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Senate Study Bill 3074 - IntroducedA Bill ForAn Act 1relating to state and local revenue and finances by
2modifying sales and use taxes, individual and corporate
3income taxes, the franchise tax, the insurance premiums tax,
4the equipment tax, the automobile rental excise tax, the
5water service tax, and local option taxes, crediting moneys
6to the natural resources and outdoor recreation trust fund,
7and including effective date and applicability provisions.
8BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2SALES AND USE TAX RATES AND DISTRIBUTION
3 Section 1. Section 423.2, subsection 1, unnumbered
4paragraph 1, Code 2022, is amended to read as follows:
5There is imposed a tax of six percent at the rate specified
6in subsection 12 upon the sales price of all sales of tangible
7personal property, sold at retail in the state to consumers or
8users except as otherwise provided in this subchapter.
9 Sec. 2. Section 423.2, subsections 2 and 3, Code 2022, are
10amended to read as follows:
112. A tax of six percent at the rate specified in subsection
1212 is imposed upon the sales price of the sale or furnishing
13of gas, electricity, water, heat, pay television service, and
14communication service, including the sales price from such
15sales by any municipal corporation or joint water utility
16furnishing gas, electricity, water, heat, pay television
17service, and communication service to the public in its
18proprietary capacity, except as otherwise provided in this
19subchapter, when sold at retail in the state to consumers or
20users.
213. A tax of six percent at the rate specified in subsection
2212 is imposed upon the sales price of all sales of tickets
23or admissions to places of amusement, fairs, and athletic
24events except those of elementary and secondary educational
25institutions. A tax of six percent at the rate specified in
26subsection 12 is imposed on the sales price of an entry fee or
27like charge imposed solely for the privilege of participating
28in an activity at a place of amusement, fair, or athletic event
29unless the sales price of tickets or admissions charges for
30observing the same activity are taxable under this subchapter.
31A tax of six percent at the rate specified in subsection 12
32 is imposed upon that part of private club membership fees or
33charges paid for the privilege of participating in any athletic
34sports provided club members.
35 Sec. 3. Section 423.2, subsection 4, paragraph a, Code 2022,
-1-1is amended to read as follows:
2a. A tax of six percent at the rate specified in subsection
312 is imposed upon the sales price derived from the operation
4of all forms of amusement devices and games of skill, games of
5chance, raffles, and bingo games as defined in chapter 99B, and
6card game tournaments conducted under section 99B.27, that are
7operated or conducted within the state, the tax to be collected
8from the operator in the same manner as for the collection of
9taxes upon the sales price of tickets or admission as provided
10in this section. Nothing in this subsection shall legalize any
11games of skill or chance or slot-operated devices which are now
12prohibited by law.
13 Sec. 4. Section 423.2, subsection 5, Code 2022, is amended
14to read as follows:
155. There is imposed a tax of six percent at the rate
16specified in subsection 12 upon the sales price from the
17furnishing of services as defined in section 423.1.
18 Sec. 5. Section 423.2, subsection 7, paragraph a,
19unnumbered paragraph 1, Code 2022, is amended to read as
20follows:
21A tax of six percent at the rate specified in subsection 12
22 is imposed upon the sales price from the sales, furnishing, or
23service of solid waste collection and disposal service.
24 Sec. 6. Section 423.2, subsection 8, paragraph a, Code 2022,
25is amended to read as follows:
26a. A tax of six percent at the rate specified in subsection
2712 is imposed on the sales price from sales of bundled
28transactions. For the purposes of this subsection, a “bundled
29transaction” is the retail sale of two or more distinct and
30identifiable products, except real property and services to
31real property, which are sold for one nonitemized price. A
32“bundled transaction” does not include the sale of any products
33in which the sales price varies, or is negotiable, based on
34the selection by the purchaser of the products included in the
35transaction.
-2-1 Sec. 7. Section 423.2, subsection 9, Code 2022, is amended
2to read as follows:
39. A tax of six percent at the rate specified in
4subsection 12 is imposed upon the sales price from any mobile
5telecommunications service, including all paging services,
6that this state is allowed to tax pursuant to the provisions
7of the federal Mobile Telecommunications Sourcing Act, Pub.
8L. No.106-252, 4 U.S.C. §116 et seq. For purposes of this
9subsection, taxes on mobile telecommunications service, as
10defined under the federal Mobile Telecommunications Sourcing
11Act that are deemed to be provided by the customer’s home
12service provider, shall be paid to the taxing jurisdiction
13whose territorial limits encompass the customer’s place of
14primary use, regardless of where the mobile telecommunications
15service originates, terminates, or passes through and
16shall in all other respects be taxed in conformity with
17the federal Mobile Telecommunications Sourcing Act. All
18other provisions of the federal Mobile Telecommunications
19Sourcing Act are adopted by the state of Iowa and incorporated
20into this subsection by reference. With respect to mobile
21telecommunications service under the federal Mobile
22Telecommunications Sourcing Act, the director shall, if
23requested, enter into agreements consistent with the provisions
24of the federal Act.
25 Sec. 8. Section 423.2, subsection 10, paragraph a, Code
262022, is amended to read as follows:
27a. A tax of six percent at the rate specified in subsection
2812 is imposed on the sales price of specified digital products
29sold at retail in the state. The tax applies whether the
30purchaser obtains permanent use or less than permanent use of
31the specified digital product, whether the sale is conditioned
32or not conditioned upon continued payment from the purchaser,
33and whether the sale is on a subscription basis or is not on a
34subscription basis.
35 Sec. 9. Section 423.2, subsection 12, Code 2022, is amended
-3-1by striking the subsection and inserting in lieu thereof the
2following:
312. a. For the period beginning January 1, 2023, through
4December 31, 2050, the sales tax rate is seven percent.
5b. Beginning January 1, 2051, the sales tax rate is six
6percent.
7 Sec. 10. Section 423.2A, subsection 2, paragraphs a, b, and
8c, Code 2022, are amended to read as follows:
9a. (1) Transfer For the period beginning January 1, 2023,
10through December 31, 2050, transfer one-seventh of the revenues
11collected under deposited into the general fund of the state
12under subsection 1 to the appropriate county accounts under
13 chapter 423B for the counties from which the tax was collected.
14(2) Beginning January 1, 2051, transfer one-sixth of the
15revenues deposited into the general fund of the state under
16subsection 1 to the appropriate county accounts under chapter
17423B for the counties from which the tax was collected.
18b. Transfer from the remaining revenues the amounts required
19under Article VII, section 10, of the Constitution of the State
20of Iowa to the natural resources and outdoor recreation trust
21fund created in section 461.31, if applicable.
22c. Transfer one-sixth of from the remaining revenues an
23amount equal to one-seventh of the revenues deposited into the
24general fund of the state under subsection 1 to the secure an
25advanced vision for education fund created in section 423F.2.
26This paragraph “c” is repealed January 1, 2051.
27 Sec. 11. Section 423.5, subsection 1, unnumbered paragraph
281, Code 2022, is amended to read as follows:
29Except as provided in paragraph “b”, an excise tax at the
30rate of six percent specified in subsection 4 of the purchase
31price or installed purchase price is imposed on the following:
32 Sec. 12. Section 423.5, subsection 4, Code 2022, is amended
33by striking the subsection and inserting in lieu thereof the
34following:
354. a. For the period beginning January 1, 2023, through
-4-1December 31, 2050, the use tax rate is seven percent.
2b. Beginning January 1, 2051, the use tax rate is six
3percent.
4 Sec. 13. Section 423.43, subsection 1, paragraph b, Code
52022, is amended by striking the paragraph and inserting in
6lieu thereof the following:
7b. Subsequent to the deposit into the general fund of
8the state the department shall do the following in the order
9prescribed:
10(1) (a) For the period beginning January 1, 2023, through
11December 31, 2050, transfer one-seventh of such revenues to the
12appropriate county accounts under chapter 423B for the counties
13from which the tax was paid.
14(b) Beginning January 1, 2051, transfer one-sixth of such
15revenues to the appropriate county accounts under chapter 423B
16for the counties from which the tax was paid.
17(2) Transfer one-sixth of such remaining revenues to the
18secure an advanced vision for education fund created in section
19423F.2. This subparagraph is repealed January 1, 2051.
20 Sec. 14. EFFECTIVE DATE. This division of this Act takes
21effect January 1, 2023.
22DIVISION II
23SALES AND USE TAX ON SERVICES AND EXEMPTIONS
24 Sec. 15. Section 423.2, subsection 6, paragraph bu, Code
252022, is amended to read as follows:
26bu. Software as a service Cloud computing.
27 Sec. 16. Section 423.2, subsection 6, Code 2022, is amended
28by adding the following new paragraphs:
29 NEW PARAGRAPH. bv. Web hosting.
30 NEW PARAGRAPH. bw. Digital automated services.
31 NEW PARAGRAPH. bx. Scooter rentals.
32 Sec. 17. Section 423.3, subsection 47, paragraph a,
33subparagraph (4), Code 2022, is amended by striking the
34subparagraph.
35 Sec. 18. Section 423.3, subsection 104, paragraph b,
-5-1subparagraph (1), Code 2022, is amended to read as follows:
2(1) “Commercial enterprise” means the same as defined in
3section 423.3, subsection 47, paragraph “d”, subparagraph (1),
4but also includes professions and occupations.
5 Sec. 19. EFFECTIVE DATE. This division of this Act takes
6effect January 1, 2023.
7DIVISION III
8SALES, use, and excise tax — returns due
9 Sec. 20. Section 9C.3, subsection 3, Code 2022, is amended
10to read as follows:
113. The application shall state whether or not the applicant
12has an Iowa retailers sales or use tax permit and if the
13applicant has such permit, shall state the number of such
14permit.
15 Sec. 21. Section 9C.5, Code 2022, is amended to read as
16follows:
179C.5 Issuance of license.
18Upon receiving an application for a transient merchant’s
19license, the secretary of state shall investigate or cause to
20be investigated, the reputation and character of the applicant.
21If, upon making such investigation, the secretary of state is
22satisfied that the statements and representations contained in
23the application are true, and that the applicant is of good
24reputation and character, and the holder of an Iowa retailer’s
25 sales or use tax permit, and if a foreign corporation, has
26authority to do business in the state of Iowa, the secretary
27shall issue to the applicant a license as a transient merchant
28upon payment of the fee as herein prescribed for the period of
29time requested in said application and for use at the location
30and place where it is stated in said application the sale will
31be held or the business conducted, both of which shall be set
32out in said license. Such license shall be valid only for the
33period of time and at the location and place described therein.
34 Sec. 22. Section 99G.30A, subsection 2, paragraph c, Code
352022, is amended to read as follows:
-6- 1c. Frequency of deposits and quarterly monthly reports of
2the monitor vending machine excise tax with the department of
3revenue are governed by the tax provisions in section 423.31.
4Monitor vending machine excise tax collections shall not be
5included in computation of the total tax to determine frequency
6of filing under section 423.31.
7 Sec. 23. Section 321.105A, subsection 4, paragraph b, Code
82022, is amended to read as follows:
9b. Section 422.25, subsection 4, sections 422.30, 422.67,
10and 422.68, section 422.69, subsection 1, sections 422.70,
11422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
122, and sections 423.23, 423.24, 423.25, 423.32, 423.33, 423.35,
13423.37 through 423.42, 423.45, and 423.47, consistent with the
14provisions of this section, apply with respect to the fees
15for new registration authorized under this section in the
16same manner and with the same effect as if the fees for new
17registration were retail use taxes within the meaning of those
18statutes.
19 Sec. 24. Section 421.26, Code 2022, is amended to read as
20follows:
21421.26 Personal liability for tax due.
22If a licensee or other person under section 452A.65, a
23retailer or purchaser under chapter 423A, 423B, 423C, 423D,
24or 423E, or section 423.14, 423.14A, 423.29, 423.31, 423.32,
25 or 423.33, or a user under section 423.34, or a permit holder
26or licensee under section 453A.13, 453A.16, or 453A.44 fails
27to pay a tax under those sections when due, an officer of a
28corporation or association, notwithstanding section 489.304,
29a member or manager of a limited liability company, or a
30partner of a partnership, having control or supervision of
31or the authority for remitting the tax payments and having
32a substantial legal or equitable interest in the ownership
33of the corporation, association, limited liability company,
34or partnership, who has intentionally failed to pay the tax
35is personally liable for the payment of the tax, interest,
-7-1and penalty due and unpaid. However, this section shall
2not apply to taxes on accounts receivable. The dissolution
3of a corporation, association, limited liability company,
4or partnership shall not discharge a person’s liability for
5failure to remit the tax due.
6 Sec. 25. Section 423.2, subsection 1, paragraph b, Code
72022, is amended to read as follows:
8b. Sales of building materials, supplies, and equipment
9to owners, contractors, subcontractors, or builders for the
10erection of buildings or the alteration, repair, or improvement
11of real property are retail sales of tangible personal property
12in whatever quantity sold. Where the owner, contractor,
13subcontractor, or builder is also a retailer holding a retail
14 sales or use tax permit and transacting retail sales of
15building materials, supplies, and equipment, the person shall
16purchase such items of tangible personal property without
17liability for the tax if such property will be subject to the
18tax at the time of resale or at the time it is withdrawn from
19inventory for construction purposes. The sales tax shall be
20due in the reporting period when the materials, supplies,
21and equipment are withdrawn from inventory for construction
22purposes or when sold at retail. The tax shall not be due when
23materials are withdrawn from inventory for use in construction
24outside of Iowa and the tax shall not apply to tangible
25personal property purchased and consumed by the manufacturer as
26building materials in the performance by the manufacturer or
27its subcontractor of construction outside of Iowa. The sale
28of carpeting is not a sale of building materials. The sale of
29carpeting to owners, contractors, subcontractors, or builders
30shall be treated as the sale of ordinary tangible personal
31property and subject to the tax imposed under this subsection
32and the use tax.
33 Sec. 26. Section 423.3, subsection 39, paragraph a,
34subparagraph (2), Code 2022, is amended to read as follows:
35(2) The sale of all or substantially all of the tangible
-8-1personal property, or specified digital products, or services
2held or used by a seller in the course of the seller’s trade
3or business for which the seller is required to hold a sales
4or use tax permit when the seller sells or otherwise transfers
5the trade or business to another person who shall engage in a
6similar trade or business.
7 Sec. 27. Section 423.3, subsection 80, paragraph d, Code
82022, is amended to read as follows:
9d. Subject to the limitations in paragraph “c”, where the
10owner, contractor, subcontractor, or builder is also a retailer
11holding a retail sales or use tax permit and transacting
12retail sales of building materials, supplies, and equipment,
13the tax shall not be due when materials are withdrawn from
14inventory for use in construction performed for a designated
15exempt entity if an exemption certificate is received from such
16entity.
17 Sec. 28. Section 423.5, subsection 2, Code 2022, is amended
18to read as follows:
192. The excise tax is imposed upon every person using
20the property within this state until the tax has been paid
21directly to the county treasurer, the state department of
22transportation, a retailer, or the department. This tax is
23imposed on every person using the services or the product of
24the services in this state until the user has paid the tax
25either to an Iowa sales or use tax permit holder or to the
26department.
27 Sec. 29. Section 423.14, subsection 2, paragraph b, Code
282022, is amended to read as follows:
29b. The tax upon the use of all tangible personal property
30and specified digital products other than that enumerated in
31paragraph “a”, which is sold by a seller who is a retailer or
32its agent that is not otherwise required to collect sales tax
33under the provisions of this chapter, may be collected by the
34retailer or agent and remitted to the department, pursuant to
35the provisions of paragraph “e”, and sections 423.24, 423.29,
-9-1423.30, 423.32 423.31, and 423.33.
2 Sec. 30. Section 423.14A, subsection 3, paragraph c,
3subparagraph (2), Code 2022, is amended to read as follows:
4(2) A marketplace facilitator shall collect sales and
5use tax on the entire sales price or purchase price paid by
6a purchaser on each Iowa sale subject to sales and use tax
7that is made or facilitated by the marketplace facilitator,
8regardless of whether the marketplace seller for whom an Iowa
9sale is made or facilitated has or is required to have a retail
10 sales or use tax permit or would have been required to collect
11sales and use tax had the sale not been facilitated by the
12marketplace facilitator, and regardless of the amount of the
13sales price or purchase price that will ultimately accrue
14to or benefit the marketplace facilitator, the marketplace
15seller, or any other person. This sales and use tax collection
16responsibility of a marketplace facilitator applies but shall
17not be limited to sales facilitated through a computer software
18application, commonly referred to as in-app purchases, or
19through another specified digital product.
20 Sec. 31. Section 423.31, subsections 1, 3, 5, and 6, Code
212022, are amended to read as follows:
221. a. Each Except as provided in paragraph “b”, each person
23subject to this section and section 423.36 and in accordance
24with the provisions of this section and section 423.36 shall,
25on or before the last day of the month following the close of
26each calendar quarter month during which such person is or
27has become or ceased being subject to the provisions of this
28section and section 423.36, make, sign, and file electronically
29 a return for the calendar quarter month in the form as may be
30required. Returns shall show information relating to sales
31prices including tangible personal property, specified digital
32products, and services converted to the use of such person,
33the amounts of sales prices excluded and exempt from the tax,
34the amounts of sales prices subject to tax, a calculation of
35tax due, and any other information for the period covered by
-10-1the return as may be required. Returns shall be signed by
2the retailer or the retailer’s authorized agent and must be
3certified by the retailer to be correct in accordance with
4forms and rules prescribed by the director. A person required
5to file a sales or use tax return who is unable to do so may
6request permission from the director to file a return by
7another method.
8b. Notwithstanding paragraph “a”, each person subject to
9this section who collects and remits less than one thousand
10two hundred dollars in sales or use tax to the department per
11calendar year may file a return on or before the last day of the
12month following the close of the calendar year.
133. The sales tax forms prescribed by the director shall be
14referred to as “retailers tax deposit”. Deposit forms shall
15be signed by the retailer or the retailer’s duly authorized
16agent, and shall be duly certified by the retailer or agent to
17be correct. The director may authorize incorporated banks and
18trust companies or other depositories authorized by law which
19are depositories or financial agents of the United States,
20or of this state, to receive any sales or use tax imposed
21under this chapter, in the manner, at the times, and under
22the conditions the director prescribes. The director shall
23prescribe the manner, times, and conditions under which the
24receipt of the tax by those depositories is to be treated as
25payment of the tax to the department.
265. a. Upon making application and receiving approval
27from the director, a person and its affiliates that make
28retail sales of tangible personal property, specified digital
29products, or taxable enumerated services may make deposits and
30file a consolidated sales or use tax return for the affiliated
31group, pursuant to rules adopted by the director. A person and
32each affiliate that files a consolidated return are jointly and
33severally liable for all tax, penalty, and interest found due
34for the tax period for which a consolidated return is filed or
35required to be filed.
-11- 1b. A business required to file a consolidated sales or use
2 tax return shall file a form entitled “schedule of consolidated
3business locations” with its quarterly sales or use tax
4return that shows the taxpayer’s consolidated permit number,
5the permit number for each Iowa business location, the state
6sales tax amount by business location, and the amount of state
7sales tax due on goods consumed that are not assigned to a
8specific business location. Consolidated quarterly sales or
9use tax returns that are not accompanied by the schedule of
10consolidated business locations form are considered incomplete
11and are subject to penalty under section 421.27.
126. If necessary or advisable in order to insure ensure
13 the payment of the tax, the director may require returns and
14payment of the tax to be made for other than quarterly monthly
15 periods, the provisions of this section or other provision to
16the contrary notwithstanding.
17 Sec. 32. Section 423.31, subsection 2, Code 2022, is amended
18by striking the subsection.
19 Sec. 33. Section 423.33, subsection 1, paragraph a, Code
202022, is amended to read as follows:
21a. If a purchaser fails to pay sales tax to the retailer
22required to collect the tax, then in addition to all of the
23rights, obligations, and remedies provided, a use tax is
24payable by the purchaser directly to the department, and
25sections 423.31, 423.32, 423.37, 423.38, 423.39, 423.40,
26423.41, and 423.42 apply to the purchaser.
27 Sec. 34. Section 423.33, subsection 3, Code 2022, is amended
28to read as follows:
293. Event sponsor’s liability for sales tax. A person
30sponsoring a flea market or a craft, antique, coin, or stamp
31show or similar event shall obtain from every retailer selling
32tangible personal property, specified digital products, or
33taxable services at the event proof that the retailer possesses
34a valid sales or use tax permit or secure from the retailer
35a statement, taken in good faith, that tangible personal
-12-1property, specified digital products, or services offered for
2sale are not subject to sales tax. Failure to do so renders
3a sponsor of the event liable for payment of any sales tax,
4interest, and penalty due and owing from any retailer selling
5property or services at the event. Sections 423.31, 423.32,
6 423.37, 423.38, 423.39, 423.40, 423.41, and 423.42 apply to the
7sponsors. For purposes of this subsection, a “person sponsoring
8a flea market or a craft, antique, coin, or stamp show or similar
9event” does not include a marketplace facilitator as defined in
10section 423.14A, subsection 1, an organization which sponsors
11an event determined to qualify as an event involving casual
12sales pursuant to section 423.3, subsection 39, or the state
13fair or a fair as defined in section 174.1.
14 Sec. 35. Section 423.34, Code 2022, is amended to read as
15follows:
16423.34 Liability of user.
17Any person who uses any tangible personal property,
18specified digital products, or services enumerated in section
19423.2 upon which the use tax has not been paid, either to the
20county treasurer or to a retailer or direct to the department
21as required by this subchapter, shall be liable for the payment
22of tax, and shall on or before the last day of the month next
23succeeding each quarterly monthly period pay the use tax upon
24all tangible personal property, specified digital products,
25or services used by the person during the preceding quarterly
26 monthly period in the manner and accompanied by such returns
27as the director shall prescribe. All of the provisions of
28sections 423.32 423.31 and 423.33 with reference to the returns
29and payments shall be applicable to the returns and payments
30required by this section.
31 Sec. 36. Section 423.36, subsection 4, paragraph b, Code
322022, is amended to read as follows:
33b. If an applicant is making sales outside Iowa for use in
34this state or furnishing services outside Iowa, the product
35or result of which will be used in this state, that applicant
-13-1shall be issued one sales or use tax permit by the department
2applicable to these out-of-state sales or services.
3 Sec. 37. Section 423.36, subsection 4, Code 2022, is amended
4by adding the following new paragraph:
5 NEW PARAGRAPH. c. If an applicant is required to collect
6sales or use tax and is not included in the definition of a
7retailer maintaining a place of business in this state in
8section 423.1, subsection 48, paragraph “a”, subparagraph (1),
9the applicant shall be issued one sales or use tax permit by
10the department regardless of the number of locations from which
11sales are made.
12 Sec. 38. Section 423.36, subsections 7 and 8, Code 2022, are
13amended to read as follows:
147. a. Sellers who are not regularly engaged in selling
15at retail and do not have a permanent place of business, but
16who are temporarily engaged in selling from trucks, portable
17roadside stands, concessionaires at state, county, district,
18or local fairs, carnivals, or the like, shall report and remit
19the sales tax on a temporary seasonal basis, under rules
20the director shall provide for the efficient collection of
21the sales tax. This subsection applies to sellers who are
22temporarily engaged in furnishing services.
23b. Persons engaged in selling tangible personal property,
24specified digital products, or furnishing services shall not
25be required to obtain or retain a sales or use tax permit for a
26place of business at which taxable sales of tangible personal
27property, specified digital products, or taxable performance of
28services will not occur.
298. The provisions of subsection 1, dealing with the lawful
30right of a retailer to transact business, as applicable, apply
31to persons having receipts from furnishing services enumerated
32in section 423.2, except that a person holding a permit
33pursuant to subsection 1 shall not be required to obtain any
34separate sales or use tax permit for the purpose of engaging in
35business involving the services.
-14-1 Sec. 39. Section 423.40, subsections 1, 2, 3, and 5, Code
22022, are amended to read as follows:
31. In addition to the sales or use tax or additional sales
4or use tax, the taxpayer shall pay a penalty as provided in
5section 421.27. The taxpayer shall also pay interest on the
6sales or use tax or additional sales or use tax at the rate
7in effect under section 421.7 for each month counting each
8fraction of a month as an entire month, computed from the date
9the semimonthly or monthly tax deposit form or return was
10required to be filed. The penalty and interest shall be paid
11to the department and disposed of in the same manner as other
12receipts under this subchapter. Unpaid penalties and interest
13may be enforced in the same manner as the taxes imposed by this
14chapter.
152. a. Any person who knowingly sells tangible personal
16property, specified digital products, tickets or admissions
17to places of amusement and athletic events, or gas, water,
18electricity, or communication service at retail, or engages in
19the furnishing of services enumerated in section 423.2, in this
20state without procuring a permit to collect tax, as provided
21in section 423.36, or who violates section 423.24 and the
22officers of any corporation who so act are guilty of a serious
23misdemeanor.
24b. A person who knowingly sells tangible personal property,
25specified digital products, tickets or admissions to places of
26amusement and athletic events, or gas, water, electricity, or
27communication service at retail, or engages in the furnishing
28of services enumerated in section 423.2, in this state after
29the person’s sales or use tax permit has been revoked and
30before it has been restored as provided in section 423.36,
31subsection 6, and the officers of any corporation who so act
32are guilty of an aggravated misdemeanor.
333. A person who willfully attempts in any manner to evade
34any tax imposed by this chapter or the payment of the tax or
35a person who makes or causes to be made a false or fraudulent
-15-1semimonthly or monthly tax deposit form or return with intent
2to evade any tax imposed by subchapter II or III or the payment
3of the tax is guilty of a class “D” felony.
45. A person required to pay sales or use tax, or to make,
5sign, or file a tax deposit form or return or supplemental
6return, who willfully makes a false or fraudulent tax deposit
7form or return, or willfully fails to pay at least ninety
8percent of the tax or willfully fails to make, sign, or file
9the tax deposit form or return, at the time required by law, is
10guilty of a fraudulent practice.
11 Sec. 40. Section 423.45, subsection 4, paragraph b, Code
122022, is amended to read as follows:
13b. The sales tax liability for all sales of tangible
14personal property and specified digital products and all sales
15of services is upon the seller and the purchaser unless the
16seller takes from the purchaser a valid exemption certificate
17stating under penalty of perjury that the purchase is for a
18nontaxable purpose and is not a retail sale as defined in
19section 423.1, or the seller is not obligated to collect tax
20due, or unless the seller takes a fuel exemption certificate
21pursuant to subsection 5. If the tangible personal property,
22specified digital products, or services are purchased tax free
23pursuant to a valid exemption certificate and the tangible
24personal property, specified digital products, or services are
25used or disposed of by the purchaser in a nonexempt manner, the
26purchaser is solely liable for the taxes and shall remit the
27taxes directly to the department and sections 423.31, 423.32,
28 423.37, 423.38, 423.39, 423.40, 423.41, and 423.42 shall apply
29to the purchaser.
30 Sec. 41. Section 423.45, subsection 5, paragraph c, Code
312022, is amended to read as follows:
32c. The seller may accept a completed fuel exemption
33certificate, as prepared by the purchaser, for three
34years unless the purchaser files a new completed exemption
35certificate. If the fuel is purchased tax free pursuant to a
-16-1fuel exemption certificate which is taken by the seller, and
2the fuel is used or disposed of by the purchaser in a nonexempt
3manner, the purchaser is solely liable for the taxes, and shall
4remit the taxes directly to the department and sections 423.31,
5423.32, 423.37, 423.38, 423.39, 423.40, 423.41, and 423.42
6shall apply to the purchaser.
7 Sec. 42. Section 423.50, subsection 1, Code 2022, is amended
8to read as follows:
91. Only one remittance of tax per return is required except
10as provided in this subsection. Sellers that collect more
11than thirty thousand dollars in sales and use taxes for this
12state during the preceding calendar year shall be required to
13make additional remittances as required under rules adopted by
14the director. The filing of a return is not required with an
15additional remittance.
