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Senate File 215 - 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 STATE 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 property that is not residential or multiresidential.
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, the taxes imposed under this subchapter, less
18the credits allowed under section 422.12, shall be reduced by
19a solar energy system tax credit equal to fifteen percent of
20the gross cost of the solar energy system, not to exceed the
21following 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. The director shall adopt rules pursuant to chapter 17A to
11administer this section.
12 Sec. 2. Section 422.33, subsection 29, paragraph a, Code
132021, is amended to read as follows:
14a. The Beginning with installations completed on or after
15January 1, 2021, the taxes imposed under this subchapter shall
16be reduced by a solar energy system tax credit equal to sixty
17percent of the federal energy credit related to solar energy
18systems provided in section 48(a)(2)(A)(i)(II) and section
1948(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
20twenty thousand dollars. For installations occurring on or
21after January 1, 2016, the applicable percentage of the federal
22energy credit related to solar energy systems shall be fifty
23percent allowed under section 422.11L.
24 Sec. 3. Section 422.60, subsection 12, paragraph a, Code
252021, is amended to read as follows:
26a. The Beginning with the installations completed on or
27after January 1, 2021, the taxes imposed under this subchapter
28shall be reduced by a solar energy system tax credit equal to
29sixty percent of the federal energy credit related to solar
30energy systems provided in section 48(a)(2)(A)(i)(II) and
31section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not
32to exceed twenty thousand dollars. For installations occurring
33on or after January 1, 2016, the applicable percentage of the
34federal energy credit related to solar energy systems shall be
35fifty percent allowed under section 422.11L.
-3-1 Sec. 4. Section 533.329, subsection 2, paragraph k, Code
22021, is amended to read as follows:
3k. The Beginning with the installations completed on or
4after January 1, 2021, the moneys and credits tax imposed under
5this section shall be reduced by a solar energy system tax
6credit allowed under section 422.11L.
7 Sec. 5. WAIT LIST FOR CLAIMS PRIOR TO JANUARY 1, 2021. The
8wait list pursuant to section 422.11L, subsection 3, paragraph
9“d”, subparagraph (2), Code 2021, in existence prior to January
101, 2021, shall remain in effect, and an applicant from that
11wait list shall be given priority on any new wait list based
12upon the date the application for the credit was received by
13the department.
14 Sec. 6. EFFECTIVE DATE. This division of this Act, being
15deemed of immediate importance, takes effect upon enactment.
16 Sec. 7. RETROACTIVE APPLICABILITY. This division of this
17Act applies retroactively to January 1, 2021, for tax years
18ending on or after that date.
19DIVISION II
20MAXIMUM CUMULATIVE VALUE OF TAX CREDITS FOR YEAR 2020
21 Sec. 8. CUMULATIVE VALUE OF TAX CREDIT FOR YEAR
222020. Notwithstanding section 422.11L, subsection 4, Code
232021, the maximum cumulative value of tax credits that may be
24claimed during the 2020 calendar year shall not exceed ten
25million dollars.
26 Sec. 9. EFFECTIVE DATE. This division of this Act, being
27deemed of immediate importance, takes effect upon enactment.
28 Sec. 10. RETROACTIVE APPLICABILITY. This division of this
29Act applies retroactively to tax years beginning on or after
30January 1, 2020, but before January 1, 2021.
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.
7Division I strikes provisions basing the Iowa solar energy
8system tax credit as a percentage of federal energy tax credits
9and creates a new Iowa solar energy system tax credit for
10installations completed on or after January 1, 2021. The bill
11creates a residential solar energy system tax credit equal
12to 15 percent of the gross cost of the system, up to $5,000.
13The bill creates a separate commercial solar energy system
14tax credit not to exceed 15 percent of the gross cost of the
15system, up to $20,000. The tax credit is available against the
16individual and corporate income taxes, the franchise tax, and
17the moneys and credits tax.
18The bill defines “residential solar energy system” to
19mean a solar energy project on residential property or
20multiresidential property. The bill defines “commercial solar
21energy system” to mean a solar energy system on a property that
22is not residential or multiresidential.
23Any tax credit approved under the bill is not refundable
24but the excess for the tax year may be credited to the tax
25liability for the following 10 years or until depleted,
26whichever is earlier.
27A taxpayer eligible to claim a credit under the bill is not
28eligible to claim a renewable energy tax credit under Code
29chapter 476C.
30The bill provides that a taxpayer may claim more than one tax
31credit, but may claim only one credit per separate and distinct
32solar energy system installation.
33The bill permanently increases the maximum cumulative value
34of tax credits that may be claimed during the year from $4
35million to $10 million.
-5- 1The bill provides that the wait list in existence prior to
2January 1, 2021, shall remain in effect, and an applicant from
3that wait list shall be given priority on any new wait list
4based upon the date the application for the credit was received
5by the department.
6The division takes effect upon enactment and applies
7retroactively to January 1, 2021, for tax years ending on or
8after that date.
9Division II raises the cumulative value of solar energy
10system tax credits that may be claimed during the 2020 calendar
11year from $4 million to $10 million. The division takes effect
12upon enactment and applies retroactively to tax years beginning
13on or after January 1, 2020, but before January 1, 2021.
