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House File 323 - 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:
1 Section 1. Section 422.11L, Code 2021, is amended by
2striking the section and inserting in lieu thereof the
3following:
4422.11L Solar energy system tax credits.
51. As used in this section:
6a. “Commercial solar energy system” means a solar energy
7system on property that is not residential or multiresidential.
8b. “Residential solar energy system” means a solar energy
9system on residential property or multiresidential property.
10c. “Solar energy system” means a system of equipment capable
11of collecting and converting incident solar radiation into
12thermal, mechanical, or electrical energy and transporting the
13energy by a separate apparatus to storage or to a point of use.
142. Beginning with installations completed on or after
15January 1, 2021, the taxes imposed under this subchapter, less
16the credits allowed under section 422.12, shall be reduced by a
17solar energy system tax credit equal to an amount calculated
18using only one of the following methods:
19a. Fifteen percent of the gross cost of the solar energy
20system, not to exceed the following amounts:
21(1) For a residential solar energy system, five thousand
22dollars.
23(2) For a commercial solar energy system, twenty thousand
24dollars.
25b. The sum of the following:
26(1) Fifty percent of the federal residential energy
27efficient property credit related to solar energy provided in
28section 25D(a)(1) and section 25D(a)(2) of the Internal Revenue
29Code, not to exceed five thousand dollars.
30(2) Fifty percent of the federal energy credit related to
31solar energy systems provided in section 48(a)(2)(A)(i)(II) and
32section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not
33to exceed twenty thousand dollars.
343. Any credit in excess of the tax liability is not
35refundable but the excess for the tax year may be credited
-1-1to the tax liability for the following ten years or until
2depleted, whichever is earlier.
34. a. An individual may claim the tax credit allowed a
4partnership, limited liability company, S corporation, estate,
5or trust electing to have the income taxed directly to the
6individual. The amount claimed by the individual shall be
7based upon the pro rata share of the individual’s earnings of
8the partnership, limited liability company, S corporation,
9estate, or trust.
10b. A taxpayer who is eligible to claim a credit under this
11section shall not be eligible to claim a renewable energy tax
12credit under chapter 476C.
13c. A taxpayer may claim more than one credit under this
14section, but may claim only one credit per separate and
15distinct solar energy system installation. The department
16shall establish criteria, by rule, for determining what
17constitutes a separate and distinct installation.
18d. (1) A taxpayer must submit an application to the
19department for each separate and distinct solar energy
20system installation. The application must be approved by the
21department in order to claim the tax credit. The application
22must be filed by May 1 following the year of the installation
23of the solar energy system.
24(2) The department shall accept and approve applications
25on a first-come, first-served basis until the maximum amount
26of tax credits that may be claimed pursuant to subsection 5
27is reached. If for a tax year the aggregate amount of tax
28credits applied for exceeds the amount specified in subsection
295, the department shall establish a wait list for tax credits.
30Valid applications filed by the taxpayer by May 1 following the
31year of the installation but not approved by the department
32shall be placed on a wait list in the order the applications
33were received and those applicants shall be given priority
34for having their applications approved in succeeding years.
35Placement on a wait list pursuant to this subparagraph shall
-2-1not constitute a promise binding the state. The availability
2of a tax credit and approval of a tax credit application
3pursuant to this section in a future year is contingent upon
4the availability of tax credits in that particular year.
55. a. The cumulative value of tax credits claimed annually
6by applicants pursuant to this section shall not exceed ten
7million dollars.
8b. If an amount of tax credits available for a tax year
9pursuant to paragraph “a” goes unclaimed, the amount of the
10unclaimed tax credits shall be made available for the following
11tax year in addition to, and cumulated with, the amount
12available pursuant to paragraph “a” for the following tax year.
136. On or before January 1, annually, the department shall
14submit a written report to the governor and the general
15assembly regarding the number and value of tax credits claimed
16under this section, and any other information the department
17may deem relevant and appropriate.
187. The director shall adopt rules pursuant to chapter 17A to
19administer this section.
20 Sec. 2. Section 422.33, subsection 29, paragraph a, Code
212021, is amended to read as follows:
22a. The Beginning with installations completed on or after
23January 1, 2021, the taxes imposed under this subchapter shall
24be reduced by a solar energy system tax credit equal to sixty
25percent of the federal energy credit related to solar energy
26systems provided in section 48(a)(2)(A)(i)(II) and section
2748(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
28twenty thousand dollars. For installations occurring on or
29after January 1, 2016, the applicable percentage of the federal
30energy credit related to solar energy systems shall be fifty
31percent allowed under section 422.11L.