16 Sec. 43. Section 423.57, Code 2022, is amended to read as
17follows:
18423.57 Statutes applicable.
19The director shall administer this subchapter as it relates
20to the taxes imposed in this chapter in the same manner and
21subject to all the provisions of, and all of the powers,
22duties, authority, and restrictions contained in sections
23423.14, 423.14A, 423.14B, 423.15, 423.16, 423.17, 423.19,
24423.20, 423.21, 423.22, 423.23, 423.24, 423.25, 423.29, 423.31,
25423.32, 423.33, 423.34, 423.34A, 423.35, 423.37, 423.38,
26423.39, 423.40, 423.41, and 423.42, section 423.43, subsection
271, and sections 423.45, 423.46, and 423.47.
28 Sec. 44. Section 423.58, Code 2022, is amended to read as
29follows:
30423.58 Collection, permit, and tax return exemption for
31certain out-of-state businesses.
32Notwithstanding sections 423.14, 423.14A, 423.14B, 423.29,
33423.31, 423.32, and 423.36, a person meeting the requirements
34of section 29C.24 is not required to obtain a sales or use tax
35permit, collect and remit sales and use tax, or make and file
-17-1applicable sales or use tax returns, as provided in section
229C.24, subsection 3, paragraph “a”, subparagraph (2).
3 Sec. 45. Section 423A.6, subsection 4, Code 2022, is amended
4to read as follows:
54. Section 422.25, subsection 4, sections 422.30, 422.67,
6and 422.68, section 422.69, subsection 1, sections 422.70,
7422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
81, and sections 423.23, 423.24, 423.25, 423.31, 423.33,
9423.35, 423.37 through 423.42, and 423.47, consistent with the
10provisions of this chapter, apply with respect to the taxes
11authorized under this chapter, in the same manner and with the
12same effect as if the state and local hotel and motel taxes
13were retail sales taxes within the meaning of those statutes.
14Notwithstanding this subsection, the director shall provide
15for quarterly monthly filing of returns and for other than
16quarterly monthly filing of returns both as prescribed in
17section 423.31. The director may require all persons who are
18engaged in the business of deriving any sales price subject
19to tax under this chapter to register with the department.
20All taxes collected under this chapter by a retailer, lodging
21provider, lodging facilitator, lodging platform, or any other
22person are deemed to be held in trust for the state of Iowa and
23the local jurisdictions imposing the taxes.
24 Sec. 46. Section 423B.5, subsection 3, Code 2022, is amended
25to read as follows:
263. A tax permit other than the state sales or use tax permit
27required under section 423.36 shall not be required by local
28authorities.
29 Sec. 47. Section 423B.6, subsection 2, paragraph c, Code
302022, is amended to read as follows:
31c. Frequency of deposits and quarterly monthly reports of a
32local sales and services tax with the department of revenue are
33governed by the tax provisions in section 423.31. Local tax
34collections shall not be included in computation of the total
35tax to determine frequency of filing under section 423.31.
-18-1 Sec. 48. Section 423C.4, Code 2022, is amended to read as
2follows:
3423C.4 Administration and enforcement.
4All powers and requirements of the director of revenue
5to administer the state sales tax law under chapter 423 are
6applicable to the administration of the tax imposed under
7section 423C.3, including but not limited to section 422.25,
8subsection 4, sections 422.30, 422.67, and 422.68, section
9422.69, subsection 1, sections 422.70 through 422.75, section
10423.14, subsection 1, and sections 423.15, 423.23, 423.24,
11423.25, 423.31, 423.33, 423.35 and 423.37 through 423.42,
12423.45, 423.46, and 423.47. However, as an exception to the
13powers specified in section 423.31, the director shall only
14require the filing of quarterly monthly reports.
15 Sec. 49. Section 423D.4, subsection 3, Code 2022, is amended
16to read as follows:
173. Section 422.25, subsection 4, sections 422.30, 422.67,
18and 422.68, section 422.69, subsection 1, sections 422.70,
19422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
201, and sections 423.23, 423.24, 423.25, 423.31 through
21423.35, 423.37 through 423.42, and 423.47, consistent with
22the provisions of this chapter, apply with respect to the tax
23authorized under this chapter, in the same manner and with the
24same effect as if the excise taxes on equipment sales or use
25were retail sales taxes within the meaning of those statutes.
26Notwithstanding this subsection, the director shall provide
27for quarterly monthly filing of returns and for other than
28quarterly monthly filing of returns both as prescribed in
29section 423.31. All taxes collected under this chapter by a
30retailer or any user are deemed to be held in trust for the
31state of Iowa.
32 Sec. 50. Section 423G.5, subsection 3, Code 2022, is amended
33to read as follows:
343. Section 422.25, subsection 4, sections 422.30, 422.67,
35and 422.68, section 422.69, subsection 1, sections 422.70,
-19-1422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
21, and sections 423.23, 423.24, 423.25, 423.31 through
3423.35, 423.37 through 423.42, and 423.47, consistent with the
4provisions of this chapter, shall apply with respect to the tax
5authorized under this chapter, in the same manner and with the
6same effect as if the excise taxes on the sale or furnishing of
7a water service were retail sales taxes within the meaning of
8those statutes. Notwithstanding this subsection, the director
9shall provide for quarterly monthly filing of returns and
10for other than quarterly monthly filing of returns both as
11prescribed in section 423.31. All taxes collected under this
12chapter by a retailer or any user are deemed to be held in trust
13for the state of Iowa.
14 Sec. 51. Section 728.1, subsection 6, Code 2022, is amended
15to read as follows:
166. “Place of business” means the premises of a business
17required to obtain a sales or use tax permit pursuant to
18chapter 423, the premises of a nonprofit or not-for-profit
19organization, and the premises of an establishment which is
20open to the public at large or where entrance is limited by a
21cover charge or membership requirement.
22 Sec. 52. Section 728.5, subsection 1, unnumbered paragraph
231, Code 2022, is amended to read as follows:
24An owner, manager, or person who exercises direct control
25over a place of business required to obtain a sales or use tax
26permit shall be guilty of a serious misdemeanor under any of
27the following circumstances:
28 Sec. 53. REPEAL. Section 423.32, Code 2022, is repealed.
29DIVISION IV
30DISTRIBUTIONS OF REVENUE TO LOCAL GOVERNMENTS AND SCHOOL
31DISTRICTS
32 Sec. 54. Section 423B.7, subsection 2, paragraph a, Code
332022, is amended to read as follows:
34a. The director of revenue by August 15 of each fiscal
35year the last day of each month shall send transfer to each
-20-1city or county where the local option tax is imposed, an
2estimate of the amount of tax moneys remitted to the department
3attributable to each city or county will receive for the year
4and for each month of the year from the preceding month. At the
5end of each month, the director may revise the estimates for
6the year and remaining months.
7 Sec. 55. Section 423B.7, subsection 2, paragraphs b and c,
8Code 2022, are amended by striking the paragraphs.
9 Sec. 56. Section 423F.2, subsection 4, paragraph a, Code
102022, is amended to read as follows:
11a. The director of revenue by August 15 of each fiscal year
12 the last day of each month shall send transfer to each school
13district an estimate of the amount of tax moneys remitted
14to the department attributable to each school district will
15receive for the year and for each month of the year from the
16preceding month. At the end of each month, the director may
17revise the estimates for the year and remaining months.
18 Sec. 57. Section 423F.2, subsection 4, paragraphs b and c,
19Code 2022, are amended by striking the paragraphs.
20 Sec. 58. TRANSITION PROVISION FOR LOCAL OPTION SALES TAX
21AND SECURING AN ADVANCED VISION FOR EDUCATION — TRANSFER
22AMOUNTS. Notwithstanding any other provision of law to the
23contrary, the department of revenue shall estimate monthly
24local option sales tax and securing an advanced vision for
25education transfer amounts through the end of the 2022 calendar
26year. The department of revenue shall transfer estimated
27amounts to each local government or school district for the
28months of July, August, and September 2022. Beginning with the
29October 2022 transfer, the department shall not use estimated
30amounts and shall transfer the amount of tax attributable to
31each local government or school district for the tax remitted
32in September 2022. Any adjustment amount that is necessary to
33the July, August, or September 2022 estimated transfer amount
34to reflect the accurate attributable amount shall be made by
35the department of revenue or the local government or school
-21-1district by the close of business on December 30, 2022.
2DIVISION V
3SALE OF CERTAIN QUALIFIED STOCK — NET CAPITAL GAIN EXCLUSION
4 Sec. 59. Section 422.7, Code 2022, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 63. a. Subtract the following percentage
7of the net capital gain from the sale or exchange of capital
8stock of a qualified corporation for which an election is made
9by an employee-owner:
10(1) For the tax year beginning in the 2023 calendar year,
11thirty-three percent.
12(2) For the tax year beginning in the 2024 calendar year,
13sixty-six percent.
14(3) For tax years beginning on or after January 1, 2025, one
15hundred percent.
16b. (1) An employee-owner is entitled to make one
17irrevocable lifetime election to exclude the net capital gain
18from the sale or exchange of capital stock of one qualified
19corporation which capital stock was acquired by the employee-
20owner while employed and on account of employment by such
21qualified corporation.
22(2) The election shall apply to all subsequent sales
23or exchanges of qualifying capital stock of the elected
24corporation within fifteen years of the date of the election,
25provided that the subsequent sales or exchanges were of capital
26stock in the same qualified corporation and were acquired by
27the employee-owner while employed and on account of employment
28by such qualified corporation.
29(3) The election shall apply to qualifying capital stock
30that has been transferred by inter vivos gift from the
31employee-owner to the employee-owner’s spouse or to a trust
32for the benefit of the employee-owner’s spouse following the
33transfer. This subparagraph (3) shall apply to a spouse
34only if the spouse was married to the employee-owner on the
35date of the sale or exchange or the date of death of the
-22-1employee-owner.
2(4) If the employee-owner dies after having sold or
3exchanged qualifying capital stock without having made an
4election under this subsection, the surviving spouse or, if
5there is no surviving spouse, the personal representative of
6the employee-owner’s estate, may make the election that would
7have qualified under this subsection.
8(5) The election shall be made in the manner and form
9prescribed by the department and shall be included with the
10taxpayer’s state income tax return for the taxable year in
11which the election is made.
12c. For purposes of this subsection:
13(1) “Capital stock” means common or preferred stock, either
14voting or nonvoting. “Capital stock” does not include stock
15rights, stock warrants, stock options, or debt securities.
16(2) “Employee-owner” means an individual who owns capital
17stock in a qualified corporation for at least ten years, which
18capital stock was acquired by the individual while employed and
19on account of employment by such corporation for at least ten
20cumulative years.
21(3) “Personal representative” means the same as defined in
22section 633.3, or if there is no such personal representative
23appointed, then the person legally authorized to perform
24substantially the same functions.
25(4) (a) “Qualified corporation” means, with respect to an
26employee-owner, a corporation which, at the time of the first
27sale or exchange for which an election is made by the employee-
28owner under this subsection, meets all of the following
29conditions:
30(i) The corporation employed individuals in this state for
31at least ten years.
32(ii) The corporation has had at least five shareholders for
33the ten years prior to the first sale or exchange under this
34subsection.
35(iii) The corporation has had at least two shareholders or
-23-1groups of shareholders who are not related for the ten years
2prior to the first sale or exchange under this subsection.
3Two persons are considered related when, under section 318 of
4the Internal Revenue Code, one is a person who owns, directly
5or indirectly, capital stock that if directly owned would be
6attributed to the other person, or is the brother, sister,
7aunt, uncle, cousin, niece, or nephew of the other person who
8owns capital stock either directly or indirectly.
9(b) “Qualified corporation” includes any member of an Iowa
10affiliated group if the Iowa affiliated group includes a member
11that has employed individuals in this state for at least ten
12years. For purposes of this subparagraph division, “Iowa
13affiliated group” means an affiliated group that has made a
14valid election to file an Iowa consolidated income tax return
15under section 422.37 in the year in which the deduction under
16this subsection is claimed. “Member” includes any entity
17included in the consolidated return under section 422.37,
18subsection 2, for the tax year in which the deduction is
19claimed.
20(c) “Qualified corporation” also includes any corporation
21that was a party to a reorganization that was entirely or
22substantially tax free if such reorganization occurred during
23or after the employment of the employee-owner.
24 Sec. 60. EFFECTIVE DATE. This division of this Act takes
25effect January 1, 2023.
26 Sec. 61. APPLICABILITY. This division of this Act applies
27to tax years beginning on or after January 1, 2023.
28DIVISION VI
29RETIRED FARMER LEASE INCOME EXCLUSION
30 Sec. 62. Section 422.7, Code 2022, is amended by adding the
31following new subsection:
32 NEW SUBSECTION. 21A. a. Subtract, to the extent included,
33net income received by an eligible individual pursuant to a
34farm tenancy agreement covering real property held by the
35eligible individual for ten or more years, if the eligible
-24-1individual materially participated in a farming business for
2ten or more years.
3b. An individual who elects to exclude income received
4pursuant to a farm tenancy agreement under this subsection
5shall not claim any of the following in the tax year in which
6the election is made or in any succeeding year:
7(1) The capital gain exclusion under section 422.7,
8subsection 21.
9(2) The beginning farmer tax credit under section 422.11E.
10c. Married individuals who file separate state income tax
11returns shall allocate their combined annual exclusion limit
12to each spouse in the proportion that each spouse’s respective
13net income from a farm tenancy agreement bears to the total net
14income from a farm tenancy agreement.
15d. The department shall establish criteria, by rule,
16relating to whether and how a surviving spouse may claim the
17income exclusion for which a deceased eligible individual would
18have been eligible under this subsection.
19e. Net income from a farm tenancy agreement earned,
20received, or reported by an entity taxed as a partnership
21for federal tax purposes, an S corporation, or a trust or
22estate is not eligible for the election and deduction in this
23subsection, even if such net income ultimately passes through
24to an eligible individual.
25f. For purposes of this subsection:
26(1) “Eligible individual” means an individual who is
27disabled or who is fifty-five years of age or older at the time
28the election is made, who no longer materially participates in
29a farming business at the time the election is made, and who,
30as an owner-lessor, is party to a farm tenancy agreement.
31(2) “Farm tenancy agreement” means a written agreement
32outlining the rights and obligations of an owner-lessor and a
33tenant-lessee where the tenant-lessee has a farm tenancy as
34defined in section 562.1A. A “farm tenancy agreement” includes
35cash leases, crop share leases, or livestock share leases.
-25- 1(3) “Farming business” means the production, care, growing,
2harvesting, preservation, handling, or storage of crops
3or forest or fruit trees; the production, care, feeding,
4management, and housing of livestock; or horticulture, all
5intended for profit.
6(4) “Livestock” means the same as defined in section 717.1.
7(5) “Materially participated” means the same as “material
8participation” in section 469(h) of the Internal Revenue Code.
9 Sec. 63. EFFECTIVE DATE. This division of this Act takes
10effect January 1, 2023.
11 Sec. 64. APPLICABILITY. This division of this Act applies
12to tax years beginning on or after January 1, 2023.
13DIVISION VII
14RETIRED FARMER CAPITAL GAIN EXCLUSION
15 Sec. 65. Section 422.7, subsection 21, Code 2022, is amended
16by striking the subsection and inserting in lieu thereof the
17following:
1821. a. For purposes of this subsection:
19(1) “Farming business” means the production, care, growing,
20harvesting, preservation, handling, or storage of crops
21or forest or fruit trees; the production, care, feeding,
22management, and housing of livestock; or horticulture, all for
23intended profit.
24(2) “Held” shall be determined with reference to the holding
25period provisions of section 1223 of the Internal Revenue Code
26and the federal regulations pursuant thereto.
27(3) “Livestock” means the same as defined in section 717.1.
28(4) “Materially participated” means the same as “material
29participation” in section 469(h) of the Internal Revenue Code.
30(5) (a) “Real property used in a farming business” means
31all tracts of land and the improvements and structures located
32on such tracts which are in good faith used primarily for
33a farming business. Buildings which are primarily used or
34intended for human habitation are deemed to be used in a
35farming business when the building is located on or adjacent
-26-1to the parcel used in the farming business. Land and the
2nonresidential improvements and structures located on such land
3that shall be considered to be used primarily in a farming
4business include but are not limited to land, improvements
5or structures used for the storage or maintenance of farm
6machinery or equipment, for the drying, storage, handling,
7or preservation of agricultural crops, or for the storage of
8farm inputs, feed, or manure. Real property used in a farming
9business shall also include woodland, wasteland, pastureland,
10and idled land used for the conservation of natural resources
11including soil and water.
12(b) Real property classified as agricultural property for
13Iowa property tax purposes, except real property described
14in section 441.21, subsection 12, paragraph “a” or “b”,
15shall be presumed to be real property used in a farming
16business. This presumption is rebuttable by the department by
17a preponderance of evidence that the real property did not meet
18the requirements of subparagraph division (a).
19(6) “Relative” means a person that satisfies one or more of
20the following conditions:
21(a) The individual is related to the taxpayer by
22consanguinity or affinity within the second degree as
23determined by common law.
24(b) The individual is a lineal descendent of the taxpayer.
25For purposes of this subparagraph division, “lineal descendent”
26means children of the taxpayer, including legally adopted
27children and biological children, stepchildren, grandchildren,
28great-grandchildren, and any other lineal descendent of the
29taxpayer.
30(c) An entity in which an individual who satisfies the
31conditions of either subparagraph division (a) or (b) has a
32legal or equitable interest as an owner, member, partner, or
33beneficiary.
34(7) “Retired farmer” means an individual who is disabled
35or who is fifty-five years of age or older and who no longer
-27-1materially participates in a farming business when an exclusion
2and deduction is claimed under this subsection.
3b. Subtract the net capital gain from the sale of real
4property used in a farming business if one of the following
5conditions are satisfied:
6(1) The taxpayer has materially participated in a farming
7business for a minimum of ten years and has held the real
8property used in a farming business for a minimum of ten years.
9If the taxpayer is a retired farmer, the taxpayer is considered
10to meet the material participation requirement if the taxpayer
11materially participated in a farming business for ten years or
12more in the aggregate, prior to making an election under this
13subsection.
14(2) The taxpayer has held the real property used in a
15farming business which is sold to a relative of the taxpayer.
16c. For a taxpayer who is a retired farmer, subtract the
17net capital gain from the sale of cattle or horses held by
18the taxpayer for breeding, draft, dairy, or sporting purposes
19for a period of twenty-four months or more from the date of
20acquisition; but only if the taxpayer materially participated
21in the farming business for five of the eight years preceding
22the farmer’s retirement or disability and who has sold all or
23substantially all of the taxpayer’s interest in the farming
24business by the time the election under this paragraph is made.
25d. For a taxpayer who is a retired farmer, subtract the net
26capital gain from the sale of breeding livestock, other than
27cattle and horses, if the livestock is held by the taxpayer for
28a period of twelve months or more from the date of acquisition;
29but only if the taxpayer materially participated in the farming
30business for five of the eight years preceding the farmer’s
31retirement or disability and who has sold all or substantially
32all of the taxpayer’s interest in the farming business by the
33time the election under this paragraph is made.
34e. A taxpayer who is a retired farmer may make, subject to
35the limitations described in paragraphs “f” and “g”, a single,
-28-1lifetime election to exclude all qualifying capital gains under
2paragraphs “b”, “c”, and “d”.
3f. A taxpayer who is a retired farmer who elects to exclude
4capital gains under paragraph “b”, “c”, or “d” shall not claim
5the beginning farmer tax credit under section 422.11E or the
6exclusion for net income received pursuant to a farm tenancy
7agreement in section 422.7, subsection 21A, in the tax year in
8which this election is made or in any subsequent year.
9g. A taxpayer who is a retired farmer who claims the
10beginning farmer tax credit under section 422.11E shall not,
11in the same year, make an election under this subsection. A
12taxpayer who is a retired farmer and who elects to exclude
13the net income received from a farm tenancy agreement under
14section 422.7, subsection 21A, shall not, in the same tax year
15or in any subsequent tax year, make the election under this
16subsection.
17h. Married individuals who file separate state income tax
18returns shall allocate their combined annual net capital gain
19exclusion under paragraphs “b”, “c”, and “d” to each spouse in
20the proportion that each spouse’s respective net capital gain
21bears to the total net capital gain.
22i. The department shall establish criteria, by rule,
23relating to whether and how a surviving spouse may claim the
24income exclusion for which a deceased retired farmer would have
25been eligible under this subsection.
26 Sec. 66. REPEAL. 2018 Iowa Acts, chapter 1161, section 113,
27is repealed.
28 Sec. 67. REPEAL. 2019 Iowa Acts, chapter 162, section 1,
29is repealed.
30 Sec. 68. EFFECTIVE DATE. This division of this Act takes
31effect January 1, 2023.
32 Sec. 69. APPLICABILITY.
331. This division of this Act applies to tax years beginning
34on or after January 1, 2023.
352. This division of this Act applies to sales consummated on
-29-1or after the effective date of this division of this Act, and
2sales consummated prior to the effective date of this division
3of this Act shall be governed by the law as it existed prior to
4the effective date of this division of this Act.
5DIVISION VIII
6INDIVIDUAL INCOME TAX RATES — PHASE IN
7 Sec. 70. Section 422.5, subsection 3, paragraph b, Code
82022, is amended to read as follows:
9b. (1) In lieu of the computation in subsection 1 or
102, or in paragraph “a” of this subsection, if the married
11persons’, filing jointly or filing separately on a combined
12return, head of household’s, or surviving spouse’s net income
13exceeds thirteen thousand five hundred dollars, the regular
14tax imposed under this subchapter shall be the lesser of the
15maximum alternate state individual income tax rate specified in
16subparagraph (2) times the portion of the net income in excess
17of thirteen thousand five hundred dollars or the regular tax
18liability computed without regard to this sentence. Taxpayers
19electing to file separately shall compute the alternate tax
20described in this paragraph using the total net income of the
21husband and wife spouses. The alternate tax described in this
22paragraph does not apply if one spouse elects to carry back or
23carry forward the loss as provided in section 422.9, subsection
243.
25(2) (a) (i) For the tax year beginning on or after January
261, 2023, but before January 1, 2024, the alternate tax rate is
276.00 percent.
28(ii) For the tax year beginning on or after January 1, 2024,
29but before January 1, 2025, the alternate tax rate is 5.70
30percent.
31(iii) For the tax year beginning on or after January 1,
322025, but before January 1, 2026, the alternate tax rate is
335.20 percent.
34(iv) For the tax year beginning on or after January 1, 2026,
35but before January 1, 2027, the alternate tax rate is 4.35
-30-1percent.
2(b) For tax years beginning on or after January 1, 2027,
3the alternate tax rate shall be one-half of one percent higher
4than the maximum individual income tax rate unless the maximum
5individual rate is zero, and in such a case the alternate tax
6rate shall be zero.
7 Sec. 71. Section 422.5, subsection 3B, paragraph b, Code
82022, is amended to read as follows:
9b. (1) In lieu of the computation in subsection 1, 2, or 3,
10if the married persons’, filing jointly or filing separately on
11a combined return, head of household’s, or surviving spouse’s
12net income exceeds thirty-two thousand dollars, the regular
13tax imposed under this subchapter shall be the lesser of the
14maximum alternate state individual income tax rate specified in
15subparagraph (2) times the portion of the net income in excess
16of thirty-two thousand dollars or the regular tax liability
17computed without regard to this sentence. Taxpayers electing
18to file separately shall compute the alternate tax described in
19this paragraph using the total net income of the husband and
20wife spouses. The alternate tax described in this paragraph
21does not apply if one spouse elects to carry back or carry
22forward the loss as provided in section 422.9, subsection 3.
23(2) (a) (i) For the tax year beginning on or after January
241, 2023, but before January 1, 2024, the alternate tax rate is
256.00 percent.
26(ii) For the tax year beginning on or after January 1, 2024,
27but before January 1, 2025, the alternate tax rate is 5.70
28percent.
29(iii) For the tax year beginning on or after January 1,
302025, but before January 1, 2026, the alternate tax rate is
315.20 percent.
32(iv) For the tax year beginning on or after January 1, 2026,
33but before January 1, 2027, the alternate tax rate is 4.35
34percent.
35(b) For tax years beginning on or after January 1, 2027,
-31-1the alternate tax rate shall be one-half of one percent higher
2than the maximum individual income tax rate unless the maximum
3individual rate is zero, and in such a case the alternate tax
4rate shall be zero.
5 Sec. 72. Section 422.5, subsection 6, Code 2022, is amended
6to read as follows:
76. a. Upon determination of the latest cumulative inflation
8factor, the director shall multiply each dollar amount set
9forth in section 422.5A by this cumulative inflation factor,
10shall round off the resulting product to the nearest one
11dollar, and shall incorporate the result into the income tax
12forms and instructions for each tax year.
13b. This subsection is repealed on January 1, 2026.
14 Sec. 73. Section 422.5A, Code 2022, is amended by striking
15the section and inserting in lieu thereof the following:
16422.5A Tax rates.
171. The tax imposed in section 422.5 shall be calculated
18using the following rates in the following tax years in the
19case of married persons filing jointly:
20a. For the tax year beginning on or after January 1, 2023,
21but before January 1, 2024:
22(1) On taxable income from 0 through $12,000, the rate of
234.40 percent.
24(2) On taxable income exceeding $12,000 but not exceeding
25$60,000, the rate of 4.82 percent.
26(3) On taxable income exceeding $60,000 but not exceeding
27$150,000, the rate of 5.70 percent.
28(4) On taxable income exceeding $150,000, the rate of 6.00
29percent.
30b. For the tax year beginning on or after January 1, 2024,
31but before January 1, 2025:
32(1) On taxable income from 0 through $12,000, the rate of
334.40 percent.
34(2) On taxable income exceeding $12,000 but not exceeding
35$60,000, the rate of 4.82 percent.
-32- 1(3) On taxable income exceeding $60,000, the rate of 5.70
2percent.
3c. For the tax year beginning on or after January 1, 2025,
4but before January 1, 2026:
5(1) On taxable income from 0 through $12,000, the rate of
64.40 percent.
7(2) On taxable income exceeding $12,000, the rate of 4.82
8percent.
92. The tax imposed in section 422.5 shall be calculated
10using the following rates in the following tax years in the
11case of any other taxpayer other than married persons filing
12jointly:
13a. For the tax year beginning on or after January 1, 2023,
14but before January 1, 2024:
15(1) On taxable income from 0 through $6,000, the rate of
164.40 percent.
17(2) On taxable income exceeding $6,000 but not exceeding
18$30,000, the rate of 4.82 percent.
19(3) On taxable income exceeding $30,000 but not exceeding
20$75,000, the rate of 5.70 percent.
21(4) On taxable income exceeding $75,000, the rate of 6.00
22percent.
23b. For the tax year beginning on or after January 1, 2024,
24but before January 1, 2025:
25(1) On taxable income from 0 through $6,000, the rate of
264.40 percent.
27(2) On taxable income exceeding $6,000 but not exceeding
28$30,000, the rate of 4.82 percent.
29(3) On taxable income exceeding $30,000, the rate of 5.70
30percent.
31c. For the tax year beginning on or after January 1, 2025,
32but before January 1, 2026:
33(1) On taxable income from 0 through $6,000, the rate of
344.40 percent.
35(2) On taxable income exceeding $6,000, the rate of 4.82
-33-1percent.
2 Sec. 74. REPEAL. 2018 Iowa Acts, chapter 1161, section 107,
3is repealed.
4 Sec. 75. EFFECTIVE DATE. This division of this Act takes
5effect January 1, 2023.
6 Sec. 76. APPLICABILITY. This division of this Act applies
7to tax years beginning on or after January 1, 2023.