-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:
1DIVISION I
2SOLAR ENERGY SYSTEM STATE 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 property that is not residential or multiresidential.
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, the taxes imposed under this subchapter, less
18the credits allowed under section 422.12, shall be reduced by
19a solar energy system tax credit equal to fifteen percent of
20the gross cost of the solar energy system, not to exceed the
21following 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. The director shall adopt rules pursuant to chapter 17A to
11administer this section.
12 Sec. 2. Section 422.33, subsection 29, paragraph a, Code
132021, is amended to read as follows:
14a. The Beginning with installations completed on or after
15January 1, 2021, the taxes imposed under this subchapter shall
16be reduced by a solar energy system tax credit equal to sixty
17percent of the federal energy credit related to solar energy
18systems provided in section 48(a)(2)(A)(i)(II) and section
1948(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
20twenty thousand dollars. For installations occurring on or
21after January 1, 2016, the applicable percentage of the federal
22energy credit related to solar energy systems shall be fifty
23percent allowed under section 422.11L.
24 Sec. 3. Section 422.60, subsection 12, paragraph a, Code
252021, is amended to read as follows:
26a. The Beginning with the installations completed on or
27after January 1, 2021, the taxes imposed under this subchapter
28shall be reduced by a solar energy system tax credit equal to
29sixty percent of the federal energy credit related to solar
30energy systems provided in section 48(a)(2)(A)(i)(II) and
31section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not
32to exceed twenty thousand dollars. For installations occurring
33on or after January 1, 2016, the applicable percentage of the
34federal energy credit related to solar energy systems shall be
35fifty percent allowed under section 422.11L.
-3-1 Sec. 4. Section 533.329, subsection 2, paragraph k, Code
22021, is amended to read as follows:
3k. The Beginning with the installations completed on or
4after January 1, 2021, the moneys and credits tax imposed under
5this section shall be reduced by a solar energy system tax
6credit allowed under section 422.11L.
7 Sec. 5. WAIT LIST FOR CLAIMS PRIOR TO JANUARY 1, 2021. The
8wait list pursuant to section 422.11L, subsection 3, paragraph
9“d”, subparagraph (2), Code 2021, in existence prior to January
101, 2021, shall remain in effect, and an applicant from that
11wait list shall be given priority on any new wait list based
12upon the date the application for the credit was received by
13the department.
14 Sec. 6. EFFECTIVE DATE. This division of this Act, being
15deemed of immediate importance, takes effect upon enactment.
16 Sec. 7. RETROACTIVE APPLICABILITY. This division of this
17Act applies retroactively to January 1, 2021, for tax years
18ending on or after that date.
19DIVISION II
20MAXIMUM CUMULATIVE VALUE OF TAX CREDITS FOR YEAR 2020
21 Sec. 8. CUMULATIVE VALUE OF TAX CREDIT FOR YEAR
222020. Notwithstanding section 422.11L, subsection 4, Code
232021, the maximum cumulative value of tax credits that may be
24claimed during the 2020 calendar year shall not exceed ten
25million dollars.
26 Sec. 9. EFFECTIVE DATE. This division of this Act, being
27deemed of immediate importance, takes effect upon enactment.
28 Sec. 10. RETROACTIVE APPLICABILITY. This division of this
29Act applies retroactively to tax years beginning on or after
30January 1, 2020, but before January 1, 2021.
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.
7Division I strikes provisions basing the Iowa solar energy
8system tax credit as a percentage of federal energy tax credits
9and creates a new Iowa solar energy system tax credit for
10installations completed on or after January 1, 2021. The bill
11creates a residential solar energy system tax credit equal
12to 15 percent of the gross cost of the system, up to $5,000.
13The bill creates a separate commercial solar energy system
14tax credit not to exceed 15 percent of the gross cost of the
15system, up to $20,000. The tax credit is available against the
16individual and corporate income taxes, the franchise tax, and
17the moneys and credits tax.
18The bill defines “residential solar energy system” to
19mean a solar energy project on residential property or
20multiresidential property. The bill defines “commercial solar
21energy system” to mean a solar energy system on a property that
22is not residential or multiresidential.
23Any tax credit approved under the bill is not refundable
24but the excess for the tax year may be credited to the tax
25liability for the following 10 years or until depleted,
26whichever is earlier.
27A taxpayer eligible to claim a credit under the bill is not
28eligible to claim a renewable energy tax credit under Code
29chapter 476C.
30The bill provides that a taxpayer may claim more than one tax
31credit, but may claim only one credit per separate and distinct
32solar energy system installation.
33The bill permanently increases the maximum cumulative value
34of tax credits that may be claimed during the year from $4
35million to $10 million.
-5- 1The bill provides that the wait list in existence prior to
2January 1, 2021, shall remain in effect, and an applicant from
3that wait list shall be given priority on any new wait list
4based upon the date the application for the credit was received
5by the department.
6The division takes effect upon enactment and applies
7retroactively to January 1, 2021, for tax years ending on or
8after that date.
9Division II raises the cumulative value of solar energy
10system tax credits that may be claimed during the 2020 calendar
11year from $4 million to $10 million. The division takes effect
12upon enactment and applies retroactively to tax years beginning
13on or after January 1, 2020, but before January 1, 2021.
-6-jm/jh