32 Sec. 3. Section 422.60, subsection 12, paragraph a, Code
332021, is amended to read as follows:
34a. The Beginning with the installations completed on or
35after January 1, 2021, the taxes imposed under this subchapter
-3-1shall be reduced by a solar energy system tax credit equal to
2sixty percent of the federal energy credit related to solar
3energy systems provided in section 48(a)(2)(A)(i)(II) and
4section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not
5to exceed twenty thousand dollars. For installations occurring
6on or after January 1, 2016, the applicable percentage of the
7federal energy credit related to solar energy systems shall be
8fifty percent allowed under section 422.11L.
9 Sec. 4. Section 533.329, subsection 2, paragraph k, Code
102021, is amended to read as follows:
11k. The Beginning with the installations completed on or
12after January 1, 2021, the moneys and credits tax imposed under
13this section shall be reduced by a solar energy system tax
14credit allowed under section 422.11L.
15 Sec. 5. CUMULATIVE VALUE OF SOLAR ENERGY SYSTEM TAX CREDIT
16FOR YEAR 2021 — WAIT LIST. Notwithstanding section 422.11L,
17subsection 5, as enacted by this Act, there shall be no maximum
18cumulative value of tax credits that may be claimed during the
192021 calendar year until such time as the wait list pursuant to
20section 422.11L, subsection 3, Code 2021, has been eliminated.
21If the wait list has been eliminated during the 2021 calendar
22year, the maximum cumulative value of tax credits during
23calendar year 2021 shall not exceed the maximum cumulative
24value of tax credits specified in section 422.11L, subsection
255, as enacted by this Act.
26 Sec. 6. EFFECTIVE DATE. This Act, being deemed of immediate
27importance, takes effect upon enactment.
28 Sec. 7. RETROACTIVE APPLICABILITY. This Act applies
29retroactively to January 1, 2021, for tax years ending on or
30after that date.
31EXPLANATION
32The inclusion of this explanation does not constitute agreement with
33the explanation’s substance by the members of the general assembly.
34This bill relates to the solar energy system tax credit.
35Under existing law, the Iowa solar energy system tax credit
-4-1available against the individual or corporate income tax, the
2franchise tax, or the moneys and credits tax equals the sum of
350 percent of the federal residential energy efficient property
4credit, not to exceed $5,000, plus 50 percent of the federal
5energy credit related to solar energy systems, not to exceed
6$20,000.
7The bill maintains the existing framework of the solar
8energy system tax credit as a percentage of the federal energy
9credit but creates a new Iowa solar energy system tax credit
10for installations completed on or after January 1, 2021. For
11solar energy systems completed on or after January 1, 2021, the
12bill allows a taxpayer to calculate the solar energy system tax
13credit amount as a percentage of the federal energy credit or
14calculate the solar energy system tax credit amount pursuant
15to the new Iowa solar energy system tax credit created in the
16bill. The bill creates a residential solar energy system tax
17credit equal to 15 percent of the gross cost of the system, up
18to $5,000. The bill creates a separate commercial solar energy
19system tax credit not to exceed 15 percent of the gross cost of
20the system, up to $20,000. The bill defines “residential solar
21energy system” to mean a solar energy project on residential
22property or multiresidential property. The bill defines
23“commercial solar energy system” to mean a solar energy system
24on a property that is not residential or multiresidential.
25Any tax credit approved under the bill is not refundable
26but the excess for the tax year may be credited to the tax
27liability for the following 10 years or until depleted,
28whichever is earlier.
29The tax credit is available against the individual and
30corporate income taxes, the franchise tax, and the moneys and
31credits tax.
32A taxpayer eligible to claim a credit under the bill is not
33eligible to claim a renewable energy tax credit under Code
34chapter 476C.
35The bill provides that a taxpayer may claim more than one tax
-5-1credit, but may claim only one credit per separate and distinct
2solar energy system installation.
3The bill permanently increases the maximum cumulative value
4of tax credits that may be claimed during the year from $4
5million to $10 million.
6The bill eliminates the wait list for the tax credit by
7removing the maximum cumulative value of tax credits that may
8be claimed in a year for calendar year 2021 until the wait list
9is eliminated. If the wait list is eliminated during calendar
10year 2021, the maximum cumulative value of tax credits that
11may be claimed during calendar year 2021 shall not exceed the
12maximum cumulative value established in the bill, $10 million.
13The bill takes effect upon enactment and applies
14retroactively to January 1, 2021, for tax years ending on or
15after that date.