8DIVISION IX
9INDIVIDUAL INCOME TAX — FLAT RATE — contingent elimination
10 Sec. 77. Section 421.27, subsection 9, paragraph a,
11subparagraph (3), Code 2022, is amended to read as follows:
12(3) In the case of all other entities, including
13corporations described in section 422.36, subsection 5, and all
14other entities required to file an information return under
15section 422.15, subsection 2, the entity’s Iowa net income
16after the application of the Iowa business activity ratio,
17if applicable, multiplied by the top income tax rate imposed
18under section 422.5A 422.5 for the tax year, less any Iowa tax
19credits available to the entity.
20 Sec. 78. Section 422.5, subsection 1, paragraph a, Code
212022, is amended to read as follows:
22a. (1) A tax is imposed upon every resident and nonresident
23of the state which tax shall be levied, collected, and paid
24annually upon and with respect to the entire taxable income
25as defined in this subchapter at rates as provided in section
26422.5A a rate of three and eighty-five hundredths percent for
27the tax year beginning January 1, 2026, but before January 1,
282027, and at a rate of three and six-tenths percent for tax
29years beginning on or after January 1, 2027.
30(2) (a) Notwithstanding the rate in subparagraph (1), the
31department of revenue shall determine the individual income
32tax rate as provided in this subparagraph. The tax rate in
33subparagraph (1) shall remain in effect until the rate is
34adjusted pursuant to this subparagraph. A rate adjusted in
35this subparagraph shall remain in effect until the rate is
-34-1adjusted again pursuant to this subparagraph.
2(b) By November 1, 2028, and by November 1 each year
3thereafter, until the individual income tax rate equals zero,
4the department of management shall determine the amount of
5moneys available in the individual income tax elimination fund
6in section 8.57E, and the net individual income tax receipts
7at the close of the preceding fiscal year. The department of
8revenue shall adjust and apply a new rate based upon the amount
9of moneys available in the individual income tax elimination
10fund as provided in subparagraph division (c).
11(c) (i) The rate shall be adjusted in such a way that the
12rate would have generated an amount equal to the net receipts
13generated from the rate in the preceding fiscal year less the
14amount available in the individual income tax elimination
15fund in section 8.57E that is used in the calculation in this
16subparagraph division.
17(ii) The rate shall not be adjusted unless the rate is able
18to be adjusted at least one-tenth of one percent. The rate,
19when adjusted, shall be rounded down to the nearest one-tenth
20of one percent.
21(iii) If a determination is made by the department of
22revenue that the rate is subject to adjustment, the department
23of revenue shall adjust the rate specified in subparagraph
24(1), or if the rate has been previously adjusted, adjust the
25previously adjusted rate.
26(d) If an adjustment is made pursuant to subparagraph
27division (c), the amount of moneys in the individual income
28tax elimination fund used in the calculation in subparagraph
29division (c) shall be transferred to the general fund of the
30state in the fiscal year the rate is adjusted.
31(e) If a rate is adjusted pursuant to subparagraph division
32(c), the director of revenue shall cause an advisory notice
33containing the new individual income tax rate to be published
34in the Iowa administrative bulletin and on the internet site
35of the department of revenue. The calculation and publication
-35-1of the adjusted tax rate by the director of revenue is exempt
2from chapter 17A, and shall be submitted for publication by the
3first December 31 following the determination date to adjust
4the rate.
5 Sec. 79. Section 422.16B, subsection 2, paragraph a, Code
62022, is amended to read as follows:
7a. (1) A pass-through entity shall file a composite return
8on behalf of all nonresident members and shall report and pay
9the income or franchise tax imposed under this chapter at the
10maximum state income or franchise tax rate applicable to the
11member under section 422.5A 422.5, 422.33, or 422.63 on the
12nonresident members’ distributive shares of the income from the
13pass-through entity.
14(2) The tax rate applicable to a tiered pass-through entity
15shall be the maximum state income tax rate under section 422.5A
16 422.5.
17 Sec. 80. Section 422.25A, subsection 5, paragraph c,
18subparagraphs (3), (4), and (5), Code 2022, are amended to read
19as follows:
20(3) Determine the total distributive share of all final
21federal partnership adjustments and positive reallocation
22adjustments as modified by this title that are reported to
23nonresident individual partners and nonresident fiduciary
24partners and allocate and apportion such adjustments as
25provided in section 422.33 at the partnership or tiered
26partner level, and multiply the resulting amount by the maximum
27 individual income tax rate pursuant to section 422.5A 422.5 for
28the reviewed year.
29(4) For the total distributive share of all final federal
30partnership adjustments and positive reallocation adjustments
31as modified by this title that are reported to tiered partners:
32(a) Determine the amount of such adjustments which are of a
33type that would be subject to sourcing to Iowa under section
34422.8, subsection 2, paragraph “a”, as a nonresident, and then
35determine the portion of this amount that would be sourced to
-36-1Iowa under those provisions as if the tiered partner were a
2nonresident.
3(b) Determine the amount of such adjustments which are of
4a type that would not be subject to sourcing to Iowa under
5section 422.8, subsection 2, paragraph “a”, as a nonresident.
6(c) Determine the portion of the amount in subparagraph
7division (b) that can be established, as prescribed by the
8department by rule, to be properly allocable to indirect
9partners that are nonresident partners or other partners not
10subject to tax on the adjustments.
11(d) Multiply the total of the amounts determined in
12subparagraph divisions (a) and (b), reduced by any amount
13determined in subparagraph division (c), by the highest
14 individual income tax rate pursuant to section 422.5A 422.5 for
15the reviewed year.
16(5) For the total distributive share of all final federal
17partnership adjustments and positive reallocation adjustments
18as modified by this title that are reported to resident
19individual partners and resident fiduciary partners, multiply
20that amount by the highest individual income tax rate pursuant
21to section 422.5A 422.5 for the reviewed year.
22 Sec. 81. EFFECTIVE DATE. This division of this Act takes
23effect January 1, 2026.
24 Sec. 82. APPLICABILITY. This division of this Act applies
25to tax years beginning on or after January 1, 2026.
26DIVISION X
27Retirement Income
28 Sec. 83. Section 422.5, subsection 3, paragraph a, Code
292022, is amended to read as follows:
30a. The tax shall not be imposed on a resident or nonresident
31whose net income, as defined in section 422.7, is thirteen
32thousand five hundred dollars or less in the case of married
33persons filing jointly or filing separately on a combined
34return, heads of household, and surviving spouses or nine
35thousand dollars or less in the case of all other persons; but
-37-1in the event that the payment of tax under this subchapter
2would reduce the net income to less than thirteen thousand five
3hundred dollars or nine thousand dollars as applicable, then
4the tax shall be reduced to that amount which would result
5in allowing the taxpayer to retain a net income of thirteen
6thousand five hundred dollars or nine thousand dollars as
7applicable. The preceding sentence does not apply to estates
8or trusts. For the purpose of this subsection, the entire net
9income, including any part of the net income not allocated
10to Iowa, shall be taken into account. For purposes of this
11subsection, net income includes all amounts of pensions or
12other retirement income, except for military retirement pay
13excluded under section 422.7, subsection 31A, paragraph “a”, or
14section 422.7, subsection 31B, paragraph “a”, received from any
15source which is not taxable under this subchapter as a result
16of the government pension exclusions in section 422.7, or any
17other state law. If the combined net income of a husband and
18wife exceeds thirteen thousand five hundred dollars, neither
19of them shall receive the benefit of this subsection, and it
20is immaterial whether they file a joint return or separate
21returns. However, if a husband and wife file separate returns
22and have a combined net income of thirteen thousand five
23hundred dollars or less, neither spouse shall receive the
24benefit of this paragraph, if one spouse has a net operating
25loss and elects to carry back or carry forward the loss as
26provided in section 422.9, subsection 3. A person who is
27claimed as a dependent by another person as defined in section
28422.12 shall not receive the benefit of this subsection if
29the person claiming the dependent has net income exceeding
30thirteen thousand five hundred dollars or nine thousand dollars
31as applicable or the person claiming the dependent and the
32person’s spouse have combined net income exceeding thirteen
33thousand five hundred dollars or nine thousand dollars as
34applicable.
35 Sec. 84. Section 422.5, subsection 3B, paragraph a, Code
-38-12022, is amended to read as follows:
2a. The tax shall not be imposed on a resident or nonresident
3who is at least sixty-five years old on December 31 of
4the tax year and whose net income, as defined in section
5422.7, is thirty-two thousand dollars or less in the case
6of married persons filing jointly or filing separately on a
7combined return, heads of household, and surviving spouses or
8twenty-four thousand dollars or less in the case of all other
9persons; but in the event that the payment of tax under this
10subchapter would reduce the net income to less than thirty-two
11thousand dollars or twenty-four thousand dollars as applicable,
12then the tax shall be reduced to that amount which would result
13in allowing the taxpayer to retain a net income of thirty-two
14thousand dollars or twenty-four thousand dollars as applicable.
15The preceding sentence does not apply to estates or trusts.
16For the purpose of this subsection, the entire net income,
17including any part of the net income not allocated to Iowa,
18shall be taken into account. For purposes of this subsection,
19net income includes all amounts of pensions or other retirement
20income, except for military retirement pay excluded under
21section 422.7, subsection 31A, paragraph “a”, or section 422.7,
22subsection 31B, paragraph “a”, received from any source which is
23not taxable under this subchapter as a result of the government
24pension exclusions in section 422.7, or any other state law.
25 If the combined net income of a husband and wife exceeds
26thirty-two thousand dollars, neither of them shall receive the
27benefit of this subsection, and it is immaterial whether they
28file a joint return or separate returns. However, if a husband
29and wife file separate returns and have a combined net income
30of thirty-two thousand dollars or less, neither spouse shall
31receive the benefit of this paragraph, if one spouse has a net
32operating loss and elects to carry back or carry forward the
33loss as provided in section 422.9, subsection 3. A person
34who is claimed as a dependent by another person as defined in
35section 422.12 shall not receive the benefit of this subsection
-39-1if the person claiming the dependent has net income exceeding
2thirty-two thousand dollars or twenty-four thousand dollars
3as applicable or the person claiming the dependent and the
4person’s spouse have combined net income exceeding thirty-two
5thousand dollars or twenty-four thousand dollars as applicable.
6 Sec. 85. Section 422.7, subsection 31, Code 2022, is amended
7to read as follows:
831. a. For a person who is disabled, or is fifty-five years
9of age or older, or is the surviving spouse of an individual or
10a survivor having an insurable interest in an individual who
11would have qualified for the exemption under this subsection
12 for the tax year, subtract Subtract, to the extent included,
13the total amount of received from a governmental or other
14pension or retirement pay plan, including, but not limited
15to, defined benefit or defined contribution plans, annuities,
16individual retirement accounts, plans maintained or contributed
17to by an employer, or maintained or contributed to by a
18self-employed person as an employer, and deferred compensation
19plans or any earnings attributable to the deferred compensation
20plans, up to a maximum of six thousand dollars for a person,
21other than a husband or wife, who files a separate state income
22tax return and up to a maximum of twelve thousand dollars
23for a husband and wife who file a joint state income tax
24return. However, a surviving spouse who is not disabled or
25fifty-five years of age or older can only exclude the amount
26of pension or retirement pay received as a result of the death
27of the other spouse. A husband and wife filing separate state
28income tax returns or separately on a combined state return
29are allowed a combined maximum exclusion under this subsection
30 of up to twelve thousand dollars. The twelve thousand dollar
31exclusion shall be allocated to the husband or wife in the
32proportion that each spouse’s respective pension and retirement
33pay received bears to total combined pension and retirement
34pay received received by a person who is disabled, or is
35fifty-five years of age or older, or is the surviving spouse of
-40-1an individual or is a survivor having an insurable interest in
2an individual who would have qualified for the exemption under
3this subsection for the tax year.
4b. Married taxpayers who file separate state income tax
5returns shall allocate their combined annual exclusion amount
6to each spouse in the proportion that each spouse’s respective
7income received from a pension or retirement plan bears to the
8total combined pension or retirement pay received.
9c. A taxpayer who is not disabled or fifty-five years of
10age or older and who receives pension or retirement pay as a
11surviving spouse or as a survivor with an insurable interest
12in an individual who would have qualified for the exemption
13for the tax year may only exclude the amount received from a
14pension or retirement plan in the tax year as a result of the
15death of the decedent.
16 Sec. 86. EFFECTIVE DATE. This division of this Act takes
17effect January 1, 2023.
18 Sec. 87. APPLICABILITY. This division of this Act applies
19to tax years beginning on or after January 1, 2023.
20DIVISION XI
21CORPORATE INCOME TAX
22 Sec. 88. Section 422.33, subsection 1, paragraphs a, b, c,
23and d, Code 2022, are amended to read as follows:
24a. On the first twenty-five thousand dollars of taxable
25income, or any part thereof, the rate of six percent for tax
26years beginning prior to January 1, 2021, and the rate of
27five and one-half percent for tax years beginning on or after
28January 1, 2021, but before January 1, 2024.
29b. On taxable income between twenty-five thousand dollars
30and one hundred thousand dollars or any part thereof, the rate
31of eight percent for tax years beginning prior to January 1,
322021, and the rate of five and one-half percent for tax years
33beginning on or after January 1, 2021, but before January 1,
342024.
35c. On taxable income between one hundred thousand dollars
-41-1and two hundred fifty thousand dollars or any part thereof, the
2rate of ten percent for tax years beginning prior to January 1,
32021, and the rate of nine percent for tax years beginning on
4or after January 1, 2021, but before January 1, 2024.
5d. On taxable income of two hundred fifty thousand dollars
6or more, the rate of twelve percent for tax years beginning
7prior to January 1, 2021, and the rate of nine and eight-tenths
8percent for tax years beginning on or after January 1, 2021,
9but before January 1, 2024.
10DIVISION XII
11FUTURE CORPORATE INCOME TAX RATES
12 Sec. 89. Section 422.33, subsection 1, Code 2022, as
13amended by this Act, is amended by striking the subsection and
14inserting in lieu thereof the following:
151. a. A tax is imposed annually upon each corporation doing
16business in this state, or deriving income from sources within
17this state, in an amount computed by applying the following
18rates of taxation to the net income received by the corporation
19during the income year:
20(1) For the tax year beginning on or after January 1, 2023,
21but before January 1, 2024:
22(a) On taxable income from zero through one hundred thousand
23dollars, or any part thereof, the rate of five and one-half
24percent.
25(b) On taxable income between one hundred thousand dollars
26and two hundred fifty thousand dollars, or any part thereof,
27the rate of nine percent.
28(c) On taxable income of two hundred fifty thousand dollars
29or more, the rate of nine and eight-tenths percent.
30(2) For the tax year beginning on or after January 1, 2024,
31but before January 1, 2025:
32(a) On taxable income from zero through one hundred thousand
33dollars, or any part thereof, the rate of five and one-half
34percent.
35(b) On taxable income between one hundred thousand dollars
-42-1and two hundred fifty thousand dollars, or any part thereof,
2the rate of nine percent.
3(c) On taxable income of two hundred fifty thousand dollars
4or more, the rate of nine and four-tenths percent.
5(3) For the tax year beginning on or after January 1, 2025,
6but before January 1, 2026:
7(a) On taxable income from zero through one hundred thousand
8dollars, or any part thereof, the rate of five and one-half
9percent.
10(b) On taxable income exceeding one hundred thousand
11dollars, the rate of nine percent.
12(4) For the tax year beginning on or after January 1, 2026,
13but before January 1, 2027:
14(a) On taxable income from zero through one hundred thousand
15dollars, or any part thereof, the rate of five and four-tenths
16percent.
17(b) On taxable income exceeding one hundred thousand
18dollars, the rate of eight and six-tenths percent.
19(5) For the tax year beginning on or after January 1, 2027,
20but before January 1, 2028:
21(a) On taxable income from zero through one hundred thousand
22dollars, or any part thereof, the rate of five and four-tenths
23percent.
24(b) On taxable income exceeding one hundred thousand
25dollars, the rate of eight and two-tenths percent.
26b. For tax years beginning on or after January 1, 2028, a
27tax is imposed annually upon each corporation doing business
28in this state, or deriving income from sources within this
29state, in an amount computed by applying the following rates of
30taxation to the net income received by the corporation during
31the income year:
32(1) On taxable income from zero through one hundred thousand
33dollars, or any part thereof, the rate of five and three-tenths
34percent.
35(2) On taxable income exceeding one hundred thousand
-43-1dollars, the rate of seven and eight-tenths percent.
2 Sec. 90. EFFECTIVE DATE. This division of this Act takes
3effect January 1, 2024.
4DIVISION XIII
5FRANCHISE TAX
6 Sec. 91. Section 422.63, Code 2022, is amended to read as
7follows:
8422.63 Amount of tax.
91. The franchise tax is imposed annually in an amount equal
10to five the percent specified in subsection 2 of the net income
11received or accrued during the taxable year. If the net income
12of the financial institution is derived from its business
13carried on entirely within the state, the tax shall be imposed
14on the entire net income, but if the business is carried on
15partly within and partly without the state, the portion of net
16income reasonably attributable to the business within the state
17shall be specifically allocated or equitably apportioned within
18and without the state under rules of the director.
192. a. For tax years beginning prior to January 1, 2023,
20five percent.
21b. For tax years beginning on or after January 1, 2023, but
22before January 1, 2024, four and four-fifths percent.
23c. For tax years beginning on or after January 1, 2024, but
24before January 1, 2025, four and three-fifths percent.
25d. For tax years beginning on or after January 1, 2025, but
26before January 1, 2026, four and two-fifths percent.
27e. For tax years beginning on or after January 1, 2026, but
28before January 1, 2027, four and one-fifth percent.
29f. For tax years beginning on or after January 1, 2027, four
30percent.
31DIVISION XIV
32INSURANCE PREMIUM TAX
33 Sec. 92. Section 432.1, subsection 2, Code 2022, is amended
34to read as follows:
352. The “applicable percent” for purposes of subsection 1 of
-44-1this section and section 432.2 is the following:
2a. For calendar years beginning before the 2003 calendar
3year, two percent.
4b. For the 2003 calendar year, one and three-fourths
5percent.
6c. For the 2004 calendar year, one and one-half percent.
7d. For the 2005 calendar year, one and one-fourth percent.
8e. For the 2006 and subsequent calendar years year through
9the 2022 calendar year, one percent.
10f. For the 2023 calendar year, ninety-five hundredths of one
11percent.
12g. For the 2024 and subsequent calendar years, nine-tenths
13of one percent.
14 Sec. 93. Section 432.1, subsection 4, Code 2022, is amended
15to read as follows:
164. The “applicable percent” for purposes of subsection 3 is
17the following:
18a. For calendar years beginning before the 2004 calendar
19year, two percent.
20b. For the 2004 calendar year, one and three-fourths
21percent.
22c. For the 2005 calendar year, one and one-half percent.
23d. For the 2006 calendar year, one and one-fourth percent.
24e. For the 2007 and subsequent calendar years year through
25the 2022 calendar year, one percent.
26f. For the 2023 calendar year, ninety-five hundredths of one
27percent.
28g. For the 2024 and subsequent calendar years, nine-tenths
29of one percent.
30DIVISION XV
31AUTOMOBILE RENTAL EXCISE TAX
32 Sec. 94. Section 423C.2, subsection 7, Code 2022, is amended
33by striking the subsection.
34 Sec. 95. Section 423C.3, subsection 1, Code 2022, is amended
35to read as follows:
-45- 11. A tax of five seven percent is imposed upon the rental
2price of an automobile if the rental transaction is subject
3to the sales tax under chapter 423, subchapter II, or the use
4tax under chapter 423, subchapter III. The tax shall not be
5imposed on any rental transaction not taxable under the state
6sales tax, as provided in section 423.3, or the state use tax,
7as provided in section 423.6, on automobile rental receipts.
8 Sec. 96. Section 423C.3, subsection 3, Code 2022, is amended
9by striking the subsection.
10 Sec. 97. Section 423.14A, subsection 1, paragraph b,
11subparagraph (3), Code 2022, is amended by striking the
12subparagraph.
13 Sec. 98. EFFECTIVE DATE. This division of this Act takes
14effect January 1, 2023.
15DIVISION XVI
16EQUIPMENT TAX
17 Sec. 99. Section 423D.2, Code 2022, is amended to read as
18follows:
19423D.2 Tax imposed.
20A tax of five six percent is imposed on the sales price
21or purchase price of all equipment sold or used in the state
22of Iowa. This tax shall be collected and paid over to the
23department by any retailer, retailer maintaining a place of
24business in this state, or user who would be responsible for
25collection and payment of the tax if it were a sales or use tax
26imposed under chapter 423.
27 Sec. 100. EFFECTIVE DATE. This division of this Act takes
28effect January 1, 2023.
29DIVISION XVII
30WATER SERVICE TAX
31 Sec. 101. Section 421.71, subsection 3, Code 2022, is
32amended to read as follows:
333. Private cause of action immunity for overpayment of
34certain taxes.
35a. A taxpayer, or any person required to collect taxes
-46-1imposed under chapters 423, 423A, 423B, 423C, and 423D, and
2chapter 423G, Code 2022, shall be immune from any private cause
3of action arising from or related to the overpayment of taxes
4imposed under chapters 423, 423A, 423B, 423C, and 423D, and
5chapter 423G, Code 2022, that are collected and remitted to the
6department.
7b. Nothing in this subsection shall apply to or otherwise
8limit any of the following:
9(1) Any claim, action, mandate, power, remedy, or
10discretion of the department, or an agent or designee of the
11department.
12(2) A taxpayer’s right to seek a refund from the department
13related to taxes imposed under chapters 423, 423A, 423B, 423C,
14and 423D, and chapter 423G, Code 2022, that are collected from
15or paid by the taxpayer.
16 Sec. 102. Section 423.3, subsection 103, Code 2022, is
17amended by striking the subsection.
18 Sec. 103. REPEAL. Chapter 423G, Code 2022, is repealed.
19 Sec. 104. EFFECTIVE DATE. This division of this Act takes
20effect January 1, 2023.
21DIVISION XVIII
22TAX CREDITS
23 Sec. 105. Section 15.119, subsection 2, paragraph a, Code
242022, is amended by adding the following new subparagraph:
25 NEW SUBPARAGRAPH. (3) In allocating tax credits pursuant
26to this subsection, the authority shall prioritize issuing
27additional research and development tax credits pursuant to
28section 15.335.
29 Sec. 106. Section 15.293A, subsection 1, paragraph c,
30subparagraph (2), unnumbered paragraph 1, Code 2022, is amended
31to read as follows:
32A For the tax year beginning on or after January 1, 2023,
33but before January 1, 2024, seventy-five percent of the tax
34credit in excess of the taxpayer’s liability for the tax year
35is refundable, and for tax years beginning on or after January
-47-11, 2024, fifty percent of the tax credit in excess of the
2taxpayer’s liability for the tax year is refundable, if all of
3the following conditions are met:
4 Sec. 107. Section 15.319, subsection 5, Code 2022, is
5amended to read as follows:
65. Any For the tax year beginning on or after January 1,
72023, but before January 1, 2024, seventy-five percent of any
8 tax credit in excess of the tax liability is refundable. For
9tax years beginning on or after January 1, 2024, fifty percent
10of any tax credit in excess of the tax liability is refundable.
11 In lieu of claiming a refund, the taxpayer may elect to have
12the overpayment shown on the taxpayer’s final, completed return
13credited to the tax liability for the following tax year.
14 Sec. 108. Section 15E.305, subsection 2, paragraph a, Code
152022, is amended to read as follows:
16a. The maximum amount of tax credits granted to a taxpayer
17shall not exceed five percent one hundred thousand dollars of
18the aggregate amount of tax credits authorized.
19 Sec. 109. Section 422.5, subsection 1, paragraph b,
20subparagraph (2), Code 2022, is amended by striking the
21subparagraph.
22 Sec. 110. Section 422.5, subsection 2, paragraph d, Code
232022, is amended to read as follows:
24d. In the case of a resident, including a resident
25estate or trust, the state’s apportioned share of the state
26alternative minimum tax is one hundred percent of the state
27alternative minimum tax computed in this subsection 2. In the
28case of a resident or part-year resident shareholder in an S
29corporation which has in effect for the tax year an election
30under subchapter S of the Internal Revenue Code and carries
31on business within and without the state, a nonresident,
32including a nonresident estate or trust, or an individual,
33estate, or trust that is domiciled in the state for less than
34the entire tax year, the state’s apportioned share of the
35state alternative minimum tax is the amount of tax computed
-48-1under this subsection 2, reduced by the applicable credits in
2sections 422.10 through 422.12 and this result multiplied by
3a fraction with a numerator of the sum of state net income
4allocated to Iowa as determined in section 422.8, subsection 2,
5paragraph “a” or “b” as applicable, plus tax preference items,
6adjustments, and losses under subparagraph (1) attributable
7to Iowa and with a denominator of the sum of total net income
8computed under section 422.7 plus all tax preference items,
9adjustments, and losses under subparagraph (1). In computing
10this fraction, those items excludable under subparagraph (1)
11shall not be used in computing the tax preference items.
12Married taxpayers electing to file separate returns or
13separately on a combined return must allocate the minimum
14tax computed in this subsection in the proportion that each
15spouse’s respective preference items, adjustments, and losses
16under subparagraph (1) bear to the combined preference items,
17adjustments, and losses under subparagraph (1) of both spouses.
18 Sec. 111. Section 422.8, subsection 2, paragraph b, Code
192022, is amended by striking the paragraph.
20 Sec. 112. Section 422.8, subsection 6, Code 2022, is amended
21by striking the subsection.
22 Sec. 113. Section 422.10, subsection 1, paragraph a, Code
232022, is amended by adding the following new subparagraph:
24 NEW SUBPARAGRAPH. (3) The credit provided in this section
25is claimed on a return filed by the due date for filing the
26return, including extensions of time. If timely claimed, the
27business shall not increase the credit claim on an amended
28return or otherwise unless the increase results from an
29audit or examination by the internal revenue service or the
30department.
31 Sec. 114. Section 422.10, subsection 1, paragraph b,
32subparagraph (1), subparagraph divisions (a) and (b), Code
332022, are amended to read as follows:
34(a) Six and one-half Four percent of the excess of qualified
35research expenses during the tax year over the base amount for
-49-1the tax year based upon the state’s apportioned share of the
2qualifying expenditures for increasing research activities.
3(b) Six and one-half Four percent of the basic research
4payments determined under section 41(e)(1)(A) of the Internal
5Revenue Code during the tax year based upon the state’s
6apportioned share of the qualifying expenditures for increasing
7research activities.
8 Sec. 115. Section 422.10, subsection 1, paragraph b, Code
92022, is amended by adding the following new subparagraph:
10 NEW SUBPARAGRAPH. (3) For the purpose of calculating
11the state’s apportioned share of the qualifying expenditures
12for increasing research activities in subparagraph (2), the
13following criteria shall apply only to the determination of
14qualified research expenditures in this state:
15(a) Wages paid to an employee for qualified services,
16or contract research expenses paid to a third party for
17the performance of qualified research services, shall only
18constitute qualified research expenses in this state if the
19services are performed in this state, and if the following
20conditions are met, as applicable:
21(i) For qualified services performed by employees, during
22the period of the tax year that the business is engaging in one
23or more research projects, a majority of the total services
24performed by the employee for the business are directly related
25to those research projects.
26(ii) For the performance of qualified research services
27by a third party, during the period of the business’s tax
28year that the third party is performing research services for
29the business, a majority of the total services performed by
30the person for the third party are directly related to those
31research projects of the business.
32(b) The substantially all rule for determining qualified
33services as described in section 41(b)(2)(B) of the Internal
34Revenue Code and Treas.Reg.1.41-2(d)(2) does not apply.
