or after
16January 1, 2021, but before December 31, 2030, the
taxes
17imposed under this subchapter shall be reduced by a solar
18energy system tax credit equal to sixty percent of the federal
19energy credit related to solar energy systems provided in
20section 48(a)(2)(A)(i)(II) and section 48(a)(2)(A)(i)(III)
21of the Internal Revenue Code, not to exceed twenty thousand
22dollars. For installations occurring on or after January 1,
232016, the applicable percentage of the federal energy credit
24related to solar energy systems shall be fifty percent
 allowed
25under section 422.11L
.
26   Sec. 3.  Section 422.60, subsection 12, paragraph a, Code
272021, is amended to read as follows:
   28a.  The Beginning with the installations completed on or
29after January 1, 2021, but before December 31, 2030, the
taxes
30imposed under this subchapter shall be reduced by a solar
31energy system tax credit equal to sixty percent of the federal
32energy credit related to solar energy systems provided in
33section 48(a)(2)(A)(i)(II) and section 48(a)(2)(A)(i)(III)
34of the Internal Revenue Code, not to exceed twenty thousand
35dollars. For installations occurring on or after January 1,
-3-12016, the applicable percentage of the federal energy credit
2related to solar energy systems shall be fifty percent
 allowed
3under section 422.11L
.
4   Sec. 4.  Section 533.329, subsection 2, paragraph k, Code
52021, is amended to read as follows:
   6k.  The Beginning with the installations completed on or
7after January 1, 2021, but before December 31, 2030, the
moneys
8and credits tax imposed under this section shall be reduced by
9a solar energy system tax credit allowed under section 422.11L.
10   Sec. 5.  CUMULATIVE VALUE OF SOLAR ENERGY SYSTEM TAX CREDIT
11FOR YEAR 2021 — RESERVED CLAIMS.
  Notwithstanding section
12422.11L, subsection 5, as enacted by this division of this Act,
13the maximum cumulative value of tax credits that may be claimed
14during the 2021 calendar year shall not exceed seventeen
15million dollars. Of this amount, at least seven million
16dollars shall be reserved for claims placed on the wait list
17pursuant to section 422.11L, subsection 3, Code 2021, prior to
18January 1, 2021. The reserved claims shall be approved using
19the same priority of approval established for the wait list.
20In the event claims from the wait list exceed the reserved
21amount, an applicant from the wait list shall be given priority
22to make a claim for amounts not reserved for the year 2021, to
23the extent such claims have not been claimed. In the event the
24maximum cumulative amount of tax credits have been claimed for
25the year 2021, an applicant from the wait list shall be given
26priority on any wait list based upon the date the application
27for the credit was received by the department.
28   Sec. 6.  EFFECTIVE DATE.  This division of this Act, being
29deemed of immediate importance, takes effect upon enactment.
30   Sec. 7.  RETROACTIVE APPLICABILITY.  This division of this
31Act applies retroactively to January 1, 2021, for tax years
32ending on or after that date.
33DIVISION II
34CORRESPONDING CHANGES DUE TO FUTURE REPEAL OF SOLAR ENERGY
35SYSTEM TAX CREDIT
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1   Sec. 8.  Section 422.33, subsection 29, Code 2021, is amended
2by adding the following new paragraph:
3   NEW PARAGRAPH.  c.  This subsection is repealed on January
41, 2041.
5   Sec. 9.  Section 422.60, subsection 12, Code 2021, is amended
6by adding the following new paragraph:
7   NEW PARAGRAPH.  c.  This subsection is repealed on January
81, 2041.
9   Sec. 10.  Section 476C.2, subsection 3, Code 2021, is amended
10to read as follows:
   113.  a.  A taxpayer who is eligible to claim a renewable
12energy tax credit under this chapter shall not be eligible to
13claim a solar energy system tax credit under section 422.11L
14or 422.33.
   15b.  This subsection is repealed on January 1, 2041.
16   Sec. 11.  Section 533.329, subsection 2, paragraph k, Code
172021, is amended to read as follows:
   18k.  (1)  The moneys and credits tax imposed under this
19section shall be reduced by a solar energy system tax credit
20allowed under section 422.11L.
   21(2)  This paragraph is repealed on January 1, 2041.
22EXPLANATION
23The inclusion of this explanation does not constitute agreement with
24the explanation’s substance by the members of the general assembly.
   25DIVISION I — SOLAR ENERGY SYSTEM TAX CREDIT — REPEAL. This
26bill relates to the solar energy system tax credit. Under
27existing law, the Iowa solar energy system tax credit available
28against the individual or corporate income tax, the franchise
29tax, or the moneys and credits tax equals the sum of 50 percent
30of the federal residential energy efficient property credit,
31not to exceed $5,000, plus 50 percent of the federal energy
32credit related to solar energy systems, not to exceed $20,000.
   33The bill strikes provisions basing the Iowa solar energy
34system tax credit as a percentage of federal energy tax credits
35and creates a new Iowa solar energy system tax credit for
-5-1installations completed on or after January 1, 2021, but before
2December 31, 2030. The bill creates a residential solar energy
3system tax credit equal to 15 percent of the gross cost of the
4system, up to $5,000. The bill creates a separate commercial
5solar energy system tax credit not to exceed 15 percent of the
6gross cost of the system, up to $20,000. The tax credit is
7available against the individual and corporate income taxes,
8the franchise tax, and the moneys and credits tax.
   9The bill defines “residential solar energy system” to
10mean a solar energy project on residential property or
11multiresidential property. The bill defines “commercial
12solar energy system” to mean a solar energy system on a
13nonresidential property.
   14Any tax credit approved under the bill is not refundable
15but the excess for the tax year may be credited to the tax
16liability for the following 10 years or until depleted,
17whichever is earlier.
   18A taxpayer eligible to claim a credit under the bill is not
19eligible to claim a renewable energy tax credit under Code
20chapter 476C.
   21The bill provides that a taxpayer may claim more than one tax
22credit, but may claim only one credit per separate and distinct
23solar energy system installation.
   24For the 2021 calendar year, the bill increases the maximum
25cumulative value of tax credits that may be claimed during
26the calendar year from $4 million to $17 million. Of this
27increased maximum tax credit amount for the 2021 calendar year,
28$7 million is reserved for claims placed on the wait list prior
29to January 1, 2021. The reserved claims shall be approved
30using the same priority of approval established for the wait
31list. An applicant placed on the wait list prior to January
322021 shall be given priority to make a claim for amounts not
33reserved for the year 2021, to the extent such claims have not
34been claimed. In the event the maximum cumulative amount of
35tax credits have been claimed for the year 2021 under the bill,
-6-1the applicant shall have priority on any wait list based upon
2the date the application for the credit was received by the
3department of revenue.
   4Beginning in the 2022 calendar year through the 2030
5calendar year, the bill establishes the maximum cumulative
6value of tax credits that may be claimed during the year at $10
7million.
   8The bill repeals the solar energy tax credit on January
91, 2041, which is 10 years after the tax year the credit may
10be claimed for completed installations in order to allow any
11credit in excess of tax liability for installations completed
12prior to December 31, 2030, to be credited to future tax
13liability for up to 10 years.
   14Division I takes effect upon enactment and applies
15retroactively to January 1, 2021, for tax years ending on or
16after that date.
   17DIVISION II — CORRESPONDING CHANGES DUE TO REPEAL OF THE
18SOLAR ENERGY SYSTEM TAX CREDIT. The bill makes corresponding
19changes in the Code due to the repeal of the solar energy
20system tax credit on January 1, 2041.
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