-6-jm/jh
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:
1 Section 1. Section 422.11L, Code 2021, is amended by
2striking the section and inserting in lieu thereof the
3following:
4422.11L Solar energy system tax credits.
51. As used in this section:
6a. “Commercial solar energy system” means a solar energy
7system on property that is not residential or multiresidential.
8b. “Residential solar energy system” means a solar energy
9system on residential property or multiresidential property.
10c. “Solar energy system” means a system of equipment capable
11of collecting and converting incident solar radiation into
12thermal, mechanical, or electrical energy and transporting the
13energy by a separate apparatus to storage or to a point of use.
142. Beginning with installations completed on or after
15January 1, 2021, the taxes imposed under this subchapter, less
16the credits allowed under section 422.12, shall be reduced by a
17solar energy system tax credit equal to an amount calculated
18using only one of the following methods:
19a. Fifteen percent of the gross cost of the solar energy
20system, not to exceed the following amounts:
21(1) For a residential solar energy system, five thousand
22dollars.
23(2) For a commercial solar energy system, twenty thousand
24dollars.
25b. The sum of the following:
26(1) Fifty percent of the federal residential energy
27efficient property credit related to solar energy provided in
28section 25D(a)(1) and section 25D(a)(2) of the Internal Revenue
29Code, not to exceed five thousand dollars.
30(2) Fifty percent of the federal energy credit related to
31solar energy systems provided in section 48(a)(2)(A)(i)(II) and
32section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not
33to exceed twenty thousand dollars.
343. Any credit in excess of the tax liability is not
35refundable but the excess for the tax year may be credited
-1-1to the tax liability for the following ten years or until
2depleted, whichever is earlier.
34. a. An individual may claim the tax credit allowed a
4partnership, limited liability company, S corporation, estate,
5or trust electing to have the income taxed directly to the
6individual. The amount claimed by the individual shall be
7based upon the pro rata share of the individual’s earnings of
8the partnership, limited liability company, S corporation,
9estate, or trust.
10b. A taxpayer who is eligible to claim a credit under this
11section shall not be eligible to claim a renewable energy tax
12credit under chapter 476C.
13c. A taxpayer may claim more than one credit under this
14section, but may claim only one credit per separate and
15distinct solar energy system installation. The department
16shall establish criteria, by rule, for determining what
17constitutes a separate and distinct installation.
18d. (1) A taxpayer must submit an application to the
19department for each separate and distinct solar energy
20system installation. The application must be approved by the
21department in order to claim the tax credit. The application
22must be filed by May 1 following the year of the installation
23of the solar energy system.
24(2) The department shall accept and approve applications
25on a first-come, first-served basis until the maximum amount
26of tax credits that may be claimed pursuant to subsection 5
27is reached. If for a tax year the aggregate amount of tax
28credits applied for exceeds the amount specified in subsection
295, the department shall establish a wait list for tax credits.
30Valid applications filed by the taxpayer by May 1 following the
31year of the installation but not approved by the department
32shall be placed on a wait list in the order the applications
33were received and those applicants shall be given priority
34for having their applications approved in succeeding years.
35Placement on a wait list pursuant to this subparagraph shall
-2-1not constitute a promise binding the state. The availability
2of a tax credit and approval of a tax credit application
3pursuant to this section in a future year is contingent upon
4the availability of tax credits in that particular year.
55. a. The cumulative value of tax credits claimed annually
6by applicants pursuant to this section shall not exceed ten
7million dollars.
8b. If an amount of tax credits available for a tax year
9pursuant to paragraph “a” goes unclaimed, the amount of the
10unclaimed tax credits shall be made available for the following
11tax year in addition to, and cumulated with, the amount
12available pursuant to paragraph “a” for the following tax year.
136. On or before January 1, annually, the department shall
14submit a written report to the governor and the general
15assembly regarding the number and value of tax credits claimed
16under this section, and any other information the department
17may deem relevant and appropriate.
187. The director shall adopt rules pursuant to chapter 17A to
19administer this section.
20 Sec. 2. Section 422.33, subsection 29, paragraph a, Code
212021, is amended to read as follows:
22a. The Beginning with installations completed on or after
23January 1, 2021, the taxes imposed under this subchapter shall
24be reduced by a solar energy system tax credit equal to sixty
25percent of the federal energy credit related to solar energy
26systems provided in section 48(a)(2)(A)(i)(II) and section
2748(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
28twenty thousand dollars. For installations occurring on or
29after January 1, 2016, the applicable percentage of the federal
30energy credit related to solar energy systems shall be fifty
31percent allowed under section 422.11L.