35(c) Amounts paid for supplies as defined in section
-50-141(b)(2)(C) of the Internal Revenue Code, or for the right to
2use computers as described in section 41(b)(2)(A)(iii) of the
3Internal Revenue Code, shall not be qualified research expenses
4in this state.
5 Sec. 116. Section 422.10, subsection 1, paragraphs c and d,
6Code 2022, are amended to read as follows:
7c. In lieu of the credit amount computed in paragraph “b”,
8subparagraph (1), subparagraph division (a), a taxpayer may
9 shall elect to compute the credit amount for qualified research
10expenses incurred in this state in a manner consistent with the
11alternative simplified credit described in section 41(c)(4)
12of the Internal Revenue Code if the taxpayer elected or was
13required to use the alternative simplified credit method for
14federal income tax purposes for the same taxable year. The
15taxpayer may make this election regardless of the method used
16for the taxpayer’s federal income tax. The election made under
17this paragraph is for the tax year and the taxpayer may use
18another or the same method for any subsequent year.
19d. For purposes of the alternate credit computation method
20in paragraph “c”, the following criteria shall apply:
21(1) Thecredit percentages applicable to qualified research
22expenses described in section 41(c)(4)(A) and clause (ii) of
23section 41(c)(4)(B) of the Internal Revenue Code are four and
24fifty-five hundredths two and eight-tenths percent and one and
25ninety-five hundredths two-tenths percent, respectively.
26(2) Basic research payments and qualified research expenses
27shall only include amounts for research conducted in this
28state. A taxpayer’s qualified research expenses in this state
29and average prior year qualified research expenses in this
30state shall be determined in accordance with the criteria in
31subsection 1, paragraph “b”, subparagraph (3).
32 Sec. 117. Section 422.10, subsection 3, paragraph b, Code
332022, is amended to read as follows:
34b. For purposes of this section, “basic research payment”
35and “qualified research expense” mean the same as defined
-51-1for the federal credit for increasing research activities
2under section 41 of the Internal Revenue Code, except that
3for the alternative simplified credit such amounts are for
4research conducted within this state as otherwise described in
5subsection 1, paragraph “b”, subparagraph (3), and subsection
61, paragraph “d”, subparagraph (2).
7 Sec. 118. Section 422.10, subsection 4, Code 2022, is
8amended to read as follows:
94. a. Any Commencing with the tax year beginning on or
10after January 1, 2023, but before January 1, 2024, seventy-five
11percent of any credit in excess of the tax liability imposed by
12section 422.5 less the amounts of nonrefundable credits allowed
13under this subchapter for the taxable year shall be refunded
14with interest in accordance with section 421.60, subsection
152, paragraph “e”. In lieu of claiming a refund, a taxpayer
16may elect to have the overpayment shown on the taxpayer’s
17final, completed return credited to the tax liability for the
18following taxable year.
19b. Commencing with tax years beginning on or after
20January 1, 2024, fifty percent of any credit in excess of the
21tax liability imposed by section 422.5 less the amounts of
22nonrefundable credits allowed under this subchapter for the
23taxable year shall be refunded with interest in accordance
24with section 421.60, subsection 2, paragraph “e”. In lieu of
25claiming a refund, a taxpayer may elect to have the overpayment
26shown on the taxpayer’s final, completed return credited to the
27tax liability for the following taxable year.
28 Sec. 119. Section 422.11W, Code 2022, is amended by adding
29the following new subsection:
30 NEW SUBSECTION. 5. Commencing with tax years beginning
31on or after January 1, 2023, a charitable conservation
32contribution tax credit shall not be claimed against taxes as
33provided in this section, except for tax credits claimed for
34qualified real property interests conveyed prior to January 1,
352023.
-52-1 Sec. 120. Section 422.12N, Code 2022, is amended by adding
2the following new subsections:
3 NEW SUBSECTION. 6. This section does not apply to a
4geothermal heat pump installation occurring after December 31,
52023.
6 NEW SUBSECTION. 7. This section is repealed January 1,
72034.
8 Sec. 121. Section 422.33, subsection 5, paragraph a,
9subparagraphs (1) and (2), Code 2022, are amended to read as
10follows:
11(1) Six and one-half Four percent of the excess of qualified
12research expenses during the tax year over the base amount for
13the tax year based upon the state’s apportioned share of the
14qualifying expenditures for increasing research activities.
15(2) Six and one-half Four percent of the basic research
16payments determined under section 41(e)(1)(A) of the Internal
17Revenue Code during the tax year based upon the state’s
18apportioned share of the qualifying expenditures for increasing
19research activities.
20 Sec. 122. Section 422.33, subsection 5, paragraph b, Code
212022, is amended to read as follows:
22b. (1) The state’s apportioned share of the qualifying
23expenditures for increasing research activities is a percent
24equal to the ratio of qualified research expenditures in this
25state to the total qualified research expenditures.
26(2) For the purpose of calculating the state’s apportioned
27share of the qualifying expenditures for increasing research
28activities in subparagraph (1), the following criteria
29shall apply only to the determination of qualified research
30expenditures in this state:
31(a) Wages paid to an employee for qualified services,
32or contract research expenses paid to a third party for
33the performance of qualified research services, shall only
34constitute qualified research expenses in this state if the
35services are performed in this state, and if the following
-53-1conditions are met, as applicable:
2(i) For qualified services performed by employees, during
3the period of the tax year that the business is engaging in one
4or more research projects, a majority of the total services
5performed by the employee for the business are directly related
6to those research projects.
7(ii) For the performance of qualified research services
8by a third party, during the period of the business’s tax
9year that the third party is performing research services for
10the business, a majority of the total services performed by
11the person for the third party are directly related to those
12research projects of the business.
13(b) The substantially all rule for determining qualified
14services as described in section 41(b)(2)(B) of the Internal
15Revenue Code and Treas.Reg.1.41-2(d)(2) does not apply.
16(c) Amounts paid for supplies as defined in section
1741(b)(2)(C) of the Internal Revenue Code, or for the right to
18use computers as described in section 41(b)(2)(A)(iii) of the
19Internal Revenue Code, shall not be qualified research expenses
20in this state.
21 Sec. 123. Section 422.33, subsection 5, paragraphs c and d,
22Code 2022, are amended to read as follows:
23c. In lieu of the credit amount computed in paragraph “a”,
24subparagraph (1), a corporation may elect to compute the credit
25amount for qualified research expenses incurred in this state
26in a manner consistent with the alternative simplified credit
27described in section 41(c)(4) of the Internal Revenue Code if
28the taxpayer elected or was required to use the alternative
29simplified credit method for federal income tax purposes for
30the same taxable year. The taxpayer may make this election
31regardless of the method used for the taxpayer’s federal income
32tax. The election made under this paragraph is for the tax
33year and the taxpayer may use another or the same method for
34any subsequent year.
35d. For purposes of the alternate credit computation method
-54-1in paragraph “c”, the following criteria shall apply:
2(1) Thecredit percentages applicable to qualified research
3expenses described in section 41(c)(4)(A) and clause (ii) of
4section 41(c)(4)(B) of the Internal Revenue Code are four and
5fifty-five hundredths two and eight-tenths percent and one and
6ninety-five hundredths two-tenths percent, respectively.
7(2) Basic research payments and qualified research expenses
8shall only include amounts for research conducted in this
9state. A taxpayer’s qualified research expenses in this state
10and average prior year qualified research expenses in this
11state shall be determined in accordance with the rules in
12paragraph “b”, subparagraph (2).
13 Sec. 124. Section 422.33, subsection 5, paragraph e, Code
142022, is amended by adding the following new subparagraph:
15 NEW SUBPARAGRAPH. (3) The credit provided in this
16subsection is claimed on a return filed by the due date for
17filing the return, including extensions of time. If timely
18claimed, the business shall not increase the credit claim on an
19amended return or otherwise unless the increase results from
20an audit or examination by the internal revenue service or the
21department.
22 Sec. 125. Section 422.33, subsection 5, paragraph f,
23subparagraph (2), Code 2022, is amended to read as follows:
24(2) For purposes of this subsection, “basic research
25payment” and “qualified research expense” mean the same as
26defined for the federal credit for increasing research
27activities under section 41 of the Internal Revenue Code,
28except that for the alternative simplified credit such amounts
29are for research conducted within this state as otherwise
30described in paragraph “b”, subparagraph (2), and paragraph “d”,
31subparagraph (2).
32 Sec. 126. Section 422.33, subsection 5, paragraph g, Code
332022, is amended to read as follows:
34g. (1) Any Commencing with the tax year beginning on or
35after January 1, 2023, but before January 1, 2024, seventy-five
-55-1percent of any credit in excess of the tax liability for the
2taxable year shall be refunded with interest in accordance
3with section 421.60, subsection 2, paragraph “e”. In lieu of
4claiming a refund, a taxpayer may elect to have the overpayment
5shown on its final, completed return credited to the tax
6liability for the following taxable year.
7(2) Commencing with tax years beginning on or after January
81, 2024, fifty percent of any credit in excess of the tax
9liability for the taxable year shall be refunded with interest
10in accordance with section 421.60, subsection 2, paragraph “e”.
11In lieu of claiming a refund, a taxpayer may elect to have the
12overpayment shown on its final, completed return credited to
13the tax liability for the following taxable year.
14 Sec. 127. Section 422.33, subsection 25, Code 2022, is
15amended by striking the subsection and inserting in lieu
16thereof the following:
1725. The taxes imposed under this subchapter shall be reduced
18by a charitable conservation contribution tax credit as allowed
19under section 422.11W for each tax year the taxpayer has
20credit, in excess of tax liability, for qualified real property
21interests conveyed prior to January 1, 2023.
22 Sec. 128. PRESERVATION OF EXISTING RIGHTS.
231. This division of this Act is not intended to and shall
24not limit, modify, or otherwise adversely affect any amount
25of tax credit issued, awarded, or allowed prior to January 1,
262023, nor shall it limit, modify, or otherwise adversely affect
27a taxpayer’s right to claim or redeem a tax credit issued,
28awarded, or allowed prior to January 1, 2023, including but not
29limited to any tax credit carryforward amount.
302. The repeal of a provision of law pursuant to this
31division of this Act shall not constitute grounds for
32rescission or modification of agreements entered into under
33those provisions of law, if any. Any agreement entered into
34prior to January 1, 2023, under a provision of law repealed
35in this division of this Act, shall remain in effect until
-56-1it expires under its own terms, and shall be governed by the
2applicable provisions of law as they existed immediately prior
3to January 1, 2023.
4 Sec. 129. TAX CREDIT REVIEW STUDY COMMITTEE DURING 2029
5LEGISLATIVE INTERIM. The legislative council is requested to
6authorize a study committee to review tax credits available
7against state taxes by developing options for replacing tax
8credits that produce equivalent results as the tax credit
9being replaced. The study committee shall review tax credits
10including but not limited to the adoption tax credit in section
11422.12A, the tuition and textbook tax credit in section 422.12,
12and the school tuition organization tax credit in section
13422.11S.
14The study committee shall consist of five voting members of
15the senate, three of whom shall be appointed by the majority
16leader of the senate and two of whom shall be appointed by the
17minority leader of the senate, and five voting members of the
18house of representatives, three of whom shall be appointed by
19the speaker of the house of representatives and two of whom
20shall be appointed by the minority leader of the house of
21representatives. The co-chairpersons of the committee shall
22also appoint taxpayer representatives as nonvoting members of
23the committee. The study committee shall meet during the 2029
24legislative interim to make appropriate recommendations for
25consideration during the 2029 legislative session in a report
26submitted to the general assembly by January 15, 2030.
27 Sec. 130. EFFECTIVE DATE. This division of this Act takes
28effect January 1, 2023.
29 Sec. 131. APPLICABILITY. This division of this Act applies
30to tax years beginning on or after January 1, 2023.
31DIVISION XIX
32TAX EXPENDITURE committee
33 Sec. 132. Section 2.45, subsection 5, Code 2022, is amended
34by striking the subsection.
35 Sec. 133. Section 2.48, subsections 1 and 2, Code 2022,
-57-1are amended by striking the subsections and inserting in lieu
2thereof the following:
31. As used in this section, “tax expenditure” means an
4exclusion from the operation or collection of a tax imposed in
5this state. Tax expenditures include tax credits, exemptions,
6deductions, and rebates. Tax expenditures also include sales
7tax refunds issued pursuant to section 423.3 or 423.4.
82. a. (1) The department administering a tax expenditure
9described in subsection 3 shall engage in a review of the
10tax expenditure based upon the schedule in subsection 3. If
11multiple departments administer the tax expenditure, the
12departments shall cooperate in the review.
13(2) The review shall consist of evaluating any tax
14expenditure described in subsection 3 and assess its equity,
15simplicity, competitiveness, public purpose, adequacy,
16and extent of conformance with the original purpose of the
17legislation that enacted the tax expenditure, as those issues
18pertain to taxation in Iowa.
19b. (1) The department shall file a report detailing the
20review with the general assembly no later than December 15 of
21the year the credit is scheduled to be reviewed in subsection
223.
23(2) The report may include recommendations for better
24aligning tax expenditures with the original intent of the
25legislation that enacted the tax expenditure.
26 Sec. 134. Section 2.48, subsection 3, unnumbered paragraph
271, Code 2022, is amended to read as follows:
28The committee applicable department shall review the
29following tax expenditures and incentives according to the
30following schedule:
31 Sec. 135. Section 2.48, subsection 3, paragraph b,
32subparagraph (3), Code 2022, is amended to read as follows:
33(3) Funding of urban renewal projects with increased local
34sales and services tax revenues under section 423B.10.
35 Sec. 136. Section 2.48, subsection 4, Code 2022, is amended
-58-1to read as follows:
24. Subsequent additional review. A tax expenditure or
3incentive reviewed pursuant to subsection 3 shall be reviewed
4again not more than five years after the tax expenditure or
5incentive was most recently reviewed.
6DIVISION XX
7INDIVIDUAL INCOME TAX ELIMINATION FUND
8 Sec. 137. Section 8.55, subsection 2, paragraph a, Code
92022, is amended to read as follows:
10a. The difference between the actual net revenue for the
11general fund of the state for the fiscal year and the adjusted
12revenue estimate for the fiscal year shall be transferred to
13the taxpayer relief individual income tax elimination fund
14created in section 8.57E.
15 Sec. 138. Section 8.57E, Code 2022, is amended to read as
16follows:
178.57E Taxpayer relief Individual income tax elimination fund.
181. A taxpayer relief An individual income tax elimination
19 fund is created. The fund shall be separate from the general
20fund of the state and the balance in the fund shall not be
21considered part of the balance of the general fund of the
22state. The moneys credited to the fund are not subject to
23section 8.33 and shall not be transferred, used, obligated,
24appropriated, or otherwise encumbered except as provided in
25this section.
262. Moneys in the taxpayer relief fund shall only be used
27pursuant to appropriations or transfers made by the general
28assembly for tax relief, including but not limited to increases
29in the general retirement income exclusion under section 422.7,
30subsection 31, or reductions in income tax rates.
313. a. Moneys in the taxpayer relief fund may be used for
32cash flow purposes during a fiscal year provided that any
33moneys so allocated are returned to the fund by the end of that
34fiscal year.
35b. Except as provided in section 8.58, the taxpayer relief
-59-1 fund shall be considered a special account for the purposes of
2section 8.53 in determining the cash position of the general
3fund of the state for the payment of state obligations.
44. Notwithstanding section 12C.7, subsection 2, interest or
5earnings on moneys deposited in the taxpayer relief fund shall
6be credited to the fund.
7 Sec. 139. Section 8.58, Code 2022, is amended to read as
8follows:
98.58 Exemption from automatic application.
101. To the extent that moneys appropriated under section
118.57 do not result in moneys being credited to the general fund
12under section 8.55, subsection 2, moneys appropriated under
13section 8.57 and moneys contained in the cash reserve fund,
14rebuild Iowa infrastructure fund, environment first fund, Iowa
15economic emergency fund, taxpayer relief individual income tax
16elimination fund, state bond repayment fund, Iowa coronavirus
17fiscal recovery fund, and Iowa coronavirus capital projects
18fund shall not be considered in the application of any formula,
19index, or other statutory triggering mechanism which would
20affect appropriations, payments, or taxation rates, contrary
21provisions of the Code notwithstanding.
222. To the extent that moneys appropriated under section
238.57 do not result in moneys being credited to the general
24fund under section 8.55, subsection 2, moneys appropriated
25under section 8.57 and moneys contained in the cash reserve
26fund, rebuild Iowa infrastructure fund, environment first
27fund, Iowa economic emergency fund, taxpayer relief individual
28income tax elimination fund, state bond repayment fund, Iowa
29coronavirus fiscal recovery fund, and Iowa coronavirus capital
30projects fund shall not be considered by an arbitrator or in
31negotiations under chapter 20.
32DIVISION XXI
33NATIONAL GUARD PAY
34 Sec. 140. Section 422.7, subsection 42A, Code 2022, is
35amended to read as follows:
-60- 142A. Subtract, to the extent included, all pay received by
2the taxpayer from the federal government for military service
3performed while on active duty status in the armed forces, the
4armed forces military reserve, or the national guard, including
5pay for full-time service performed pursuant to 32 U.S.C.
6§502(f) and 32 U.S.C. §709(a) and (b).
7 Sec. 141. APPLICABILITY. This division of this Act applies
8to tax years beginning on or after January 1, 2023.
9DIVISION XXII
10LOCAL OPTION TAXES
11 Sec. 142. Section 15J.7, subsection 2, Code 2022, is amended
12to read as follows:
132. In addition to the moneys received pursuant to section
1415J.6, a municipality may deposit in the reinvestment project
15fund any other moneys lawfully at the municipality’s disposal,
16including but not limited to local sales and services tax
17receipts collected revenues received under chapter 423B if such
18use is a purpose authorized for the municipality under chapter
19423B.
20 Sec. 143. Section 28A.17, Code 2022, is amended to read as
21follows:
2228A.17 Local sales and services tax.
231. If an authority is established as provided in section
2428A.6 and after approval of a referendum by a simple majority
25of votes cast in each metropolitan area in favor of the sales
26and services tax, the governing board of a county in this state
27within a metropolitan area which is part of the authority shall
28impose, at the request of the authority, a local sales and
29services tax at the rate of one-fourth of one percent on the
30sales price taxed by this state under section 423.2, within
31the metropolitan area located in this state. The referendum
32shall be called by resolution of the board and shall be held
33as provided in section 28A.6 to the extent applicable. The
34ballot proposition shall contain a statement as to the specific
35purpose or purposes for which the revenues shall be expended
-61-1and the date of expiration of the tax. The local sales and
2services tax shall be imposed on the same basis, with the same
3exceptions, and following the same administrative procedures as
4provided for a county under sections 423B.5 and 423B.6, Code
52022. The amount of the sale, for the purposes of determining
6the amount of the local sales and services tax under this
7section, does not include the amount of any local sales and
8services tax imposed under sections 423B.5 and 423B.6, Code
92022.
102. The treasurer of state shall credit the local sales
11and services tax receipts and interest and penalties to the
12authority’s account. Moneys in this account shall be remitted
13quarterly to the authority. The proceeds of the tax imposed
14under this section shall be used only for the construction,
15reconstruction, or repair of metropolitan facilities as
16specified in the referendum. The local sales and services tax
17imposed under this section may be suspended for not less than
18a fiscal quarter or more than one year by action of the board.
19The suspension may be renewed or continued by the board, but
20the board shall act on the suspension at least annually.
21The local sales and services tax may also be repealed by a
22petition and favorable referendum following the procedures and
23requirements of sections 28A.5 and 28A.6 as applicable. The
24board shall give the department of revenue at least forty days’
25notice of the repeal, suspension, or reinstatement of the tax
26and the effective dates for imposition, suspension, or repeal
27of the tax shall be as provided in section 423B.6, Code 2022.
283. A local sales and services tax authorized under this
29section shall not be imposed or collected on or after January
301, 2023.
31 Sec. 144. Section 76.4, Code 2022, is amended to read as
32follows:
3376.4 Permissive application of funds.
34Whenever the governing authority of such political
35subdivision shall have on hand funds derived from any other
-62-1source than taxation which may be appropriated to the payment
2either of interest or principal, or both principal and interest
3of such bonds, such funds may be so appropriated and used
4and the levy for the payment of the bonds correspondingly
5reduced. This section shall not restrict the authority of a
6political subdivision to apply sales and services tax receipts
7collected received pursuant to chapter 423B for such purpose.
8Notwithstanding section 423F.3, a school district may apply tax
9receipts received pursuant to chapter 423F for the purposes of
10this section.
11 Sec. 145. Section 99B.1, subsection 23, Code 2022, is
12amended to read as follows:
1323. “Net receipts” means gross receipts less amounts awarded
14as prizes and less state and local sales tax paid upon the
15gross receipts.
16 Sec. 146. Section 99B.14, subsection 1, Code 2022, is
17amended to read as follows:
181. A licensed qualified organization shall certify
19that the receipts from all charitable gambling conducted
20by the organization under this chapter, less reasonable
21expenses, charges, fees, taxes, and deductions, either will
22be distributed as prizes to participants or will be dedicated
23and distributed for educational, civic, public, charitable,
24patriotic, or religious uses. Reasonable expenses, charges,
25fees, taxes other than the state and local sales tax, and
26deductions allowed by the department shall not exceed forty
27percent of net receipts.
28 Sec. 147. Section 99G.4, subsection 2, Code 2022, is amended
29to read as follows:
302. The income and property of the authority shall be exempt
31from all state and local taxes, and the sale of lottery tickets
32and shares issued and sold by the authority and its retail
33licensees shall be exempt from all state and local sales taxes.
34 Sec. 148. Section 99G.30A, subsection 2, paragraph a, Code
352022, is amended to read as follows:
-63- 1a. The director of revenue shall administer the monitor
2vending machine excise tax as nearly as possible in conjunction
3with the administration of state sales tax laws. The director
4shall provide appropriate forms or provide appropriate entries
5on the regular state tax forms for reporting local sales and
6services tax liability.
7 Sec. 149. Section 279.63, subsection 2, paragraph a, Code
82022, is amended to read as follows:
9a. All property tax levies, and income surtaxes, and local
10option sales taxes in place in the school district, listed by
11type of levy, rate, amount, duration, and notification of the
12maximum rate and amount limitations permitted by statute.
13 Sec. 150. Section 321.40, subsection 5, Code 2022, is
14amended by striking the subsection.
15 Sec. 151. Section 321.130, Code 2022, is amended to read as
16follows:
17321.130 Fees in lieu of taxes.
18The registration fees imposed by this chapter upon private
19passenger motor vehicles or semitrailers are in lieu of all
20state and local taxes, except local vehicle taxes, to which
21motor vehicles or semitrailers are subject.
22 Sec. 152. Section 418.13, subsection 2, Code 2022, is
23amended to read as follows:
242. In addition to the moneys received pursuant to section
25418.10 or 418.12, a governmental entity may deposit in the
26flood project fund any other moneys lawfully received by the
27governmental entity, including but not limited to local sales
28and services tax receipts collected amounts received under
29chapter 423B.
30 Sec. 153. Section 421.26, Code 2022, is amended to read as
31follows:
32421.26 Personal liability for tax due.
33If a licensee or other person under section 452A.65, a
34retailer or purchaser under chapter 423A, 423B, 423C, 423D,
35or 423E, or section 423.14, 423.14A, 423.29, 423.31, 423.32,
-64-1or 423.33, or a user under section 423.34, or a permit holder
2or licensee under section 453A.13, 453A.16, or 453A.44 fails
3to pay a tax under those sections when due, an officer of a
4corporation or association, notwithstanding section 489.304,
5a member or manager of a limited liability company, or a
6partner of a partnership, having control or supervision of
7or the authority for remitting the tax payments and having
8a substantial legal or equitable interest in the ownership
9of the corporation, association, limited liability company,
10or partnership, who has intentionally failed to pay the tax
11is personally liable for the payment of the tax, interest,
12and penalty due and unpaid. However, this section shall
13not apply to taxes on accounts receivable. The dissolution
14of a corporation, association, limited liability company,
15or partnership shall not discharge a person’s liability for
16failure to remit the tax due.
17 Sec. 154. Section 421.28, Code 2022, is amended to read as
18follows:
19421.28 Exceptions to successor liability.
20The immediate successor to a licensee’s or retailer’s
21business or stock of goods under chapter 423A or 423B, or
22section 423.33 or 452A.65, is not personally liable for
23the amount of delinquent tax, interest, or penalty due and
24unpaid if the immediate successor shows that the purchase of
25the business or stock of goods was made in good faith that
26no delinquent tax, interest, or penalty was due and unpaid.
27For purposes of this section the immediate successor shows
28good faith by evidence that the department had provided
29the immediate successor with a certified statement that
30no delinquent tax, interest, or penalty is unpaid, or that
31the immediate successor had taken in good faith a certified
32statement from the licensee, retailer, or seller that no
33delinquent tax, interest, or penalty is unpaid. When requested
34to do so by a person with whom the licensee or retailer is
35negotiating the sale of the business or stock of goods, the
-65-1director of revenue shall, upon being satisfied that such
2a situation exists, inform that person as to the amount of
3unpaid delinquent tax, interest, or penalty due by the licensee
4or the retailer. The giving of the information under this
5circumstance is not a violation of section 422.20, 422.72, or
6452A.63.
7 Sec. 155. Section 421.60, subsection 2, paragraph m,
8subparagraphs (1) and (2), Code 2022, are amended to read as
9follows:
10(1) The director may abate unpaid state sales and use
11taxes and local sales and services taxes owed by a retailer
12in the event that the retailer failed to collect tax from the
13purchaser as a result of erroneous written advice issued by
14the department that was specially directed to the retailer
15by the department and the retailer is unable to collect the
16tax, interest, or penalties from the purchaser. Before the
17tax, interest, and penalties shall be abated on the basis of
18erroneous written advice, the retailer must present a copy of
19the retailer’s request for written advice to the department and
20a copy of the department’s reply. The department shall not
21maintain a position against the retailer that is inconsistent
22with the erroneous written advice, except on the basis of
23subsequent written advice sent by the department to that
24retailer, or a change in state or federal law, a reported
25court case to the contrary, a contrary rule adopted by the
26department, a change in material facts or circumstances
27relating to the retailer, or the retailer’s misrepresentation
28or incomplete or inadequate representation of material facts
29and circumstances in requesting the written advice.
30(2) (a) The director shall abate the unpaid state sales
31and use taxes and any local sales and services taxes owed by a
32retailer where the retailer failed to collect the tax from the
33purchaser on the charges paid for access to on-line computer
34services as a result of erroneous written advice issued by the
35department regarding the taxability of charges paid for access
-66-1to on-line computer services. To qualify for the abatement
2under this subparagraph, the erroneous written advice shall
3have been issued by the department prior to July 1, 1999, and
4shall have been specially directed to the retailer by the
5department.
6(b) If an abatement of unpaid state sales and use taxes and
7any local sales and services taxes is granted to the retailer
8by the director pursuant to this subparagraph, the department
9is precluded from collecting from the purchaser any unpaid
10state sales and use taxes and any local sales and services
11taxes which were abated.
12 Sec. 156. Section 422.72, subsection 6, paragraph a, Code
132022, is amended to read as follows:
14a. The department may enter into a written informational
15exchange agreement for tax administration purposes with a city
16or county which is entitled to receive funds due to a local
17hotel and motel tax or a local sales and services tax. The
18written informational exchange agreement shall designate no
19more than two paid city or county employees that have access to
20actual return information relating to that city’s or county’s
21receipts from a local hotel and motel tax or a local sales and
22services tax.
23 Sec. 157. Section 423.4, subsection 2, paragraph d, Code
242022, is amended by striking the paragraph.
25 Sec. 158. Section 423.4, subsection 5, paragraph f, Code
262022, is amended to read as follows:
27f. Notwithstanding the state sales tax imposed in section
28423.2, a rebate issued pursuant to this subsection shall not
29exceed an amount equal to five percent of the sales price
30of the tangible personal property or services furnished to
31purchasers at the automobile racetrack facility. Any local
32option taxes paid and collected shall not be subject to rebate
33under this subsection.
34 Sec. 159. Section 423.4, subsection 7, paragraph f, Code
352022, is amended to read as follows:
-67- 1f. The refund in this subsection applies only to state
2sales and use tax paid and does not apply to local option
3sales and services taxes imposed pursuant to chapter 423B.
4 Notwithstanding the state sales tax imposed in section 423.2,
5a refund issued pursuant to this section shall not exceed
6an amount equal to five percent of the sales price of the
7fuel used to create heat, power, and steam for processing
8or generating electrical current or from the sale price
9of electricity consumed by computers, machinery, or other
10equipment for operation of the data center business facility.
11 Sec. 160. Section 423.4, subsection 8, paragraph g, Code
122022, is amended to read as follows:
13g. The refund in this subsection applies only to state
14sales and use tax paid and does not apply to local option
15sales and services taxes imposed pursuant to chapter 423B.
16 Notwithstanding the state sales tax imposed in section 423.2,
17a refund issued pursuant to this section shall not exceed an
18amount equal to five percent of the sales price of the items
19listed in paragraph “a”, subparagraphs (1), (2), and (3).
20 Sec. 161. Section 423.14A, subsection 2, Code 2022, is
21amended to read as follows:
222. In addition to and not in lieu of any application of
23this chapter to sellers who are retailers and sellers who are
24retailers maintaining a place of business in this state, any
25person described in subsection 3, or the person’s agents,
26shall be considered a retailer in this state and a retailer
27maintaining a place of business in this state for purposes of
28this chapter on or after January 1, 2019, and shall be subject
29to all requirements of this chapter imposed on retailers and
30retailers maintaining a place of business in this state,
31including but not limited to the requirement to collect and
32remit sales and use taxes pursuant to sections 423.14 and
33423.29, and local option taxes under chapter 423B.
34 Sec. 162. Section 423.33, subsection 1, paragraph c, Code
352022, is amended to read as follows:
-68- 1c. If the retailer fails to collect sales tax at the time
2of the transaction, the retailer shall thereafter remit the
3applicable sales tax, or the purchaser thereafter shall remit
4the applicable use tax. If the purchaser remits all applicable
5use tax, the retailer remains liable for any local sales and
6services tax under chapter 423B that the retailer failed to
7collect.
8 Sec. 163. Section 423.34A, unnumbered paragraph 1, Code
92022, is amended to read as follows:
10A purchaser is relieved of liability for payment of state
11sales or use tax, for payment of any local option sales tax,
12 for payment of interest, or for payment of any penalty for
13nonpayment of tax which nonpayment is not fraudulent, willful,
14or intentional, under the following circumstances:
15 Sec. 164. Section 423.36, subsection 9, paragraph a, Code
162022, is amended to read as follows:
17a. Except as provided in paragraph “b”, purchasers, users,
18and consumers of tangible personal property, specified digital
19products, or enumerated services taxed pursuant to subchapter
20II or III of this chapter or chapter 423B may be authorized,
21pursuant to rules adopted by the director, to remit tax owed
22directly to the department instead of the tax being collected
23and paid by the seller. To qualify for a direct pay tax permit,
24the purchaser, user, or consumer must accrue a tax liability
25of more than four thousand dollars in tax under subchapters
26II and III in a semimonthly period and make deposits and file
27returns pursuant to section 423.31. This authority shall not
28be granted or exercised except upon application to the director
29and then only after issuance by the director of a direct pay
30tax permit.
31 Sec. 165. Section 423B.1, Code 2022, is amended by striking
32the section and inserting in lieu thereof the following:
33423B.1 Use of revenues deposited in the local sales and use
34tax fund — revenue purpose statement.
351. a. Revenues credited to and deposited in each county’s
-69-1account within the local sales and use tax fund shall be
2expended by each recipient county and city as required by the
3revenue purpose statement, subject to the requirements of
4section 423B.7, subsection 7, and approved under this section
5for the city or for the county for the unincorporated areas of
6the county, or as required by subsection 3.
7b. A revenue purpose statement for the use of local option
8sales and services tax revenue previously collected under
9this chapter and in effect on January 1, 2023, and the use of
10revenues received under this chapter for purposes authorized
11under section 423B.10 for ordinances in effect and approved
12before January 1, 2023, shall continue in effect for revenues
13received under this chapter until the expiration of the revenue
14purpose statement or ordinance, if applicable, or until the
15county board of supervisors or city council, as applicable,
16adopts a new revenue purpose statement under subsection 2 or
17repeals or amends the ordinance for the use of revenues under
18section 423B.10.
192. The board of supervisors of each county and the city
20council of each city may adopt by resolution a revenue purpose
21statement for the expenditure of funds received under this
22chapter.
233. Each city and county without a valid revenue purpose
24statement shall expend the revenues received for the following
25purposes in the order prescribed in this subsection, except
26that the payment of bonds for which the revenues have been
27pledged shall be paid first:
28a. Reduction of the county’s basic levies under section
29331.423 or reduction of the city general fund levy under
30section 384.1, as applicable.
31b. Reduction of any debt service levy of the county or city,
32as applicable.
33c. Reduction of the city’s additional taxes levied under
34section 384.12 or the county’s supplemental levies under
35section 331.424, as applicable.
-70- 1d. Reduction of any other property tax levy of the county
2or city, as applicable.
3 Sec. 166. Section 423B.7, subsection 1, Code 2022, is
4amended to read as follows:
51. a. Except as provided in paragraphs paragraph “b” and
6“c”, the director shall credit the local sales and services tax
7receipts and interest and penalties from a county-imposed tax
8 as specified in section 423.2A, subsection 2, paragraph “a”,
9including any interest and penalties, to the county’s account
10in the local sales and services use tax fund for the county in
11 from which the tax was collected. The director shall credit
12the use tax receipts as specified in section 423.43, subsection
131, paragraph “b”, subparagraph (1), including any interest
14and penalties, to the county’s account in the local sales and
15use tax fund for the county from which the use tax was paid.
16 If the director is unable to determine from which county any
17of the receipts were collected or paid, as applicable, those
18receipts shall be allocated among the possible counties based
19on allocation rules adopted by the director.
20b. The director shall credit the designated amount of the
21increase in local sales and services tax receipts, as computed
22in section 423B.10, collected in an urban renewal area of an
23eligible city that has adopted an ordinance pursuant to section
24423B.10, subsection 2, into a special city account in the local
25sales and services use tax fund.
26c. The director shall credit the local sales and services
27tax receipts and interest and penalties from a city-imposed tax
28under section 423B.1, subsection 2, to the city’s account in
29the local sales and services tax fund.
30 Sec. 167. Section 423B.7, subsection 2, paragraph a, Code
312022, as amended by this Act, is amended by striking the
32paragraph and inserting in lieu thereof the following:
33a. The director of revenue by the last day of each month
34shall transfer to each city or county the amount of tax
35receipts remitted to the department attributable to each city
-71-1or county from the preceding month.
2 Sec. 168. Section 423B.7, subsections 3 and 4, Code 2022,
3are amended to read as follows:
43. Seventy-five percent of each county’s account shall be
5remitted on the basis of the county’s population residing in
6the unincorporated area where the tax was imposed and those the
7 incorporated areas where the tax was imposed as follows:
8a. To the board of supervisors a pro rata share based upon
9the percentage of the above population of the county residing
10in the unincorporated area of the county where the tax was
11imposed according to the most recent certified federal census.
12b. To each city in the county where the tax was imposed
13 a pro rata share based upon the percentage of the city’s
14population residing in the county to the above population of
15the county according to the most recent certified federal
16census.
17c. If a subsequent certified census exists which modifies
18that most recent certified federal census for a participating
19 jurisdiction under paragraphs “a” and “b”, the computations
20under paragraphs “a” and “b” shall utilize the subsequent
21certified census in the distribution formula under rules
22established by the director of revenue.
234. Twenty-five percent of each county’s account shall
24be remitted based on the sum of property tax dollars levied
25by the board of supervisors if the tax was imposed in the
26unincorporated areas and by each city in the county where the
27tax was imposed during the three-year period beginning July 1,
281982, and ending June 30, 1985, as follows:
29a. To the board of supervisors a pro rata share based upon
30the percentage of the total property tax dollars levied by the
31board of supervisors during the above three-year period.
32b. To each city council where the tax was imposed a pro rata
33share based upon the percentage of property tax dollars levied
34by the city during the above three-year period of the above
35total property tax dollars levied by the board of supervisors
-72-1and each city where the tax was imposed during the above
2three-year period.
3 Sec. 169. Section 423B.7, subsection 5, Code 2022, is
4amended by striking the subsection.
5 Sec. 170. Section 423B.7, subsections 6 and 7, Code 2022,
6are amended to read as follows:
76. From each special city account under subsection 1,
8paragraph “b”, the sales and services tax revenues shall be
9remitted to the city council for deposit in the special fund
10created in section 403.19, subsection 2, to be used by the city
11as provided in section 423B.10. The distribution from the
12special city account is not subject to the distribution formula
13provided in subsections 3, and 4, and 5.
147. a. Subject to the requirement of paragraph “b” and the
15requirements under section 423B.1, subsection 3, local sales
16and services tax moneys amounts received by a city or county
17may be expended for any lawful purpose of the city or county,
18including but not limited to expenses related to providing
19emergency medical services within the applicable city or
20county.
21b. Each city located in whole or in part in a qualified
22county and each qualified county for the unincorporated area
23for which the imposition of the local sales and services tax
24in the city or portion thereof or the unincorporated area, as
25applicable, was revenue purpose statement approved at election
26 on or after January 1, 2019 2023, shall require the use of
27 not less than fifty percent of the moneys received from the
28qualified county’s applicable county account in the local sales
29and services use tax fund for property tax relief.
30 Sec. 171. Section 423B.9, subsection 1, paragraphs b and c,
31Code 2022, are amended to read as follows:
32b. “Designated portion” means the portion of the local
33option sales and services tax revenues received under this
34chapter which is authorized to be expended for one or a
35combination of purposes under an adopted public measure.
-73- 1c. “Secondary recipient” means a political subdivision of
2the state which is to receive revenues amounts from a local
3option sales and services tax revenues under this chapter
4 over a period of years pursuant to the terms of a chapter 28E
5agreement with one or more cities or counties.
6 Sec. 172. Section 423B.9, subsections 2 and 3, Code 2022,
7are amended to read as follows:
82. An issuer of public bonds which is a recipient of
9revenues from a local option sales and services tax imposed
10 pursuant to this chapter may issue bonds in anticipation of
11the collection of one or more designated portions of the
12local option sales and services tax such revenues and may
13pledge irrevocably an amount of the revenue derived from the
14designated portions for each of the years the bonds remain
15outstanding to the payment of the bonds. Bonds may be issued
16only for one or more of the purposes set forth on the ballot
17proposition concerning the imposition of the local option sales
18and services tax in the revenue purpose statement, except bonds
19shall not be issued which are payable from that portion of tax
20revenues designated for property tax relief. The bonds may be
21issued in accordance with the procedures set forth in either
22subsection 3 or 4.
233. The governing body of an issuer may authorize the
24issuance of bonds which are payable from the designated portion
25of the revenues of the local option sales and services tax
26 received under this chapter, and not from property tax, by
27following the authorization procedures set forth for cities
28in section 384.83. Bonds may be issued for the purpose of
29refunding outstanding and previously issued bonds under this
30subsection without otherwise complying with the provisions of
31this subsection.
32 Sec. 173. Section 423B.9, subsection 4, paragraph b, Code
332022, is amended to read as follows:
34b. The provisions of chapter 76 apply to the bonds payable
35as provided in this subsection, except that the mandatory levy
-74-1to be assessed pursuant to section 76.2 shall be at a rate
2to generate an amount which together with the receipts from
3the pledged designated portion of the local option sales and
4services tax revenues received under this chapter is sufficient
5to pay the interest and principal on the bonds. All amounts
6collected as a result of the levy assessed pursuant to section
776.2 and paid out in the first instance for bond principal
8and interest shall be repaid to the bond issuer which levied
9the tax from the first available designated portion of local
10option sales and services tax collections revenues received
11under this chapter in excess of the requirement for the payment
12of the principal and interest of the bonds and when repaid
13shall be applied in reduction of property taxes. The amount
14of bonds which may be issued under section 76.3 shall be the
15amount which could be retired from the actual collections of
16the designated portions of the local option sales and services
17tax revenues received under this chapter for the last four
18calendar quarters, as certified by the director of revenue.
19The amount of tax revenues pledged jointly by other cities or
20counties may be considered for the purpose of determining the
21amount of bonds which may be issued. If the local option sales
22and services tax has been in effect revenues have been received
23under this chapter for less than four calendar quarters, the
24tax collected revenues received within the shorter period may
25be adjusted to project the collections amount of the designated
26portion for the full year for the purpose of determining the
27amount of the bonds which may be issued. The provisions of
28this section constitute separate authorization for the issuance
29of bonds and shall prevail in the event of conflict with
30any other provision of the Code limiting the amount of bonds
31which may be issued or the source of payment of the bonds.
32Bonds issued under this section shall not limit or restrict
33the authority of the bond issuer to issue bonds under other
34provisions of the Code.
35 Sec. 174. Section 423B.9, subsection 5, Code 2022, is
-75-1amended to read as follows:
25. A city or county, jointly with one or more other
3political subdivisions as provided in chapter 28E, may pledge
4irrevocably any amount derived from the designated portions
5of the revenues of the local option sales and services tax
6 received under this chapter to the support or payment of bonds
7of an issuer, issued for one or more purposes set forth on
8the ballot proposition concerning the imposition of the local
9option sales and services tax in the revenue purpose statement
10 or a political subdivision may apply the proceeds of its bonds
11to the support of any such purpose.
12 Sec. 175. Section 423B.10, subsection 1, paragraph b, Code
132022, is amended to read as follows:
14b. “Eligible city” means a city in which a local sales and
15services tax imposed by the county applies or a city described
16in section 423B.1, subsection 2, paragraph “a”, and in which an
17urban renewal area has been designated.
18 Sec. 176. Section 423B.10, subsections 2, 3, 5, and 6, Code
192022, are amended to read as follows:
202. a. Upon approval by the board of supervisors of each
21applicable county pursuant to paragraph “b”, an eligible city
22may by ordinance of the city council provide for the use of a
23designated amount of the increased local sales and services
24tax revenues collected received under this chapter which are
25attributable to retail establishments in an urban renewal
26area to fund urban renewal projects located in the area. The
27designated amount may be all or a portion of such increased
28revenues.
29b. A city shall not adopt an ordinance under paragraph
30“a” unless the board of supervisors of each county where the
31urban renewal area from which such local sales and services
32tax revenues are to be collected and used to fund urban
33renewal projects is located first adopts a resolution approving
34the collection and use of such local sales and services tax
35revenues.
-76- 13. To determine the revenue increase for purposes of
2subsection 2, revenue amounts shall be calculated by the
3department of revenue as follows:
4a. Determine the amount of local sales and services tax
5revenue collected and attributable to a one percent sales and
6services tax from retail establishments located in the area
7comprising the urban renewal area during the base year.
8b. Determine the current year one percent sales and services
9tax revenue amount for each fiscal year following the base year
10in the manner specified in paragraph “a”.
11c. The excess of the amount determined in paragraph “b” over
12the base year revenue amount determined in paragraph “a” is the
13increase in the local sales and services tax revenues of which
14the designated amount is to be deposited in the special city
15account created in section 423B.7, subsection 6.
165. In addition to the moneys received pursuant to the
17ordinance authorized under subsection 2, an eligible city
18may deposit any other local sales and services tax revenues
19received by it the city pursuant to the distribution formula in
20section 423B.7, subsections 3, 4, and 5, to the special fund
21described in section 403.19, subsection 2.
226. For purposes of this section, the eligible city shall
23assist the department of revenue in identifying retail
24establishments in the urban renewal area that are collecting
25the local sales and services tax. This process shall be
26ongoing until the ordinance is repealed.
27 Sec. 177. REPEAL. 2019 Iowa Acts, chapter 151, section 21,
28is repealed.
29 Sec. 178. REPEAL. Sections 423B.2, 423B.3, 423B.4, 423B.5,
30423B.6, and 423B.8, Code 2022, are repealed.
31 Sec. 179. EFFECTIVE DATE. This division of this Act takes
32effect January 1, 2023.
33DIVISION XXIII
34NATURAL RESOURCES AND OUTDOOR RECREATION TRUST FUND
35 Sec. 180. Section 2.45, Code 2022, is amended by adding the
-77-1following new subsection:
2 NEW SUBSECTION. 5A. a. The legislative natural resources
3and outdoor recreation trust fund review committee which
4shall be composed of ten members of the general assembly,
5consisting of five members from each chamber, to be appointed
6by the legislative council. In appointing the five members
7of each chamber to the committee, the council shall appoint
8three members from the majority party and two members from the
9minority party.
10b. The legislative natural resources and outdoor recreation
11trust fund review committee shall have the powers and duties
12described in section 2.49.
13c. This subsection is repealed December 31, 2051.
14 Sec. 181. NEW SECTION. 2.49 Legislative natural resources
15and outdoor recreation trust fund review committee.
161. The legislative natural resources and outdoor recreation
17trust fund review committee shall meet during the legislative
18interim in calendar years 2030, 2040, and 2050. The committee
19shall consider the most effective ways to manage trust fund
20moneys to further the purpose of Article VII, section 10, of
21the Constitution of the State of Iowa. As part of its duties,
22the committee may consider any of the following:
23a. The administration of the trust fund, trust accounts, and
24designated funds as provided in chapter 461.
25b. The effectiveness of initiatives supported by trust fund
26moneys as provided in chapter 461.
272. The committee shall report to the legislative council
28the results of its considerations, which may include
29recommendations and proposed legislation for consideration
30during the next session of the general assembly.
313. This section is repealed December 31, 2051.
32 Sec. 182. Section 8.57, subsection 5, paragraph f,
33subparagraph (1), subparagraph division (c), Code 2022, is
34amended by striking the subparagraph division.
35 Sec. 183. Section 8.57, subsection 5, paragraph f,
-78-1subparagraph (1), subparagraph division (f), Code 2022, is
2amended to read as follows:
3(f) For the fiscal year beginning July 1, 2018, and for
4each fiscal year thereafter, the total moneys in excess of the
5moneys deposited under this paragraph “f” in the revenue bonds
6debt service fund, the revenue bonds federal subsidy holdback
7fund, the vision Iowa fund, the water quality infrastructure
8fund, the Iowa skilled worker and job creation fund, and the
9general fund of the state shall be deposited in the rebuild
10Iowa infrastructure fund and shall be used as provided in this
11section, notwithstanding section 8.60.
12 Sec. 184. Section 8.57B, subsection 1, Code 2022, is amended
13to read as follows:
141. a. A water quality infrastructure fund is created within
15the division of soil conservation and water quality of the
16department of agriculture and land stewardship.
17b. The fund shall consist of moneys deposited in the
18fund pursuant to section 8.57, subsection 5, paragraph “f”,
19subparagraph (1), subparagraph division (c), moneys all of the
20following:
21(1) (a) Moneystransferred to the fund pursuant to section
22423G.6, and 461.33.
23(b) This subparagraph (1) is repealed December 31, 2051.
24(2) Moneys transferred orappropriations made to the fund
25and transfers of interest, earnings, and moneys from other
26funds as provided by law.
27 Sec. 185. Section 16.134A, subsection 2, paragraph a,
28subparagraphs (1) and (2), Code 2022, are amended to read as
29follows:
30(1) Moneys transferred to the fund pursuant to section
31423G.6 461.34.
32(2) This paragraph “a” is repealed on January 1, 2040
33 December 31, 2051.
34 Sec. 186. Section 455A.17, Code 2022, is amended by striking
35the section and inserting in lieu thereof the following:
-79- 1455A.17 Regional meetings.
21. Beginning in calendar year 2023, and every four
3calendar years thereafter, the department shall arrange
4and conduct regional meetings to identify opportunities for
5regional resource enhancement and protection, and to review
6and recommend changes in resource enhancement and protection
7policies, programs, and funding. The department shall provide
8outreach and educational services to those attending, which
9shall include the distribution of information regarding
10resource enhancement and protection expenditures. The
11department shall promote attendance of interested persons for
12each regional meeting.
132. The expenses of the department in making the arrangements
14for and conducting regional meetings and providing outreach and
15educational services shall be paid from moneys credited to the
16administration fund created in section 456A.17.
17 Sec. 187. Section 455A.18, subsection 1, Code 2022, is
18amended to read as follows:
191. a. An Iowa resources enhancement and protection fund is
20created in the office of the treasurer of state.
21b. The fund consists of all revenues of the following:
22(1) (a) Moneys allocated from the natural resources and
23outdoor recreation trust fund as provided in section 461.35.
24(b) This subparagraph (1) is repealed December 31, 2051.
25(2) Revenuesand all other moneys lawfully credited or
26transferred to the fund. The director shall certify monthly
27the portions of the fund that are allocated to the various
28accounts as provided under section 455A.19. The director shall
29certify before the twentieth of each month the portions of
30the fund resulting from the previous month’s receipts to be
31allocated to the various accounts.
32 Sec. 188. Section 455A.18, subsection 3, paragraph a, Code
332022, is amended by striking the paragraph.
34 Sec. 189. Section 455A.18, subsection 3, paragraph b, Code
352022, is amended to read as follows:
-80- 1b. Section 8.33 does not apply to moneys appropriated under
2this subsection credited to the fund.
3 Sec. 190. Section 461.2, Code 2022, is amended to read as
4follows:
5461.2 Definitions.
6As used in this chapter, unless the context otherwise
7requires:
81. “Authority” means the economic development authority
9created in section 15.105.
102. “Department” “Custodial department” means the department
11of agriculture and land stewardship, the department of
12management, the department of natural resources, or the
13department of transportation.
143. “Designated fund” means the water quality infrastructure
15fund created in section 8.57B, the water quality financial
16assistance fund created in section 16.134A, or the Iowa
17resources enhancement and protection fund created in section
18455A.18.
192. 4. “Fiscal year” means the state fiscal year effective
20as provided in section 3.12.
213. 5. “Initiative” includes a program, project, practice,
22strategy, or plan established or administered by an agency that
23furthers, or under the supervision or oversight of, a custodial
24department or the Iowa finance authority, if the initiative is
25supported in whole or in part by trust fund moneys to further a
26constitutional purpose as provided in section 461.3.
276. “Iowa nutrient reduction strategy” means the same as
28defined in section 455B.171.
297. “Nonpoint source” means a source of pollution other than
30a point source.
318. “Point source” means the same as defined in section
32455B.171.
339. “Public use area” means a park, preserve, recreation
34area, forest, water body, or a land or water trail owned or
35managed by the state or a political subdivision of the state.
-81- 14. 10. “Recreational purpose” includes means only hunting,;
2 trapping,; angling,; horseback riding,; swimming,; boating,;
3 camping,; picnicking,; hiking,; biking; recreational shooting;
4archery; using land or water trails; bird watching,; nature
5study,; water skiing,; snowmobiling;, other summer and winter
6sports, and viewing or enjoying historical, archaeological,
7scenic, or scientific sites.
811. “Trust account” means the natural resources trust
9account created in section 461.32, the soil conservation and
10nonpoint source water protection trust account created in
11section 461.33, the watershed protection trust account created
12in section 461.34, the local conservation partnership trust
13account created in section 461.36, the water and land trails
14trust account created in section 461.37, or the lake and stream
15restoration trust account created in section 461.38.
165. 12. “Trust fund” means the natural resources and outdoor
17recreation trust fund created in section 461.31.
186. 13. “Trust fund moneys” means moneys originating from
19 credited to the natural resources and outdoor recreation trust
20fund or moneys allocated from the trust fund, including but not
21limited to moneys allocated to a trust account or allocated or
22transferred to a designated fund.
2314. “Water trail” means a point-to-point travel system on a
24navigable water body capable of supporting a floating vessel
25capable of carrying one or more persons on a recommended route
26connecting the points.
27 Sec. 191. Section 461.3, Code 2022, is amended to read as
28follows:
29461.3 Constitutional purpose, and implementation, and
30revenue.
311. This chapter is created for the constitutional purposes
32of protecting and enhancing water quality and natural areas
33in this state, including parks, trails, and fish and wildlife
34habitat, and conserving agricultural soils in this state.
352. This chapter is intended to implement Article VII,
-82-1section 10, of the Constitution of the State of Iowa by
2establishing the natural resources and outdoor recreation
3trust fund, accounts in the including trust fund accounts,
4and appropriating or allocating trust fund moneys to support
5initiatives specified in subchapter IV. This chapter shall not
6be construed to require the state to appropriate, allocate,
7or transfer other moneys to support those initiatives or
8constitutional purposes.
9 Sec. 192. Section 461.11, subsection 2, Code 2022, is
10amended to read as follows:
112. The heads of each department receiving trust fund moneys
12 the custodial departments and the director of the authority
13 shall regularly meet and whenever practicable collaborate in
14decision making including by adopting rules providing for
15the administration of the trust fund and trust accounts,
16establishing funding priorities, and determining when it is
17beneficial to provide joint funding of initiatives.
18 Sec. 193. NEW SECTION. 461.20 Information regarding trust
19fund moneys.
201. Each year the department of revenue shall calculate
21an estimate of the total revenue to be transferred to the
22trust fund during the following fiscal year as required
23pursuant to section 423.2A. Not later than May 1 of each
24year, the department of revenue shall submit the estimate to
25each custodial department, the authority, and the legislative
26services agency.
272. A custodial department shall at least annually notify the
28legislative services agency of transfers of trust fund moneys
29from a trust account to another trust account or designated
30fund as authorized in this chapter.
31 Sec. 194. Section 461.21, Code 2022, is amended to read as
32follows:
33461.21 Audit.
341. The auditor of state or a certified public accounting
35firm appointed by the auditor of state shall conduct an annual
-83-1 audit of the trust fund and all trust accounts and transactions
2of the trust fund and trust accounts in the same manner as
3provided for departments pursuant to chapter 11, subchapter I.
42. The auditor of state or the certified public accounting
5firm appointed by the auditor as provided in subsection 1
6shall be paid from trust fund moneys without reducing the
7percentage of trust fund moneys distributed allocated to the
8Iowa resources enhancement and protection fund or any one a
9trust account established or designated fund pursuant to this
10chapter subchapter IV.
11 Sec. 195. Section 461.22, Code 2022, is amended to read as
12follows:
13461.22 Report Trust fund report.
14The three departments department of management shall jointly
15prepare and submit to the governor and the general assembly not
16later than January 15 of each year a complete trust fund report
17in an electronic format detailing all of the following:
181. The receipts and expenditures of the trust fund and its
19trust accounts, a summary of initiatives supported by trust
20fund moneys, the results of those expenditures, any performance
21goals or measurements, and plans for future short-term or
22long-term expenditures.
232. Recommendations An evaluation of the use of trust fund
24moneys to further progress in achieving the goals of the Iowa
25nutrient reduction strategy as prepared by the department of
26agriculture and land stewardship, the department of natural
27resources, and the college of agriculture and life sciences
28of the Iowa state university of science and technology. The
29evaluation shall be based on the latest credible findings and
30recommendations recognized by those entities. The evaluation
31may include recommendations to the governor and general
32assembly, including legislation proposed by one or more of the
33departments entities.
34 Sec. 196. Section 461.23, Code 2022, is amended to read as
35follows:
-84- 1461.23 Rules.
2The department of revenue, the department of agriculture and
3land stewardship, the department of management, the department
4of natural resources, and the department of transportation, the
5Iowa finance authority, and the economic development authority
6 shall adopt rules separately or jointly as necessary in order
7to implement and administer this chapter.