32 Sec. 3. Section 422.60, subsection 12, paragraph a, Code
332021, is amended to read as follows:
34a. The Beginning with the installations completed on or
35after January 1, 2021, the taxes imposed under this subchapter
-3-1shall be reduced by a solar energy system tax credit equal to
2sixty percent of the federal energy credit related to solar
3energy systems provided in section 48(a)(2)(A)(i)(II) and
4section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not
5to exceed twenty thousand dollars. For installations occurring
6on or after January 1, 2016, the applicable percentage of the
7federal energy credit related to solar energy systems shall be
8fifty percent allowed under section 422.11L.
9 Sec. 4. Section 533.329, subsection 2, paragraph k, Code
102021, is amended to read as follows:
11k. The Beginning with the installations completed on or
12after January 1, 2021, the moneys and credits tax imposed under
13this section shall be reduced by a solar energy system tax
14credit allowed under section 422.11L.
15 Sec. 5. CUMULATIVE VALUE OF SOLAR ENERGY SYSTEM TAX CREDIT
16FOR YEAR 2021 — WAIT LIST. Notwithstanding section 422.11L,
17subsection 5, as enacted by this Act, there shall be no maximum
18cumulative value of tax credits that may be claimed during the
192021 calendar year until such time as the wait list pursuant to
20section 422.11L, subsection 3, Code 2021, has been eliminated.
21If the wait list has been eliminated during the 2021 calendar
22year, the maximum cumulative value of tax credits during
23calendar year 2021 shall not exceed the maximum cumulative
24value of tax credits specified in section 422.11L, subsection
255, as enacted by this Act.
26 Sec. 6. EFFECTIVE DATE. This Act, being deemed of immediate
27importance, takes effect upon enactment.
28 Sec. 7. RETROACTIVE APPLICABILITY. This Act applies
29retroactively to January 1, 2021, for tax years ending on or
30after that date.
31EXPLANATION
32The inclusion of this explanation does not constitute agreement with
33the explanation’s substance by the members of the general assembly.
34This bill relates to the solar energy system tax credit.
35Under existing law, the Iowa solar energy system tax credit
-4-1available against the individual or corporate income tax, the
2franchise tax, or the moneys and credits tax equals the sum of
350 percent of the federal residential energy efficient property
4credit, not to exceed $5,000, plus 50 percent of the federal
5energy credit related to solar energy systems, not to exceed
6$20,000.
7The bill maintains the existing framework of the solar
8energy system tax credit as a percentage of the federal energy
9credit but creates a new Iowa solar energy system tax credit
10for installations completed on or after January 1, 2021. For
11solar energy systems completed on or after January 1, 2021, the
12bill allows a taxpayer to calculate the solar energy system tax
13credit amount as a percentage of the federal energy credit or
14calculate the solar energy system tax credit amount pursuant
15to the new Iowa solar energy system tax credit created in the
16bill. The bill creates a residential solar energy system tax
17credit equal to 15 percent of the gross cost of the system, up
18to $5,000. The bill creates a separate commercial solar energy
19system tax credit not to exceed 15 percent of the gross cost of
20the system, up to $20,000. The bill defines “residential solar
21energy system” to mean a solar energy project on residential
22property or multiresidential property. The bill defines
23“commercial solar energy system” to mean a solar energy system
24on a property that is not residential or multiresidential.
25Any tax credit approved under the bill is not refundable
26but the excess for the tax year may be credited to the tax
27liability for the following 10 years or until depleted,
28whichever is earlier.
29The tax credit is available against the individual and
30corporate income taxes, the franchise tax, and the moneys and
31credits tax.
32A taxpayer eligible to claim a credit under the bill is not
33eligible to claim a renewable energy tax credit under Code
34chapter 476C.
35The bill provides that a taxpayer may claim more than one tax
-5-1credit, but may claim only one credit per separate and distinct
2solar energy system installation.
3The bill permanently increases the maximum cumulative value
4of tax credits that may be claimed during the year from $4
5million to $10 million.
6The bill eliminates the wait list for the tax credit by
7removing the maximum cumulative value of tax credits that may
8be claimed in a year for calendar year 2021 until the wait list
9is eliminated. If the wait list is eliminated during calendar
10year 2021, the maximum cumulative value of tax credits that
11may be claimed during calendar year 2021 shall not exceed the
12maximum cumulative value established in the bill, $10 million.
13The bill takes effect upon enactment and applies
14retroactively to January 1, 2021, for tax years ending on or
15after that date.
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