8 Sec. 197. Section 461.24, Code 2022, is amended by striking
9the section and inserting in lieu thereof the following:
10461.24 Public listing.
11The department of management shall publish and maintain a
12public listing of moneys credited to and allocated from the
13trust fund, trust fund moneys allocated or transferred from
14trust accounts, and trust fund moneys allocated or transferred
15to designated funds to support initiatives. This section does
16not require the disclosure of information that is confidential
17as provided by rules adopted pursuant to section 461.23.
18 Sec. 198. NEW SECTION. 461.25 Use of trust fund moneys.
191. A custodial department shall not appropriate, allocate,
20or transfer trust fund moneys except as provided in this
21chapter. However, this subsection shall not be construed to
22limit a custodial department from using trust fund moneys with
23another person, including a custodial department, when engaging
24in a joint initiative as authorized by law.
252. During any fiscal year, a custodial department shall not
26use more than five percent of trust fund moneys allocated to
27a trust account to pay for expenses incurred in administering
28trust fund moneys allocated to that trust account.
293. In administering the use of trust fund moneys allocated
30to a trust account, a custodial department shall provide a
31higher priority to supporting initiatives that further goals of
32the Iowa nutrient reduction strategy.
334. A custodial department shall administer the use of
34trust fund moneys to support an initiative having primarily
35a recreational purpose only if such use is in cooperation
-85-1with the authority. The authority shall review, score, and
2rank applications to support such initiatives as part of a
3competitive evaluation process. The scoring criteria must
4further the economic development policy of the state as
5provided in chapter 15.
65. When making a determination to support competing
7proposed initiatives relating to a public use area that
8benefits a locality, a custodial department or the authority
9shall provide a higher priority to supporting an initiative to
10improve an existing public use area.
116. When making a determination to support a proposed
12initiative to establish, improve, or expand a land trail,
13the proposal shall not be approved unless the sponsor of the
14proposal demonstrates to the custodial department or other
15entity making the funding decision how the trail is to be
16maintained by other sources of revenue.
177. In administering the use of trust fund moneys allocated
18to a trust account to support an initiative relating to
19the management of land, this chapter does not do any of the
20following:
21a. Prohibit the farming of the land in a manner that is
22consistent with the Iowa nutrient reduction strategy.
23b. Require a separation distance between an animal feeding
24operation and a public use area that is more restrictive than
25if the land were not managed pursuant to the initiative.
268. Trust fund moneys shall not be used to support any of the
27following:
28a. An initiative that establishes, improves, or expands a
29single or multipurpose athletic field, baseball or softball
30diamond, tennis court, golf course, swimming pool, or other
31group or organized sport facility.
32b. The taking of property by exercising the power of eminent
33domain, including by acquiring property as provided in chapters
346A and 6B.
35 Sec. 199. Section 461.31, Code 2022, is amended to read as
-86-1follows:
2461.31 Natural resources and outdoor recreation trust fund
3— creation.
41. A natural resources and outdoor recreation trust fund
5is created within the state treasury. The trust fund shall be
6administered by the department of management.
72. a. The trust fund shall be composed comprised of moneys
8 all of the following:
9(1) Moneys transferred to the trust fund pursuant to section
10423.2A.
11(2) Other moneysrequired to be credited to the trust
12fund by law and moneys accepted by a custodial department for
13placement in an account established in this subchapter and the
14trust fund from any source.
15b. Trust fund moneys are exclusively appropriated by law
16to carry out the constitutional purposes provided described in
17section 461.3.
18c. Trust fund moneys shall supplement and not replace
19moneys appropriated by the general assembly to support the
20constitutional purposes provided in section 461.3.
21d. Trust fund moneys shall only be used to support voluntary
22initiatives and shall not be used for regulatory efforts,
23enforcement actions, or litigation.
243. In administering a trust fund account, a custodial
25 department may contract, sue and be sued, and authorize payment
26for costs, fees, commissions, and other reasonable expenses
27from the trust account. However, a custodial department shall
28not in any manner directly or indirectly pledge the credit of
29this state.
304. a. Except as provided in paragraph “b”, the treasurer
31of state shall, each month as directed by the department of
32management, allocate all trust fund moneys that have been
33credited to the trust fund, including moneys transferred to the
34trust fund as provided in section 423.2A, to each trust account
35and designated fund as provided in this subchapter.
-87- 1b. Notwithstanding sections 461.32 through 461.38, for the
2fiscal year beginning July 1, 2023, and for each subsequent
3fiscal year, only that amount as authorized by an Act of
4the general assembly shall be allocated from the trust fund
5to a trust account or designated fund as provided in this
6subchapter. However, if for a fiscal year no Act of the
7general assembly authorizes trust fund moneys to be allocated
8from the trust fund, the trust fund moneys shall be allocated
9from the trust fund to the trust accounts and designated funds
10as provided in this subchapter by operation of law.
115. a. Notwithstanding section 8.33, any unexpended balance
12in the trust fund or in an a trust account created within the
13trust fund at the end of each fiscal year shall be retained in
14the trust fund or the respective trust account.
15b. Notwithstanding section 12C.7, subsection 2, interest or
16earnings on investments or time deposits of the moneys in the
17trust fund and its respective trust accounts shall be credited
18to the trust fund and its respective trust accounts.
19c. The recapture of awards originating from an a trust
20 account and other repayments to an a trust account shall be
21retained in that trust account.
22 Sec. 200. Section 461.32, Code 2022, is amended to read as
23follows:
24461.32 Natural resources trust account — allocations.
251. A natural resources trust account is created in the trust
26fund. Twenty-three The trust account shall be administered by
27the department of natural resources.
282. Eighteenpercent of the moneys credited to the trust fund
29shall be allocated to the trust account.
302. 3. The trust account shall be used by the department of
31natural resources to support all of the following initiatives:
32a. The establishment, restoration, or enhancement of state
33parks, state preserves, state forests, wildlife areas, wildlife
34habitats, native prairies, and wetlands.
35(1) A higher priority shall be provided to supporting
-88-1initiatives for the maintenance, preservation, or restoration
2of land and a lower priority shall be provided to supporting
3initiatives for the purchase or acquisition of land.
4(2) The department shall utilize an index that includes a
5comprehensive assessment mechanism to produce a statistically
6verifiable basis for determining whether to approve or
7disapprove the purchase or acquisition of the land. The
8department shall establish index criteria that justifies the
9land’s removal from private ownership and use.
10b. The construction or improvement of facilities located on
11land owned or managed by the department.
12b. c. Wildlife diversity.
13c. d. Recreational purposes.
14d. e. Technical assistance and financial incentives
15provided to private landowners to promote the management of
16forests, fisheries, recreational areas, wetlands, and wildlife.
17e. f. The improvement of water trails, rivers, and streams.
18f. g. Education and outreach that provide instruction
19regarding natural history and the outdoors. The subjects
20of such instruction may relate to opportunities involving a
21 recreational purposes purpose, outdoor safety, and or ethics.
223. The department of natural resources shall to every extent
23possible consider its comprehensive plan provided in section
24456A.31 when making funding decisions.
25 Sec. 201. Section 461.33, Code 2022, is amended to read as
26follows:
27461.33 Soil conservation and nonpoint source water protection
28trust account — allocations.
291. A soil conservation and nonpoint source water protection
30trust account is created in the trust fund. Twenty The trust
31account shall be administered by the department of agriculture
32and land stewardship.
332. Thirty-fourpercent of the moneys credited to the trust
34fund shall be allocated to the trust account.
353. Forty-seven percent of trust fund moneys allocated to
-89-1the trust account shall first be transferred as directed by the
2department to any or all of the following:
3a. The water quality infrastructure fund created in section
48.57B to support water quality agriculture infrastructure
5programs created in section 466B.43 in order to reduce nutrient
6loads from nonpoint sources.
7b. The water quality financial assistance fund created
8in section 16.134A to support the water quality urban
9infrastructure program created in section 466B.44.
102. 4. a. The account shall be used by the department of
11agriculture and land stewardship remaining trust fund moneys
12allocated to the trust account shall be used by the department
13 to support all of the following initiatives:
14a. (1) Soil conservation and watershed protection,
15including by supporting the department’s division of
16soil conservation and water quality within the department
17of agriculture and land stewardship and soil and water
18conservation district commissioners. The department and
19commissioners may provide for the installation establishment of
20conservation practices and watershed protection improvements as
21provided in chapters 161A, 161C, 461A, and 466, and 466B.
22b. (2) The conservation of highly erodible land. The
23department of agriculture and land stewardship may execute
24contracts with private landowners who agree to reserve such
25land only for uses that prevent erosion in excess of the
26applicable soil loss limits as established in section 161A.44.
27c. (3) Soil conservation or crop management practices
28used on land producing biomass for biorefineries, including
29cellulosic ethanol production.
303. b. The department of agriculture and land stewardship
31 may use unencumbered or unobligated trust fund moneys allocated
32to the trust account to provide financial incentives or
33technical assistance to landowners.
345. During a fiscal year, the department may transfer
35unencumbered or unobligated trust fund moneys allocated to
-90-1the trust account for use by the department as is provided in
2subsection 4 to any of the following:
3a. The water quality infrastructure fund created in section
48.57B to support water quality agriculture infrastructure
5programs created in section 466B.43 in order to reduce nutrient
6loads from nonpoint sources.
7b. The water quality financial assistance fund created
8in section 16.134A to support the water quality urban
9infrastructure program created in section 466B.44.
10 Sec. 202. Section 461.34, Code 2022, is amended to read as
11follows:
12461.34 Watershed protection trust account — allocations.
131. A watershed protection trust account is created in the
14trust fund. Fourteen The trust account shall be administered
15by the department of natural resources.
162. Fifteenpercent of the moneys credited to the trust fund
17shall be allocated to the trust account.
183. Forty-seven percent of trust fund moneys allocated
19to the trust account shall first be transferred to the water
20quality financial assistance fund created in section 16.134A
21for appropriation as provided in that section.
222. 4. The account Of the remaining trust fund moneys
23allocated to the trust account, fifty percent shall be used
24cooperatively distributed for use by the department of
25natural resources and the department of agriculture and land
26stewardship to support all of the following initiatives:
27a. Water water quality resource projects administered by
28the department of natural resources to preserve watersheds,
29including but not limited to all of the following:
30(1) a. Projects to protect, restore, or enhance water
31quality in the state through the provision of financial
32assistance to communities for impairment-based, locally
33directed watershed projects. The department may use the
34account trust fund moneys to support the water resource
35restoration sponsor program as provided in section 455B.199.
-91- 1(2) b. Regional and community watershed assessment,
2planning, and prioritization efforts, including as provided in
3chapter 466B.
4c. Water quality protection programs provided in section
5466.7 that relate to any of the following:
6(1) The administration of geographic information systems
7for use in developing, monitoring, and displaying local
8watershed information.
9(2) An activity to support the collection and analysis of
10water quality monitoring.
11(3) Floodplain permitting.
12(4) Flood protection education to provide information to
13local officials regarding floodplain management.
14b. 5. Surface Of the remaining trust fund moneys allocated
15to the trust account, fifty percent shall be distributed for
16use by the department of agriculture and land stewardship
17to support surface water protection projects and practices
18administered by the department of agriculture and land
19stewardship or the department of natural resources, as
20described in the Iowa nutrient reduction strategy including but
21not limited to the installation of permanent vegetation cover,
22filter strips, grass waterways, edge-of-field practices, and
23riparian forest buffers; dredging; and bank stabilization. The
24departments of agriculture and land stewardship and natural
25resources department may use the account trust fund moneys
26 to support the conservation buffer strip program provided in
27section 466.4 and the conservation reserve enhancement program
28as provided in section 466.5.
293. 6. The departments’ A decision by a department to
30prioritize initiatives may be based on the priority list of
31watersheds provided in section 456A.33A.
327. During a fiscal year, the department of natural
33resources or the department of agriculture and land stewardship
34may transfer unencumbered or unobligated trust fund moneys
35distributed to the custodial department pursuant to subsection
-92-14 or 5 to the water quality financial assistance fund created
2in section 16.134A.
3 Sec. 203. Section 461.35, Code 2022, is amended to read as
4follows:
5461.35 Iowa resources enhancement and protection fund —
6allocation.
7Thirteen Ten percent of the moneys credited to the trust
8fund shall be allocated to the Iowa resources enhancement
9and protection fund created in section 455A.18 for further
10allocation as provided in section 455A.19.
11 Sec. 204. Section 461.36, Code 2022, is amended by striking
12the section and inserting in lieu thereof the following:
13461.36 Local conservation partnership trust account —
14allocations.
151. A local conservation partnership trust account is
16created in the trust fund. The trust account shall be
17administered by the department of natural resources.
182. Nine percent of the moneys credited to the trust fund
19shall be allocated to the trust account.
203. The department shall allocate the trust fund moneys
21credited to the account to local communities participating
22in the local conservation partnership program as provided in
23section 461.36A.
24 Sec. 205. NEW SECTION. 461.36A Local conservation
25partnership program.
261. As used in this section, unless the context otherwise
27requires:
28a. “Department” means the department of natural resources.
29b. “Local community” includes a political subdivision or
30a watershed management authority created pursuant to section
31466B.22.
322. The department shall establish and administer a local
33conservation partnership program to provide financing to local
34communities to do any of the following:
35a. Maintain and improve parks, preserves, wildlife areas,
-93-1wildlife habitats, native prairies, forests, or wetlands.
2b. Promote wildlife diversity.
3c. Further a recreational purpose.
4d. Improve rivers and streams.
5e. Sponsor education and outreach programs and projects that
6provide instruction regarding natural history and the outdoors.
7The subjects of such instruction may relate to opportunities
8involving a recreational purpose, outdoor safety, or ethics.
9The programs and projects may assist Iowa students studying in
10fields of science, technology, engineering, and mathematics.
11f. Further any other purpose described in section 350.1.
123. As part of a local conservation partnership under the
13program, two or more local communities may enter into chapter
1428E agreements, and a local community may cooperate with
15the federal government or a nongovernmental organization.
16A nongovernmental organization shall not be eligible to
17participate in a local community partnership under the program
18unless the nongovernmental organization submits an application
19in association with a political subdivision or county
20conservation board and enters into a chapter 28E agreement with
21the political subdivision or county conservation board.
224. a. A local community is not eligible to receive moneys
23from the department under the program to support a local
24conservation partnership, unless the local community finances
25a minimum percentage of the estimated or total cost of the
26initiative, whichever is less.
27b. The minimum amount of the cost-share contribution by a
28local community, as described in paragraph “a”, shall be as
29follows:
30(1) Ten percent for a local community located in a county
31having a population of fifteen thousand or less.
32(2) Twenty-five percent for a local community located in a
33county having a population of more than fifteen thousand but
34less than one hundred thousand.
35(3) Seventy-five percent for a local community located in a
-94-1county having a population of one hundred thousand or more.
2 Sec. 206. Section 461.37, Code 2022, is amended to read as
3follows:
4461.37 Trails Water and land trails trust account —
5allocations.
61. A water and land trails trust account is created in the
7trust fund. Ten The trust account shall be administered by the
8department of transportation.
92. Fourpercent of the moneys credited to the trust fund
10shall be allocated to the trust account.
112. 3. The Of the amount of trust fund moneys allocated
12to the trust account, fifty percent shall be distributed for
13use by the department of transportation and the department of
14natural resources shall use moneys in the account to support
15initiatives related to the design, establishment, maintenance,
16improvement, and expansion of land trails.
173. 4. The Of the amount of trust fund moneys allocated to
18the trust account, fifty percent shall be distributed for use
19by the department of natural resources may use the account to
20support the design, establishment, maintenance, improvement,
21and expansion of water trails. The department shall provide
22priority to stream restoration.
235. a. During a fiscal year, and pursuant to an agreement
24between the department of transportation and the department
25of natural resources, either custodial department that is
26distributed trust fund moneys for use under this section may
27transfer unencumbered or unobligated trust fund moneys to the
28other custodial department for use by the other custodial
29department as provided in this section.
30b. During a fiscal year, and pursuant to an agreement
31between the department of transportation and the department
32of natural resources, the department of transportation
33may transfer unencumbered or unobligated trust fund moneys
34allocated to the trust account and distributed for use by
35the department of transportation to another trust account
-95-1administered by the department of natural resources for use by
2the department of natural resources.
3 Sec. 207. Section 461.38, Code 2022, is amended to read as
4follows:
5461.38 Lake and stream restoration trust account —
6allocations.
71. A lake and stream restoration trust account is created in
8the trust fund. Seven The trust account shall be administered
9by the department of natural resources.
102. Tenpercent of the moneys credited to the trust fund
11shall be allocated to the trust account.
122. 3. The department of natural resources shall use moneys
13in allocated to the trust account to support public all of the
14following:
15a. Publiclake restoration initiatives as follows:
16a. (1) An initiative shall account for a lake’s
17recreational purpose, and provide for environmental, aesthetic,
18ecological, and social value. It must improve water quality
19 further a goal of the Iowa nutrient reduction strategy.
20b. (2) The department’s A decision by the department to
21prioritize an initiative may be based on the department’s lake
22restoration plan and report as provided in section 456A.33B and
23the Iowa nutrient reduction strategy.
24b. The stabilization and restoration of stream banks.
25 Sec. 208. NEW SECTION. 461.51 Repeal.
26This chapter is repealed December 31, 2051.
27 Sec. 209. CODE EDITOR DIRECTIVE.
281. The Code editor is directed to make the following
29transfers:
30a. Section 461.36A, as enacted in this division of this Act,
31to section 455A.31.
32b. Section 461.35, as amended in this division of this Act,
33to section 461.41.
342. The Code editor shall correct internal references in the
35Code and in any enacted legislation as necessary due to the
-96-1enactment of this section.
2 Sec. 210. REPEAL. Section 455A.20, Code 2022, is repealed.
3 Sec. 211. EFFECTIVE DATE. This division of this Act takes
4effect January 1, 2023.
5DIVISION XXIV
6contingent code editor directive
7 Sec. 212.CONTINGENT CODE EDITOR DIRECTIVE.
8The Code editor is directed to harmonize amendments to
9sections 421.26, 422.33, 423B.5, 423B.6, and 423B.7, if
10necessary, which are amended by two or more divisions of this
11Act, and to harmonize any other Code provision amended in two
12or more operations or divisions of this Act, and to make other
13related changes, if necessary, to effectuate such changes.
14EXPLANATION
15The inclusion of this explanation does not constitute agreement with
16the explanation’s substance by the members of the general assembly.
17This bill relates to state and local revenue and finances
18and modifies sales and use taxes, individual and corporate
19income taxes, the franchise tax, the insurance premiums tax,
20the equipment tax, the automobile rental excise tax, the water
21service tax, the local option tax, and credits moneys to the
22natural resource and outdoor recreation trust fund.
23DIVISION I — SALES AND USE TAX. An amendment to the Iowa
24Constitution was ratified on November 2, 2010, which created
25a natural resources and outdoor recreation trust fund (fund)
26and dedicated a portion of state revenues to the fund for
27the purposes of protecting and enhancing water quality and
28natural areas in the state including parks, trails, and fish
29and wildlife habitat, and conserving agricultural soils in
30the state (Article VII, section 10). The fund is codified in
31Code section 461.31. Pursuant to the amendment, the amount
32credited to the fund will be equal to the amount generated
33by an increase in the state sales tax rate occurring after
34the effective date of the constitutional amendment, but shall
35not exceed the amount that a state sales tax rate of 0.375
-97-1percent would generate. The state sales tax rate has not
2been increased since the effective date of the constitutional
3amendment, so no amounts have been credited to the fund. The
4bill increases the sales tax rate and the use tax rate from 6
5percent to 7 percent beginning January 1, 2023. In lieu of the
6local option and sales services tax revenue repealed in another
7division of the bill, the bill transfers a specified amount of
8the state sales and use tax revenues collected to the local
9sales and use tax fund established under Code chapter 423B,
10for allocation and expenditure in a manner similar to that
11which was provided for local sales and services tax revenues.
12The bill, as the result of Article VII, section 10, of the
13Constitution of the State of Iowa, also amends the transfer
14of sales tax revenues to the secure an advanced vision for
15education fund in Code section 423.2A(2).
16DIVISION II — SALES AND USE TAX ON SERVICES AND EXEMPTIONS.
17 The bill strikes “software as a service” and substitutes “cloud
18computing” as a service for purposes of imposing sales tax.
19The bill makes the following services subject to the sales tax:
20web hosting, digital automated services, and scooter.
21The bill strikes the sales and use tax exemption on the
22sales price from the sale or rental of computer or computer
23peripherals by an insurance company, financial institution, or
24commercial enterprise.
25The bill strikes “professions and occupations” from
26the definition of “commercial enterprise” in Code section
27423.3(104) thus making sales to professions and occupations
28related to prewritten software, specified digital services, and
29other services subject to the sales tax.
30The division takes effect January 1, 2023.
31DIVISION III — SALES, USE, AND EXCISE TAX — RETURNS DUE.
32The bill allows a taxpayer to have a combined sales and use tax
33permit and to file a combined return for sales and use taxes.
34Currently, a taxpayer must possess a separate sales and use tax
35permit and file separate sales and use tax returns.
-98- 1The bill changes numerous references to the phrase “sales
2tax permit” in the Code to the phrase “sales or use tax
3permit”.
4Currently, a person is required to file a sales or use tax
5return on a quarterly basis. The bill changes this filing
6requirement from a quarterly basis to a monthly basis. The
7bill does allow a person required to file a sales or use tax
8return and who collects less than $1,200 in sales or use tax in
9a calendar year, to file a return once a year on or before the
10last day of the month following the close of the calendar year.
11The bill allows certain persons required to collect sales
12or use tax who do not meet the definition of a “retailer
13maintaining a business in this state” in Code section
14423.1(48)(a)(1), to be issued only one sales or use tax permit.
15The bill allows the director of revenue, if necessary to
16ensure the payment of sales or use tax, to require a sales or
17use tax return be filed on a different basis other than on a
18monthly basis.
19The bill strikes a provision allowing a person required to
20file a sales or use tax return to take a credit against the
21total quarterly amount of tax due, upon a proper showing of
22necessity, allowing for the balance of tax due to be paid up to
2330 days after the return was due.
24The bill strikes a provision requiring a seller, who
25collects more than $30,000 of sales or use tax in the preceding
26calendar year, to make additional remittances to the state
27under the rules adopted by the director of revenue.
28DIVISION IV — DISTRIBUTIONS OF REVENUE TO LOCAL GOVERNMENTS
29AND SCHOOL DISTRICTS. Currently, by August 15, the department
30of revenue estimates the local option sale tax (LOST) and
31securing an advanced vision for education (SAVE) tax amounts
32that will be transferred to each local government or school
33district on a fiscal year and monthly basis. The transfer
34estimates may be revised for the year and remaining months by
35the director of revenue if the estimates are incorrect.
-99- 1Commencing with the fiscal year beginning July 1, 2022, the
2bill changes the LOST and SAVE transfer amount procedures,
3subject to changes to LOST and SAVE in other divisions of the
4bill, by requiring the department of revenue to transfer the
5actual LOST and SAVE taxes collected that are attributable
6to each local government or school district to that local
7government or school district.
8The bill also creates a transition procedure for the LOST
9and SAVE tax amounts transferred during July and August 2022.
10Under the transition procedure, the department of revenue shall
11transfer estimated amounts of LOST and SAVE to each local
12government or school district for the months of July, August,
13and September 2022. However, beginning with the October 2022
14transfer, the department of revenue shall transfer the actual
15amount of tax attributable to each local government or school
16district for the LOST and SAVE tax remitted in September 2022.
17The bill requires any adjustment amount that is necessary to
18the July, August, or September 2022 estimated transfer amounts
19be made by the close of business on December 30, 2022.
20DIVISION V — SALE OF CERTAIN QUALIFIED STOCK — NET
21CAPITAL GAIN EXCLUSION. The bill grants an employee-owner one
22irrevocable lifetime election to exclude from state individual
23income tax the net capital gain from the state of the capital
24stock on one qualified corporation. The election applies to
25all subsequent sales or exchanges of capital stock.
26The bill phases in over a three-year period the complete
27exclusion from the individual income tax the net capital gain
28from the sale of capital stock on one qualified corporation.
29The percentage of the capital gain that is excluded for tax
30years beginning in 2023, 2024, and 2025 and beyond is 33
31percent, 66 percent, and 100 percent, respectively. Several
32requirements must be met for the capital stock to qualify
33as capital stock of a qualified corporation. The qualified
34corporation must have employed individuals in this state for
35at least 10 years. The qualified corporation must have had at
-100-1least five shareholders for the 10 years prior to the first
2sale or exchange pursuant to the bill, and the corporation must
3have had at least two shareholders or groups of shareholders
4who are not related for the 10 years prior to the sale or
5exchange. The bill requires the capital stock to be common or
6preferred stock, and may be either voting or nonvoting, but
7does not include warrants, stock options, or debt securities.
8The bill provides that the election applies to transfers of
9the capital stock by inter vivos gift from the employee-owner
10to a spouse, or to a trust for the benefit of the
11employee-owner’s spouse. The election will apply to a spouse
12only if the spouse was married to the employee-owner on the
13date of the sale or the date of the employee-owner’s death.
14If, after making a valid inter vivos gift of stock that meets
15all the requirements for an election, an employee-owner dies
16without making an election, the surviving spouse, or if there
17is no surviving spouse, the personal representative of the
18employee-owner’s estate, may make the election.
19An election under the bill is made on a form prescribed by
20the department of revenue and included with the taxpayer’s
21state income tax return for the taxable year in which the
22election is made.
23The division takes effect January 1, 2023, and applies to tax
24years beginning on or after that date.
25DIVISION VI — RETIRED FARMER LEASE INCOME EXCLUSION.
26 Commencing with tax years beginning on or after January 1,
272023, the bill excludes from the individual income tax a
28retired farmer’s total net income received pursuant to a
29farm tenancy agreement covering real property held by the
30retired farmer for 10 or more years, if the farmer materially
31participated in a farming business for 10 or more years.
32Net income from a farm tenancy agreement earned by an
33entity taxed as a partnership for federal tax purposes, an S
34corporation, or a trust or estate is not eligible for the lease
35income exclusion, even if the net income passes through to a
-101-1retired farmer.
2A retired farmer is not eligible for the lease income
3exclusion unless the farmer is at least 55 years of age and no
4longer materially participating in farming.
5A retired farmer who elects to claim the lease income
6exclusion is not eligible, in the tax year the election is made
7or in succeeding tax years, to claim the capital gain exclusion
8under Code section 422.7(21), as amended by another division of
9the bill, or the beginning farmer tax credit.
10The division takes effect January 1, 2023, and applies to tax
11years beginning on or after that date.
12DIVISION VII — RETIRED FARMER CAPITAL GAIN EXCLUSION. The
13bill modifies the individual income tax capital gain exclusion
14for the sale of real property used in a farming business which
15otherwise would have gone into effect in tax year 2023, which
16was enacted in 2018 Iowa Acts, chapter 1161, section 113,
17and later modified in 2019 Iowa Acts, chapter 162. The bill
18repeals both 2018 Iowa Acts, chapter 1161, section 113, and
192019 Iowa Acts, chapter 162, and creates a new capital gain
20exclusion provision based upon the 2019 Iowa Acts, chapter
21162 provisions, effective for tax years beginning on or after
22January 1, 2023.
23Under the provisions in 2019 Iowa Acts, chapter 162, section
241, which otherwise would have gone into effect during the 2023
25tax year, a taxpayer who materially participates in a farming
26business for at least 10 years and held real property used
27in such a business for at least 10 years, may make a single
28lifetime exclusion election from the individual income tax of
29the capital gain of the sale of such property.
30The bill modifies the term “materially participated” in a
31farming business to include a retired farmer if the retired
32farmer materially participated in a farming business for 10
33years or more, in the aggregate, prior to making the election
34to exclude the capital gain of the sale of real property used
35in a farming business.
-102- 1In addition to a single lifetime exclusion of the capital
2gain from the sale of real property used in a farming business,
3the bill also allows a retired farmer to make a single lifetime
4exclusion of the net capital gain from the sale of cattle
5or horses if held by the retired farmer for breeding, draft,
6dairy, or sporting purposes for more than 24 months, and
7only if the retired farmer materially participated in the
8farming business for five of the eight years preceding the
9retired farmer’s retirement or disability, and who sold all
10or substantially all of the retired farmer’s interest in the
11farming business by the time the election to exclude capital
12gain of the sale of livestock from the individual income tax
13is made.
14Additionally, the bill allows a retired farmer to make a
15single lifetime exclusion of the net capital gain from the
16sale of breeding livestock, other than cattle and horses, if
17the livestock is held by the retired farmer for more than 12
18months, and only if the retired farmer materially participated
19in the farming business for five of the eight years preceding
20the retired farmer’s retirement or disability, and who sold all
21or substantially all of the retired farmer’s interest in the
22farming business by the time the election to exclude capital
23gain of the sale of livestock from the individual income tax
24is made.
25Under the bill, a retired farmer is not eligible for the
26capital gain exclusion if the retired farmer claims the
27beginning farmer tax credit in the same tax year. A retired
28farmer electing the capital gain exclusion is not eligible to
29elect to exclude retired farmer lease income in the same tax
30year or any succeeding tax year.
31The division takes effect January 1, 2023, and applies to
32sales consummated on or after that date.
33For sales consummated prior to January 1, 2023, the existing
34law in Code section 422.7(21) shall govern.
35DIVISION VIII — INDIVIDUAL INCOME TAX — PHASE IN. The bill
-103-1repeals the individual income tax rates and brackets described
2in 2018 Iowa Acts, chapter 1161, section 107, which otherwise
3would have gone into effect January 1, 2023, and strikes and
4replaces the individual income tax rates and brackets for the
5tax year beginning January 1, 2023, in Code section 422.5A.
6 The bill reduces individual income tax rates beginning with
7the 2023 tax year, and reduces the number of individual income
8tax brackets beginning with the 2024 tax year. The modified
9individual income tax rates and brackets are as follows:
10For the 2023 tax year:
11Married filing jointly
12Income over:But not over: Tax rate:
131) $0$12,000 4.40%
142) $12,000$60,000 4.82%
153) $60,000$150,000 5.70%
164) $150,0006.00%
17All other filers other than married filing jointly
18Income over:But not over: Tax rate:
191) $0$6,000 4.40%
202) $6,000$30,000 4.82%
213) $30,000$75,000 5.70%
224) $75,0006.00%
23For the 2024 tax year:
24Married filing jointly
25Income over:But not over: Tax rate:
261) $0$12,000 4.40%
272) $12,000$60,000 4.82%
283) $60,0005.70%
29All other filers other than married filing jointly
30Income over:But not over: Tax rate:
311) $0$6,000 4.40%
322) $6,000$30,000 4.82%
333) $30,0005.70%
34For the 2025 tax year:
35Married filing jointly
-104- 1Income over:But not over: Tax rate:
21) $0$12,000 4.40%
32) $12,0004.82%
4All other filers other than married filing jointly
5Income over:But not over: Tax rate:
61) $0$6,000 4.40%
72) $6,0004.82%
8Currently, an alternate income tax calculation exists
9in Code section 422.5. The alternate income tax is an
10alternate method of calculating income tax liability in lieu
11of the regular income tax calculation. The alternate method
12multiplies the taxpayer’s taxable income above the income tax
13filing thresholds in Code section 422.5(3)(b) or 422.5(3B)(b)
14by the highest existing individual income tax rate until
15the taxpayer’s tax liability is equal to the tax liability
16that would have been calculated under the regular income tax
17calculation method, then after such point the regular income
18tax calculation with the regular income tax rates are used.
19The bill phases in changes to the alternate tax rate until the
20rate is set at 4.10 percent commencing with tax years beginning
21on or after January 1, 2027. After the alternate rate is set
22at 4.10 percent, the bill proportionally reduces the alternate
23rate as the individual income tax rate is reduced.
24The division takes effect January 1, 2023, and applies to tax
25years beginning on or after that date.
26DIVISION IX — INDIVIDUAL INCOME TAX — FLAT RATE —
27CONTINGENT ELIMINATION. Commencing with the tax year beginning
28on or after January 1, 2026, but before January 1, 2027, the
29bill establishes a flat 3.85 percent individual income tax rate
30on all taxable income and moves the individual income tax rate
31from Code section 422.5A to Code section 422.5.
32Commencing tax years beginning on or after January 1, 2027,
33the bill reduces the flat individual income tax rate from 3.85
34percent to 3.60 percent on all taxable income.
35After reducing the individual income tax rate to 3.60
-105-1percent, the bill establishes a procedure where the individual
2income tax rate may be adjusted commencing with tax years
3beginning on or after January 1, 2029. The bill specifies
4the individual income tax rate shall be adjusted each tax
5year until the rate is zero, if sufficient funds to make
6the adjustment are available in the individual income tax
7elimination fund.
8By November 1, 2028, and by November 1 each year thereafter,
9the department of management shall determine the amount of
10moneys available in the individual income tax elimination fund,
11and the net individual income tax receipts at the close of
12the preceding fiscal year. The department of revenue shall
13adjust and apply a new individual income tax rate based upon
14the amount of money available in the individual income tax
15elimination fund. The bill specifies the department of revenue
16shall adjust and apply a new individual income tax rate in such
17a way that the rate would have generated an amount equal to the
18net receipts generated from the rate in the preceding fiscal
19year less the amount used in the calculation in the individual
20income tax elimination fund.
21The bill prohibits the rate from being adjusted unless the
22rate is able to be adjusted at least one-tenth of one percent.
23The rate, when adjusted, shall be rounded down to the nearest
24one-tenth of one percent.
25The bill requires the moneys in the individual income tax
26elimination fund be transferred to the general fund of the
27state in the fiscal year the rate is adjusted.
28If a tax rate is adjusted, the bill requires the director
29of revenue to cause an advisory notice containing the new
30individual income tax rate to be published in the Iowa
31administrative bulletin and on the internet site of the
32department of revenue. The calculation and publication of the
33adjusted tax rate by the director of revenue is exempt from
34Code chapter 17A, and shall be submitted for publication by the
35first December 31 following the determination date to adjust
-106-1the tax rates.
2The division takes effect January 1, 2026, and applies to tax
3years beginning on or after that date.
4DIVISION X — RETIREMENT INCOME EXCLUSION. Under current
5law, a taxpayer who is disabled, who is at least 55 years of
6age, or who is the surviving spouse or other specified survivor
7of that qualifying taxpayer, may exclude a maximum of $6,000 of
8other retirement income ($12,000 for married persons).
9Commencing with tax years beginning January 1, 2023, the
10bill excludes retirement income from the computation of net
11income for purposes of the individual income tax. In order
12to be eligible for the retirement income exclusion, a person
13must be disabled, at least 55 years of age, or be the surviving
14spouse of an individual or be a survivor having an insurable
15interest in an individual who would have qualified for the
16retirement income exclusion.
17The bill does not change current law allowing a taxpayer
18to exclude all retirement pay, including certain survivor
19benefits, received from the federal government for military
20service performed in the armed forces, the armed forces
21military reserve, or national guard.
22The bill also excludes this retirement income from the
23calculation of net income for purposes of determining whether
24or not a taxpayer’s net income exceeds the amount at which the
25individual income tax will not be imposed pursuant to Code
26section 422.5(3) or 422.5(3B), and for which an individual
27income tax return is not required to be filed, and for purposes
28of calculating the alternate tax in Code section 422.5, and
29further provides that any retirement income excluded from
30the individual income tax will not be added back to these
31calculations for tax years beginning in 2023 or later.
32The division takes effect January 1, 2023, and applies to tax
33years beginning on or after that date.
34DIVISION XI — CORPORATE INCOME TAX. The bill repeals the
35current corporate income tax rates in Code section 422.33(1)
-107-1for tax years beginning on or after January 1, 2024.
2DIVISION XII — FUTURE CORPORATE INCOME TAX RATES. The bill
3phases in reductions to corporate income tax rates commencing
4with the tax year beginning on or after January 1, 2024, but
5before January 1, 2025:
6Income over:But not over:Tax rate:
71) $0$100,0005.50%
82) $100,000$250,0009.00%
93) $250,0009.40%
10For the tax year commencing on or after January 1, 2025, but
11before January 1, 2026, the rates are as follows:
12Income over:But not over:Tax rate:
131) $0$100,0005.50%
142) $100,0009.00%
15For the tax year commencing on or after January 1, 2026, but
16before January 1, 2027, the rates are as follows:
17Income over:But not over:Tax rate:
181) $0$100,0005.40%
192) $100,0008.60%
20For the tax year beginning on or after January 1, 2027, but
21before January 1, 2028, the rates are as follows:
22Income over:But not over:Tax rate:
231) $0$100,0005.40%
242) $100,0008.20%
25For the tax years commencing on or after January 1, 2028, the
26rates are permanently set at the following:
27Income over:But not over:Tax rate:
281) $0$100,0005.30%
292) $100,0007.80%
30DIVISION XIII — FRANCHISE TAX. The bill phases in a
31reduction of the current franchise tax of 5 percent of net
32income as follows: Commencing with the tax years beginning
33during the 2023 calendar year, 4.80 percent; for tax years
34beginning during the 2024 calendar year, 4.60 percent; for tax
35years beginning during the 2025 calendar year, 4.40 percent;
-108-1for tax years beginning during the 2026 calendar year, 4.20
2percent; and for all tax years beginning on or after January
31, 2027, 4.00 percent.
4DIVISION XIV — INSURANCE PREMIUMS TAX. The bill reduces
5the insurance premium tax on the gross amount of premiums
6received by an insurance company from 1 percent to .95 percent
7in calendar year 2023, and from .95 percent to .90 percent for
8the 2024 calendar year and subsequent calendar years.
9The division takes effect January 1, 2023.
10DIVISION XV — AUTOMOBILE RENTAL EXCISE TAX. The bill
11increases the automobile rental excise tax from 5 percent to 7
12percent on the rental of automobiles rented on or after January
131, 2023. The bill repeals an exception for the collection of
14the automobile rental excise tax of a person or an affiliate
15of a person who owns, operates, or controls an automobile
16peer-to-peer sharing marketplace.
17DIVISION XVI — EQUIPMENT TAX. The bill increases the
18equipment tax from 5 percent to 6 percent of the sales price on
19all equipment sold or used in the state on or after January 1,
202023. Code section 423D.1 defines “equipment”.
21DIVISION XVII — WATER SERVICE TAX. The bill repeals Code
22chapter 423G (water service tax) in the amount of six percent
23imposed on the sales price from the sale or furnishing of
24water by a water utility to consumers or users. However, in
25division II of the bill, the sales tax exemption for the sale
26of furnishing of water by a water utility is repealed, thus
27making the sale or furnishing of water to the public subject to
28the seven percent sales tax. The division takes effect January
291, 2023.
30DIVISION XVIII — TAX CREDITS.
31HIGH QUALITY JOBS. The bill specifies that in allocating tax
32credits, the IEDA shall prioritize allocating tax credits for
33additional research activities tax credits allowed pursuant to
34Code section 15.335A.
35REDEVELOPMENT. Currently, 100 percent of the redevelopment
-109-1tax credit in excess of tax liability is refundable if certain
2conditions are met. The bill reduces the refundability of
3the redevelopment tax credit as follows: for the tax year
4beginning on or after January 1, 2023, but before January
51, 2024, the 75 percent of the tax credit in excess of the
6taxpayer’s liability for the tax year is refundable if certain
7conditions are met; and for tax years beginning on or after
8January 1, 2024, 50 percent of the tax credit in excess of tax
9liability is refundable if certain conditions are met.
10ENDOW IOWA. The bill changes the maximum amount of endow
11Iowa tax credits that are available to an individual taxpayer
12from 5 percent of the authorized credits to $100,000 of the
13authorized credits. Currently, the authorized credits shall
14not annually exceed $6 million.
15RENEWABLE CHEMICAL PRODUCTION. Currently, 100 percent of
16the renewable chemical production tax credit in excess of tax
17liability is refundable. The bill reduces the refundability of
18the renewable chemical production tax credit as follows: for
19the tax year beginning on or after January 1, 2023, but before
20January 1, 2024, 75 percent of the tax credit in excess of the
21taxpayer’s liability for the tax year is refundable; and for
22tax years beginning on or after January 1, 2024, 50 percent of
23the tax credit in excess of tax liability is refundable.
24S CORPORATION. The bill repeals the S corporation tax
25credit commencing with tax years beginning on or after January
261, 2023. In lieu of claiming the credit for taxes paid to
27another state, the S corporation tax credit allows resident
28shareholders of S corporations that do business within and
29outside of the state to recompute their individual income tax
30and claim a refund of tax paid if the recomputation is a lower
31amount. The recomputation allocates the resident shareholder’s
32share of the income and expenses of the S corporation, as is
33done for corporate income tax purposes, rather than all the
34resident’s share of the income and expenses being taxed.
35RESEARCH ACTIVITIES. The bill modifies the research
-110-1activities tax credit available against the individual and
2corporate income taxes. The bill specifies the tax credit
3shall be claimed on a return filed by the due date for filing
4the return, including extensions of time. If the tax credit is
5timely claimed, the bill prohibits a taxpayer from increasing
6the claim on an amended return unless the increase resulted
7from an audit by the Internal Revenue Service or the department
8of revenue.
9The bill modifies the calculations for determining the
10state’s apportioned share of the qualifying expenditures for
11increasing research activities.
12The bill requires a taxpayer to use the alternative
13simplified credit calculation described in federal law if
14the taxpayer elected or was required to use the alternative
15simplified credit method for federal income tax purposes for
16the same taxable year. The bill modifies the alternative
17credit computation for state tax purposes to require, for
18purposes of claiming the credit, the basic research payments
19and qualified research expenses to be conducted in this
20state. The bill also specifies the basic research payments
21and qualified research expenses under the alternate credit
22computation shall be determined in accordance with the new
23calculations for determining the state’s apportioned share of
24the qualifying expenditures in the bill.
25The bill reduces the research activities tax credit from
266.5 percent of the excess qualified research expenses or basic
27research payments to 4 percent of such expenses or payments.
28If the taxpayer uses the alternate credit computation described
29in section 41(c)(4) of the Internal Revenue Code, the bill
30reduces the alternate credit computations from 4.55 percent to
312.80 percent and 1.95 percent to 1.20 percent, respectively.
32For individual and corporate income taxpayers, commencing
33with the tax year beginning January 1, 2023, but before January
341, 2024, the bill reduces the refundability of the research
35activities tax credit from 100 percent of the credit in excess
-111-1of the tax liability imposed during the tax year, to 75 percent
2of any credit in excess of the tax liability imposed during
3the tax year. Commencing with tax years beginning on or after
4January 1, 2024, and every tax year thereafter, the bill
5reduces the refundability of the tax credit from 75 percent
6of the credit in excess of the tax liability imposed during
7the tax year, to 50 percent of any credit in excess of the tax
8liability imposed during the tax year.
9GEOTHERMAL HEAT PUMP TAX CREDIT. Currently, the state
10geothermal heat pump tax credit available against the
11individual income tax is based upon the federal tax credit
12which is set to expire for installations occurring on or after
13December 31, 2023. The bill prohibits a taxpayer from claiming
14the state geothermal heat pump tax credit for installations
15occurring after December 31, 2023. The bill delays the repeal
16of the geothermal heat pump tax credit until January 1, 2034,
17to account for the 10-year carryforward period.
18CHARITABLE CONSERVATION CONTRIBUTION. The bill prohibits
19a charitable conservation contribution tax credit from being
20claimed against the individual or corporate income tax, except
21for qualified real property interests conveyed prior to January
221, 2023. The bill allows the credit in excess of tax liability
23to carry forward for qualified real property interests conveyed
24prior to January 1, 2023.
25PRESERVATION OF EXISTING RIGHTS. The bill preserves
26existing rights and is intended to not limit, modify, or
27otherwise adversely affect any amount of the tax credit issued,
28awarded, or allowed prior to the repeal date of any tax credit.
29TAX CREDIT REVIEW STUDY COMMITTEE. During the 2029
30legislative interim, the bill requests the legislative council
31to authorize a study committee to review tax credits available
32against state taxes by developing options for replacing tax
33credits that produce equivalent results as the tax credit
34being replaced. The study shall consist of voting legislative
35members and nonvoting taxpayer representatives.
-112- 1EFFECTIVE AND APPLICABILITY DATE. The division takes effect
2January 1, 2023, and applies to tax years beginning on or after
3that date.
4DIVISION XIX — TAX EXPENDITURE COMMITTEE. The bill
5changes the process of reviewing tax expenditures. The bill
6strikes the review of tax expenditures by the tax expenditure
7committee, and requires the applicable department charged
8with administering a tax expenditure to submit a report to
9the general assembly detailing the review in the year the
10tax expenditure is scheduled to be reviewed. The bill does
11not change the tax expenditure review schedule or the tax
12expenditures to be reviewed.
13DIVISION XX — INDIVIDUAL INCOME TAX ELIMINATION FUND.
14 The bill changes the name of the taxpayer relief fund to the
15individual income tax elimination fund.
16DIVISION XXI — NATIONAL GUARD PAY. The bill exempts from
17the individual income tax all pay received by a taxpayer
18from the federal government for full-time military service
19performed in support of the national guard pursuant to 32
20U.S.C. §502(f) and 32 U.S.C. §709(a) and (b). This exempts
21certain income received by active duty and reserve personnel,
22certain operational support personnel, and certain dual-status
23federal technicians.
24The division applies to tax years beginning on or after
25January 1, 2023.
26DIVISION XXII — LOCAL OPTION TAXES. Code chapter 423B
27authorizes, following approval at election, the imposition of
28a local option sales and services tax at a rate not to exceed
29one percent to be administered similarly to the state sales
30and services tax and authorizes the imposition of a local
31vehicle tax. The bill strikes the authorization for the local
32vehicle tax and also strikes the authorization to impose the
33local option sales and services tax under Code chapter 423B,
34but instead authorizes cities and counties to expend specified
35state sales and use tax revenues that are deposited in the
-113-1local sales and use tax fund following the increase of the
2state sales and use taxes rates in previous sections of the
3bill.
4Under the bill, sales and services tax revenue credited to
5and deposited in each county’s account within the local sales
6and use tax fund must be expended by each recipient county
7and city as required by the jurisdiction’s revenue purpose
8statement, including a revenue purpose statement in effect on
9January 1, 2023, for the use of local option sales and use tax
10revenue previously collected under Code chapter 423B, or be
11used to reduce specified property tax levies.
12The board of supervisors of each county and the city
13council of each city may adopt by resolution a revenue purpose
14statement for the expenditure of funds received under Code
15chapter 423B.
16The revenues transferred to the local sales and use tax fund
17continue to be allocated to the specific county account for
18the county in which the tax was collected. Additionally, all
19cities and counties are eligible to receive the allocation of
20revenues, not just those that had previously approved the local
21option tax.
22Code section 423B.10 allows a city in which a local sales
23and services tax is imposed to, by ordinance and following
24approval of the board of supervisors, to provide for the use
25of a designated amount of increased local option sales and
26services tax revenue for urban renewal purposes. The bill
27modifies provisions governing this authorization to provide for
28the use of a specified amount of the applicable increase state
29sales tax revenues deposited in the local sales and use tax
30fund in lieu of the increased local option sales and services
31tax revenue. The bill allows city ordinances providing for the
32use of certain local option sales and services tax revenues for
33urban renewal purposes in effect on January 1, 2023, to remain
34in effect until expiration, amendment, or repeal.
35The bill also eliminates the authority to impose a local
-114-1sales and services tax under the quad cities interstate
2metropolitan authority compact under Code chapter 28A beginning
3on January 1, 2023.
4The division takes effect January 1, 2023.
5DIVISION XXIII — NATURAL RESOURCES AND OUTDOOR RECREATION
6TRUST FUND. The bill amends provisions in Code chapter 461
7(the natural resources and outdoor recreation Act) that is
8to implement Article VII, section 10, of the Constitution
9of the State of Iowa when the sales tax is increased. The
10bill increases the sales tax in division I. The Code chapter
11establishes the natural resources and outdoor recreation trust
12fund (trust fund) and associated accounts (renamed trust
13accounts) supported by a portion of state revenue generated
14by an increase in the state’s sales tax. The purpose of
15the constitutional provision is to protect and enhance water
16quality and natural areas, including parks, trails, and fish
17and wildlife habitat, and conserve agricultural soils in this
18state.
19ALLOCATIONS OF TRUST FUND MONEYS. The bill alters the
20percentage of moneys to be allocated from the trust fund
21(trust fund moneys) to its trust accounts, including the
22natural resources trust account administered by the department
23of natural resources (DNR), the soil conservation and water
24protection trust account (renamed the soil conservation and
25nonpoint source water protection trust account) administered
26by the department of agriculture and land stewardship (DALS),
27the watershed protection trust account administered by DNR
28in cooperation with DALS, the local conservation partnership
29trust account administered by DNR, the trails trust account
30(renamed the water and land trails trust account) administered
31by DOT in cooperation with DNR, and the lake restoration
32trust account (renamed the lake and stream restoration trust
33account) administered by DNR. It also reduces the allocations
34of trust fund moneys to the Iowa resources enhancement and
35protection (REAP) fund administered by DNR. It transfers
-115-1trust fund moneys allocated to the renamed soil conservation
2and nonpoint source water protection trust account and the
3watershed protection trust account to the water quality
4infrastructure fund used to support nonpoint water quality
5programs administered by DALS; and to the water quality
6financial assistance fund administered by the Iowa finance
7authority (IFA) to support the wastewater and drinking water
8treatment financial assistance program (administered by IFA),
9the water quality financing program (administered by IFA), and
10the water quality urban infrastructure program (administered by
11DALS). The bill revises provisions in the local conservation
12partnership trust account as a program to be administered
13by DNR. The bill provides that trust fund moneys may be
14transferred from the renamed soil conservation and nonpoint
15source water protection trust account to the water quality
16infrastructure fund and from the watershed protection trust
17account to the water quality financial assistance fund upon
18direction by the custodial department. The bill eliminates
19current funding sources, including the annual appropriation
20to the REAP fund from the general fund which is due to expire
21on June 30, 2026, and both a tax on the sales price on water
22service, which another division of the bill repeals, and the
23use of wagering tax receipts, which would otherwise expire on
24July 1, 2039.
25ADMINISTRATION. The bill provides that the legislative
26council is to appoint a committee to review the trust fund and
27its allocations. The bill requires the economic development
28authority to be involved in decisions that use trust fund
29moneys to support initiatives with a recreational purpose. In
30making decisions to expend trust fund moneys, a higher priority
31is given to supporting an initiative that furthers a goal of
32the Iowa nutrient reduction strategy. A higher priority is
33provided to maintaining or preserving existing public use lands
34rather than acquiring new land. Several provisions place
35restrictions upon the use of trust fund moneys for support
-116-1relating to certain initiatives, including athletic fields or
2facilities. Trust fund moneys cannot be used to support an
3exercise of eminent domain powers.
4REPEAL. Code chapter 461 is repealed December 31, 2051.
5EFFECTIVE DATE. The division of the bill takes effect
6January 1, 2023.
7DIVISION XXIV — CONTINGENT CODE EDITOR DIRECTIVE. The Code
8editor is directed to harmonize amendments to sections of the
9bill, if necessary, which are amended by two or more divisions
10of the bill, and to make other related changes, if necessary,
11to effectuate such changes.
-117-jm/jh
2modifying sales and use taxes, individual and corporate
3income taxes, the franchise tax, the insurance premiums tax,
4the equipment tax, the automobile rental excise tax, the
5water service tax, and local option taxes, crediting moneys
6to the natural resources and outdoor recreation trust fund,
7and including effective date and applicability provisions.
8BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2SALES AND USE TAX RATES AND DISTRIBUTION
3 Section 1. Section 423.2, subsection 1, unnumbered
4paragraph 1, Code 2022, is amended to read as follows:
5There is imposed a tax of six percent at the rate specified
6in subsection 12 upon the sales price of all sales of tangible
7personal property, sold at retail in the state to consumers or
8users except as otherwise provided in this subchapter.
9 Sec. 2. Section 423.2, subsections 2 and 3, Code 2022, are
10amended to read as follows:
112. A tax of six percent at the rate specified in subsection
1212 is imposed upon the sales price of the sale or furnishing
13of gas, electricity, water, heat, pay television service, and
14communication service, including the sales price from such
15sales by any municipal corporation or joint water utility
16furnishing gas, electricity, water, heat, pay television
17service, and communication service to the public in its
18proprietary capacity, except as otherwise provided in this
19subchapter, when sold at retail in the state to consumers or
20users.
213. A tax of six percent at the rate specified in subsection
2212 is imposed upon the sales price of all sales of tickets
23or admissions to places of amusement, fairs, and athletic
24events except those of elementary and secondary educational
25institutions. A tax of six percent at the rate specified in
26subsection 12 is imposed on the sales price of an entry fee or
27like charge imposed solely for the privilege of participating
28in an activity at a place of amusement, fair, or athletic event
29unless the sales price of tickets or admissions charges for
30observing the same activity are taxable under this subchapter.
31A tax of six percent at the rate specified in subsection 12
32 is imposed upon that part of private club membership fees or
33charges paid for the privilege of participating in any athletic
34sports provided club members.
35 Sec. 3. Section 423.2, subsection 4, paragraph a, Code 2022,
-1-1is amended to read as follows:
2a. A tax of six percent at the rate specified in subsection
312 is imposed upon the sales price derived from the operation
4of all forms of amusement devices and games of skill, games of
5chance, raffles, and bingo games as defined in chapter 99B, and
6card game tournaments conducted under section 99B.27, that are
7operated or conducted within the state, the tax to be collected
8from the operator in the same manner as for the collection of
9taxes upon the sales price of tickets or admission as provided
10in this section. Nothing in this subsection shall legalize any
11games of skill or chance or slot-operated devices which are now
12prohibited by law.
13 Sec. 4. Section 423.2, subsection 5, Code 2022, is amended
14to read as follows:
155. There is imposed a tax of six percent at the rate
16specified in subsection 12 upon the sales price from the
17furnishing of services as defined in section 423.1.
18 Sec. 5. Section 423.2, subsection 7, paragraph a,
19unnumbered paragraph 1, Code 2022, is amended to read as
20follows:
21A tax of six percent at the rate specified in subsection 12
22 is imposed upon the sales price from the sales, furnishing, or
23service of solid waste collection and disposal service.
24 Sec. 6. Section 423.2, subsection 8, paragraph a, Code 2022,
25is amended to read as follows:
26a. A tax of six percent at the rate specified in subsection
2712 is imposed on the sales price from sales of bundled
28transactions. For the purposes of this subsection, a “bundled
29transaction” is the retail sale of two or more distinct and
30identifiable products, except real property and services to
31real property, which are sold for one nonitemized price. A
32“bundled transaction” does not include the sale of any products
33in which the sales price varies, or is negotiable, based on
34the selection by the purchaser of the products included in the
35transaction.
-2-1 Sec. 7. Section 423.2, subsection 9, Code 2022, is amended
2to read as follows:
39. A tax of six percent at the rate specified in
4subsection 12 is imposed upon the sales price from any mobile
5telecommunications service, including all paging services,
6that this state is allowed to tax pursuant to the provisions
7of the federal Mobile Telecommunications Sourcing Act, Pub.
8L. No.106-252, 4 U.S.C. §116 et seq. For purposes of this
9subsection, taxes on mobile telecommunications service, as
10defined under the federal Mobile Telecommunications Sourcing
11Act that are deemed to be provided by the customer’s home
12service provider, shall be paid to the taxing jurisdiction
13whose territorial limits encompass the customer’s place of
14primary use, regardless of where the mobile telecommunications
15service originates, terminates, or passes through and
16shall in all other respects be taxed in conformity with
17the federal Mobile Telecommunications Sourcing Act. All
18other provisions of the federal Mobile Telecommunications
19Sourcing Act are adopted by the state of Iowa and incorporated
20into this subsection by reference. With respect to mobile
21telecommunications service under the federal Mobile
22Telecommunications Sourcing Act, the director shall, if
23requested, enter into agreements consistent with the provisions
24of the federal Act.
25 Sec. 8. Section 423.2, subsection 10, paragraph a, Code
262022, is amended to read as follows:
27a. A tax of six percent at the rate specified in subsection
2812 is imposed on the sales price of specified digital products
29sold at retail in the state. The tax applies whether the
30purchaser obtains permanent use or less than permanent use of
31the specified digital product, whether the sale is conditioned
32or not conditioned upon continued payment from the purchaser,
33and whether the sale is on a subscription basis or is not on a
34subscription basis.
35 Sec. 9. Section 423.2, subsection 12, Code 2022, is amended
-3-1by striking the subsection and inserting in lieu thereof the
2following:
312. a. For the period beginning January 1, 2023, through
4December 31, 2050, the sales tax rate is seven percent.
5b. Beginning January 1, 2051, the sales tax rate is six
6percent.
7 Sec. 10. Section 423.2A, subsection 2, paragraphs a, b, and
8c, Code 2022, are amended to read as follows:
9a. (1) Transfer For the period beginning January 1, 2023,
10through December 31, 2050, transfer one-seventh of the revenues
11collected under deposited into the general fund of the state
12under subsection 1 to the appropriate county accounts under
13 chapter 423B for the counties from which the tax was collected.
14(2) Beginning January 1, 2051, transfer one-sixth of the
15revenues deposited into the general fund of the state under
16subsection 1 to the appropriate county accounts under chapter
17423B for the counties from which the tax was collected.
18b. Transfer from the remaining revenues the amounts required
19under Article VII, section 10, of the Constitution of the State
20of Iowa to the natural resources and outdoor recreation trust
21fund created in section 461.31, if applicable.
22c. Transfer one-sixth of from the remaining revenues an
23amount equal to one-seventh of the revenues deposited into the
24general fund of the state under subsection 1 to the secure an
25advanced vision for education fund created in section 423F.2.
26This paragraph “c” is repealed January 1, 2051.
27 Sec. 11. Section 423.5, subsection 1, unnumbered paragraph
281, Code 2022, is amended to read as follows:
29Except as provided in paragraph “b”, an excise tax at the
30rate of six percent specified in subsection 4 of the purchase
31price or installed purchase price is imposed on the following:
32 Sec. 12. Section 423.5, subsection 4, Code 2022, is amended
33by striking the subsection and inserting in lieu thereof the
34following:
354. a. For the period beginning January 1, 2023, through
-4-1December 31, 2050, the use tax rate is seven percent.
2b. Beginning January 1, 2051, the use tax rate is six
3percent.
4 Sec. 13. Section 423.43, subsection 1, paragraph b, Code
52022, is amended by striking the paragraph and inserting in
6lieu thereof the following:
7b. Subsequent to the deposit into the general fund of
8the state the department shall do the following in the order
9prescribed:
10(1) (a) For the period beginning January 1, 2023, through
11December 31, 2050, transfer one-seventh of such revenues to the
12appropriate county accounts under chapter 423B for the counties
13from which the tax was paid.
14(b) Beginning January 1, 2051, transfer one-sixth of such
15revenues to the appropriate county accounts under chapter 423B
16for the counties from which the tax was paid.
17(2) Transfer one-sixth of such remaining revenues to the
18secure an advanced vision for education fund created in section
19423F.2. This subparagraph is repealed January 1, 2051.
20 Sec. 14. EFFECTIVE DATE. This division of this Act takes
21effect January 1, 2023.
22DIVISION II
23SALES AND USE TAX ON SERVICES AND EXEMPTIONS
24 Sec. 15. Section 423.2, subsection 6, paragraph bu, Code
252022, is amended to read as follows:
26bu. Software as a service Cloud computing.
27 Sec. 16. Section 423.2, subsection 6, Code 2022, is amended
28by adding the following new paragraphs:
29 NEW PARAGRAPH. bv. Web hosting.
30 NEW PARAGRAPH. bw. Digital automated services.
31 NEW PARAGRAPH. bx. Scooter rentals.
32 Sec. 17. Section 423.3, subsection 47, paragraph a,
33subparagraph (4), Code 2022, is amended by striking the
34subparagraph.
35 Sec. 18. Section 423.3, subsection 104, paragraph b,
-5-1subparagraph (1), Code 2022, is amended to read as follows:
2(1) “Commercial enterprise” means the same as defined in
3section 423.3, subsection 47, paragraph “d”, subparagraph (1),
4but also includes professions and occupations.
5 Sec. 19. EFFECTIVE DATE. This division of this Act takes
6effect January 1, 2023.
7DIVISION III
8SALES, use, and excise tax — returns due
9 Sec. 20. Section 9C.3, subsection 3, Code 2022, is amended
10to read as follows:
113. The application shall state whether or not the applicant
12has an Iowa retailers sales or use tax permit and if the
13applicant has such permit, shall state the number of such
14permit.
15 Sec. 21. Section 9C.5, Code 2022, is amended to read as
16follows:
179C.5 Issuance of license.
18Upon receiving an application for a transient merchant’s
19license, the secretary of state shall investigate or cause to
20be investigated, the reputation and character of the applicant.
21If, upon making such investigation, the secretary of state is
22satisfied that the statements and representations contained in
23the application are true, and that the applicant is of good
24reputation and character, and the holder of an Iowa retailer’s
25 sales or use tax permit, and if a foreign corporation, has
26authority to do business in the state of Iowa, the secretary
27shall issue to the applicant a license as a transient merchant
28upon payment of the fee as herein prescribed for the period of
29time requested in said application and for use at the location
30and place where it is stated in said application the sale will
31be held or the business conducted, both of which shall be set
32out in said license. Such license shall be valid only for the
33period of time and at the location and place described therein.
34 Sec. 22. Section 99G.30A, subsection 2, paragraph c, Code
352022, is amended to read as follows:
-6- 1c. Frequency of deposits and quarterly monthly reports of
2the monitor vending machine excise tax with the department of
3revenue are governed by the tax provisions in section 423.31.
4Monitor vending machine excise tax collections shall not be
5included in computation of the total tax to determine frequency
6of filing under section 423.31.
7 Sec. 23. Section 321.105A, subsection 4, paragraph b, Code
82022, is amended to read as follows:
9b. Section 422.25, subsection 4, sections 422.30, 422.67,
10and 422.68, section 422.69, subsection 1, sections 422.70,
11422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
122, and sections 423.23, 423.24, 423.25, 423.32, 423.33, 423.35,
13423.37 through 423.42, 423.45, and 423.47, consistent with the
14provisions of this section, apply with respect to the fees
15for new registration authorized under this section in the
16same manner and with the same effect as if the fees for new
17registration were retail use taxes within the meaning of those
18statutes.
19 Sec. 24. Section 421.26, Code 2022, is amended to read as
20follows:
21421.26 Personal liability for tax due.
22If a licensee or other person under section 452A.65, a
23retailer or purchaser under chapter 423A, 423B, 423C, 423D,
24or 423E, or section 423.14, 423.14A, 423.29, 423.31, 423.32,
25 or 423.33, or a user under section 423.34, or a permit holder
26or licensee under section 453A.13, 453A.16, or 453A.44 fails
27to pay a tax under those sections when due, an officer of a
28corporation or association, notwithstanding section 489.304,
29a member or manager of a limited liability company, or a
30partner of a partnership, having control or supervision of
31or the authority for remitting the tax payments and having
32a substantial legal or equitable interest in the ownership
33of the corporation, association, limited liability company,
34or partnership, who has intentionally failed to pay the tax
35is personally liable for the payment of the tax, interest,
-7-1and penalty due and unpaid. However, this section shall
2not apply to taxes on accounts receivable. The dissolution
3of a corporation, association, limited liability company,
4or partnership shall not discharge a person’s liability for
5failure to remit the tax due.
6 Sec. 25. Section 423.2, subsection 1, paragraph b, Code
72022, is amended to read as follows:
8b. Sales of building materials, supplies, and equipment
9to owners, contractors, subcontractors, or builders for the
10erection of buildings or the alteration, repair, or improvement
11of real property are retail sales of tangible personal property
12in whatever quantity sold. Where the owner, contractor,
13subcontractor, or builder is also a retailer holding a retail
14 sales or use tax permit and transacting retail sales of
15building materials, supplies, and equipment, the person shall
16purchase such items of tangible personal property without
17liability for the tax if such property will be subject to the
18tax at the time of resale or at the time it is withdrawn from
19inventory for construction purposes. The sales tax shall be
20due in the reporting period when the materials, supplies,
21and equipment are withdrawn from inventory for construction
22purposes or when sold at retail. The tax shall not be due when
23materials are withdrawn from inventory for use in construction
24outside of Iowa and the tax shall not apply to tangible
25personal property purchased and consumed by the manufacturer as
26building materials in the performance by the manufacturer or
27its subcontractor of construction outside of Iowa. The sale
28of carpeting is not a sale of building materials. The sale of
29carpeting to owners, contractors, subcontractors, or builders
30shall be treated as the sale of ordinary tangible personal
31property and subject to the tax imposed under this subsection
32and the use tax.
33 Sec. 26. Section 423.3, subsection 39, paragraph a,
34subparagraph (2), Code 2022, is amended to read as follows:
35(2) The sale of all or substantially all of the tangible
-8-1personal property, or specified digital products, or services
2held or used by a seller in the course of the seller’s trade
3or business for which the seller is required to hold a sales
4or use tax permit when the seller sells or otherwise transfers
5the trade or business to another person who shall engage in a
6similar trade or business.
7 Sec. 27. Section 423.3, subsection 80, paragraph d, Code
82022, is amended to read as follows:
9d. Subject to the limitations in paragraph “c”, where the
10owner, contractor, subcontractor, or builder is also a retailer
11holding a retail sales or use tax permit and transacting
12retail sales of building materials, supplies, and equipment,
13the tax shall not be due when materials are withdrawn from
14inventory for use in construction performed for a designated
15exempt entity if an exemption certificate is received from such
16entity.
17 Sec. 28. Section 423.5, subsection 2, Code 2022, is amended
18to read as follows:
192. The excise tax is imposed upon every person using
20the property within this state until the tax has been paid
21directly to the county treasurer, the state department of
22transportation, a retailer, or the department. This tax is
23imposed on every person using the services or the product of
24the services in this state until the user has paid the tax
25either to an Iowa sales or use tax permit holder or to the
26department.
27 Sec. 29. Section 423.14, subsection 2, paragraph b, Code
282022, is amended to read as follows:
29b. The tax upon the use of all tangible personal property
30and specified digital products other than that enumerated in
31paragraph “a”, which is sold by a seller who is a retailer or
32its agent that is not otherwise required to collect sales tax
33under the provisions of this chapter, may be collected by the
34retailer or agent and remitted to the department, pursuant to
35the provisions of paragraph “e”, and sections 423.24, 423.29,
-9-1423.30, 423.32 423.31, and 423.33.
2 Sec. 30. Section 423.14A, subsection 3, paragraph c,
3subparagraph (2), Code 2022, is amended to read as follows:
4(2) A marketplace facilitator shall collect sales and
5use tax on the entire sales price or purchase price paid by
6a purchaser on each Iowa sale subject to sales and use tax
7that is made or facilitated by the marketplace facilitator,
8regardless of whether the marketplace seller for whom an Iowa
9sale is made or facilitated has or is required to have a retail
10 sales or use tax permit or would have been required to collect
11sales and use tax had the sale not been facilitated by the
12marketplace facilitator, and regardless of the amount of the
13sales price or purchase price that will ultimately accrue
14to or benefit the marketplace facilitator, the marketplace
15seller, or any other person. This sales and use tax collection
16responsibility of a marketplace facilitator applies but shall
17not be limited to sales facilitated through a computer software
18application, commonly referred to as in-app purchases, or
19through another specified digital product.
20 Sec. 31. Section 423.31, subsections 1, 3, 5, and 6, Code
212022, are amended to read as follows:
221. a. Each Except as provided in paragraph “b”, each person
23subject to this section and section 423.36 and in accordance
24with the provisions of this section and section 423.36 shall,
25on or before the last day of the month following the close of
26each calendar quarter month during which such person is or
27has become or ceased being subject to the provisions of this
28section and section 423.36, make, sign, and file electronically
29 a return for the calendar quarter month in the form as may be
30required. Returns shall show information relating to sales
31prices including tangible personal property, specified digital
32products, and services converted to the use of such person,
33the amounts of sales prices excluded and exempt from the tax,
34the amounts of sales prices subject to tax, a calculation of
35tax due, and any other information for the period covered by
-10-1the return as may be required. Returns shall be signed by
2the retailer or the retailer’s authorized agent and must be
3certified by the retailer to be correct in accordance with
4forms and rules prescribed by the director. A person required
5to file a sales or use tax return who is unable to do so may
6request permission from the director to file a return by
7another method.
8b. Notwithstanding paragraph “a”, each person subject to
9this section who collects and remits less than one thousand
10two hundred dollars in sales or use tax to the department per
11calendar year may file a return on or before the last day of the
12month following the close of the calendar year.
133. The sales tax forms prescribed by the director shall be
14referred to as “retailers tax deposit”. Deposit forms shall
15be signed by the retailer or the retailer’s duly authorized
16agent, and shall be duly certified by the retailer or agent to
17be correct. The director may authorize incorporated banks and
18trust companies or other depositories authorized by law which
19are depositories or financial agents of the United States,
20or of this state, to receive any sales or use tax imposed
21under this chapter, in the manner, at the times, and under
22the conditions the director prescribes. The director shall
23prescribe the manner, times, and conditions under which the
24receipt of the tax by those depositories is to be treated as
25payment of the tax to the department.
265. a. Upon making application and receiving approval
27from the director, a person and its affiliates that make
28retail sales of tangible personal property, specified digital
29products, or taxable enumerated services may make deposits and
30file a consolidated sales or use tax return for the affiliated
31group, pursuant to rules adopted by the director. A person and
32each affiliate that files a consolidated return are jointly and
33severally liable for all tax, penalty, and interest found due
34for the tax period for which a consolidated return is filed or
35required to be filed.
-11- 1b. A business required to file a consolidated sales or use
2 tax return shall file a form entitled “schedule of consolidated
3business locations” with its quarterly sales or use tax
4return that shows the taxpayer’s consolidated permit number,
5the permit number for each Iowa business location, the state
6sales tax amount by business location, and the amount of state
7sales tax due on goods consumed that are not assigned to a
8specific business location. Consolidated quarterly sales or
9use tax returns that are not accompanied by the schedule of
10consolidated business locations form are considered incomplete
11and are subject to penalty under section 421.27.
126. If necessary or advisable in order to insure ensure
13 the payment of the tax, the director may require returns and
14payment of the tax to be made for other than quarterly monthly
15 periods, the provisions of this section or other provision to
16the contrary notwithstanding.
17 Sec. 32. Section 423.31, subsection 2, Code 2022, is amended
18by striking the subsection.
19 Sec. 33. Section 423.33, subsection 1, paragraph a, Code
202022, is amended to read as follows:
21a. If a purchaser fails to pay sales tax to the retailer
22required to collect the tax, then in addition to all of the
23rights, obligations, and remedies provided, a use tax is
24payable by the purchaser directly to the department, and
25sections 423.31, 423.32, 423.37, 423.38, 423.39, 423.40,
26423.41, and 423.42 apply to the purchaser.
27 Sec. 34. Section 423.33, subsection 3, Code 2022, is amended
28to read as follows:
293. Event sponsor’s liability for sales tax. A person
30sponsoring a flea market or a craft, antique, coin, or stamp
31show or similar event shall obtain from every retailer selling
32tangible personal property, specified digital products, or
33taxable services at the event proof that the retailer possesses
34a valid sales or use tax permit or secure from the retailer
35a statement, taken in good faith, that tangible personal
-12-1property, specified digital products, or services offered for
2sale are not subject to sales tax. Failure to do so renders
3a sponsor of the event liable for payment of any sales tax,
4interest, and penalty due and owing from any retailer selling
5property or services at the event. Sections 423.31, 423.32,
6 423.37, 423.38, 423.39, 423.40, 423.41, and 423.42 apply to the
7sponsors. For purposes of this subsection, a “person sponsoring
8a flea market or a craft, antique, coin, or stamp show or similar
9event” does not include a marketplace facilitator as defined in
10section 423.14A, subsection 1, an organization which sponsors
11an event determined to qualify as an event involving casual
12sales pursuant to section 423.3, subsection 39, or the state
13fair or a fair as defined in section 174.1.
14 Sec. 35. Section 423.34, Code 2022, is amended to read as
15follows:
16423.34 Liability of user.
17Any person who uses any tangible personal property,
18specified digital products, or services enumerated in section
19423.2 upon which the use tax has not been paid, either to the
20county treasurer or to a retailer or direct to the department
21as required by this subchapter, shall be liable for the payment
22of tax, and shall on or before the last day of the month next
23succeeding each quarterly monthly period pay the use tax upon
24all tangible personal property, specified digital products,
25or services used by the person during the preceding quarterly
26 monthly period in the manner and accompanied by such returns
27as the director shall prescribe. All of the provisions of
28sections 423.32 423.31 and 423.33 with reference to the returns
29and payments shall be applicable to the returns and payments
30required by this section.
31 Sec. 36. Section 423.36, subsection 4, paragraph b, Code
322022, is amended to read as follows:
33b. If an applicant is making sales outside Iowa for use in
34this state or furnishing services outside Iowa, the product
35or result of which will be used in this state, that applicant
-13-1shall be issued one sales or use tax permit by the department
2applicable to these out-of-state sales or services.
3 Sec. 37. Section 423.36, subsection 4, Code 2022, is amended
4by adding the following new paragraph:
5 NEW PARAGRAPH. c. If an applicant is required to collect
6sales or use tax and is not included in the definition of a
7retailer maintaining a place of business in this state in
8section 423.1, subsection 48, paragraph “a”, subparagraph (1),
9the applicant shall be issued one sales or use tax permit by
10the department regardless of the number of locations from which
11sales are made.
12 Sec. 38. Section 423.36, subsections 7 and 8, Code 2022, are
13amended to read as follows:
147. a. Sellers who are not regularly engaged in selling
15at retail and do not have a permanent place of business, but
16who are temporarily engaged in selling from trucks, portable
17roadside stands, concessionaires at state, county, district,
18or local fairs, carnivals, or the like, shall report and remit
19the sales tax on a temporary seasonal basis, under rules
20the director shall provide for the efficient collection of
21the sales tax. This subsection applies to sellers who are
22temporarily engaged in furnishing services.
23b. Persons engaged in selling tangible personal property,
24specified digital products, or furnishing services shall not
25be required to obtain or retain a sales or use tax permit for a
26place of business at which taxable sales of tangible personal
27property, specified digital products, or taxable performance of
28services will not occur.
298. The provisions of subsection 1, dealing with the lawful
30right of a retailer to transact business, as applicable, apply
31to persons having receipts from furnishing services enumerated
32in section 423.2, except that a person holding a permit
33pursuant to subsection 1 shall not be required to obtain any
34separate sales or use tax permit for the purpose of engaging in
35business involving the services.
-14-1 Sec. 39. Section 423.40, subsections 1, 2, 3, and 5, Code
22022, are amended to read as follows:
31. In addition to the sales or use tax or additional sales
4or use tax, the taxpayer shall pay a penalty as provided in
5section 421.27. The taxpayer shall also pay interest on the
6sales or use tax or additional sales or use tax at the rate
7in effect under section 421.7 for each month counting each
8fraction of a month as an entire month, computed from the date
9the semimonthly or monthly tax deposit form or return was
10required to be filed. The penalty and interest shall be paid
11to the department and disposed of in the same manner as other
12receipts under this subchapter. Unpaid penalties and interest
13may be enforced in the same manner as the taxes imposed by this
14chapter.
152. a. Any person who knowingly sells tangible personal
16property, specified digital products, tickets or admissions
17to places of amusement and athletic events, or gas, water,
18electricity, or communication service at retail, or engages in
19the furnishing of services enumerated in section 423.2, in this
20state without procuring a permit to collect tax, as provided
21in section 423.36, or who violates section 423.24 and the
22officers of any corporation who so act are guilty of a serious
23misdemeanor.
24b. A person who knowingly sells tangible personal property,
25specified digital products, tickets or admissions to places of
26amusement and athletic events, or gas, water, electricity, or
27communication service at retail, or engages in the furnishing
28of services enumerated in section 423.2, in this state after
29the person’s sales or use tax permit has been revoked and
30before it has been restored as provided in section 423.36,
31subsection 6, and the officers of any corporation who so act
32are guilty of an aggravated misdemeanor.
333. A person who willfully attempts in any manner to evade
34any tax imposed by this chapter or the payment of the tax or
35a person who makes or causes to be made a false or fraudulent
-15-1semimonthly or monthly tax deposit form or return with intent
2to evade any tax imposed by subchapter II or III or the payment
3of the tax is guilty of a class “D” felony.
45. A person required to pay sales or use tax, or to make,
5sign, or file a tax deposit form or return or supplemental
6return, who willfully makes a false or fraudulent tax deposit
7form or return, or willfully fails to pay at least ninety
8percent of the tax or willfully fails to make, sign, or file
9the tax deposit form or return, at the time required by law, is
10guilty of a fraudulent practice.
11 Sec. 40. Section 423.45, subsection 4, paragraph b, Code
122022, is amended to read as follows:
13b. The sales tax liability for all sales of tangible
14personal property and specified digital products and all sales
15of services is upon the seller and the purchaser unless the
16seller takes from the purchaser a valid exemption certificate
17stating under penalty of perjury that the purchase is for a
18nontaxable purpose and is not a retail sale as defined in
19section 423.1, or the seller is not obligated to collect tax
20due, or unless the seller takes a fuel exemption certificate
21pursuant to subsection 5. If the tangible personal property,
22specified digital products, or services are purchased tax free
23pursuant to a valid exemption certificate and the tangible
24personal property, specified digital products, or services are
25used or disposed of by the purchaser in a nonexempt manner, the
26purchaser is solely liable for the taxes and shall remit the
27taxes directly to the department and sections 423.31, 423.32,
28 423.37, 423.38, 423.39, 423.40, 423.41, and 423.42 shall apply
29to the purchaser.
30 Sec. 41. Section 423.45, subsection 5, paragraph c, Code
312022, is amended to read as follows:
32c. The seller may accept a completed fuel exemption
33certificate, as prepared by the purchaser, for three
34years unless the purchaser files a new completed exemption
35certificate. If the fuel is purchased tax free pursuant to a
-16-1fuel exemption certificate which is taken by the seller, and
2the fuel is used or disposed of by the purchaser in a nonexempt
3manner, the purchaser is solely liable for the taxes, and shall
4remit the taxes directly to the department and sections 423.31,
5423.32, 423.37, 423.38, 423.39, 423.40, 423.41, and 423.42
6shall apply to the purchaser.
7 Sec. 42. Section 423.50, subsection 1, Code 2022, is amended
8to read as follows:
91. Only one remittance of tax per return is required except
10as provided in this subsection. Sellers that collect more
11than thirty thousand dollars in sales and use taxes for this
12state during the preceding calendar year shall be required to
13make additional remittances as required under rules adopted by
14the director. The filing of a return is not required with an
15additional remittance.
16 Sec. 43. Section 423.57, Code 2022, is amended to read as
17follows:
18423.57 Statutes applicable.
19The director shall administer this subchapter as it relates
20to the taxes imposed in this chapter in the same manner and
21subject to all the provisions of, and all of the powers,
22duties, authority, and restrictions contained in sections
23423.14, 423.14A, 423.14B, 423.15, 423.16, 423.17, 423.19,
24423.20, 423.21, 423.22, 423.23, 423.24, 423.25, 423.29, 423.31,
25423.32, 423.33, 423.34, 423.34A, 423.35, 423.37, 423.38,
26423.39, 423.40, 423.41, and 423.42, section 423.43, subsection
271, and sections 423.45, 423.46, and 423.47.
28 Sec. 44. Section 423.58, Code 2022, is amended to read as
29follows:
30423.58 Collection, permit, and tax return exemption for
31certain out-of-state businesses.
32Notwithstanding sections 423.14, 423.14A, 423.14B, 423.29,
33423.31, 423.32, and 423.36, a person meeting the requirements
34of section 29C.24 is not required to obtain a sales or use tax
35permit, collect and remit sales and use tax, or make and file
-17-1applicable sales or use tax returns, as provided in section
229C.24, subsection 3, paragraph “a”, subparagraph (2).
3 Sec. 45. Section 423A.6, subsection 4, Code 2022, is amended
4to read as follows:
54. Section 422.25, subsection 4, sections 422.30, 422.67,
6and 422.68, section 422.69, subsection 1, sections 422.70,
7422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
81, and sections 423.23, 423.24, 423.25, 423.31, 423.33,
9423.35, 423.37 through 423.42, and 423.47, consistent with the
10provisions of this chapter, apply with respect to the taxes
11authorized under this chapter, in the same manner and with the
12same effect as if the state and local hotel and motel taxes
13were retail sales taxes within the meaning of those statutes.
14Notwithstanding this subsection, the director shall provide
15for quarterly monthly filing of returns and for other than
16quarterly monthly filing of returns both as prescribed in
17section 423.31. The director may require all persons who are
18engaged in the business of deriving any sales price subject
19to tax under this chapter to register with the department.
20All taxes collected under this chapter by a retailer, lodging
21provider, lodging facilitator, lodging platform, or any other
22person are deemed to be held in trust for the state of Iowa and
23the local jurisdictions imposing the taxes.
24 Sec. 46. Section 423B.5, subsection 3, Code 2022, is amended
25to read as follows:
263. A tax permit other than the state sales or use tax permit
27required under section 423.36 shall not be required by local
28authorities.
29 Sec. 47. Section 423B.6, subsection 2, paragraph c, Code
302022, is amended to read as follows:
31c. Frequency of deposits and quarterly monthly reports of a
32local sales and services tax with the department of revenue are
33governed by the tax provisions in section 423.31. Local tax
34collections shall not be included in computation of the total
35tax to determine frequency of filing under section 423.31.
-18-1 Sec. 48. Section 423C.4, Code 2022, is amended to read as
2follows:
3423C.4 Administration and enforcement.
4All powers and requirements of the director of revenue
5to administer the state sales tax law under chapter 423 are
6applicable to the administration of the tax imposed under
7section 423C.3, including but not limited to section 422.25,
8subsection 4, sections 422.30, 422.67, and 422.68, section
9422.69, subsection 1, sections 422.70 through 422.75, section
10423.14, subsection 1, and sections 423.15, 423.23, 423.24,
11423.25, 423.31, 423.33, 423.35 and 423.37 through 423.42,
12423.45, 423.46, and 423.47. However, as an exception to the
13powers specified in section 423.31, the director shall only
14require the filing of quarterly monthly reports.
15 Sec. 49. Section 423D.4, subsection 3, Code 2022, is amended
16to read as follows:
173. Section 422.25, subsection 4, sections 422.30, 422.67,
18and 422.68, section 422.69, subsection 1, sections 422.70,
19422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
201, and sections 423.23, 423.24, 423.25, 423.31 through
21423.35, 423.37 through 423.42, and 423.47, consistent with
22the provisions of this chapter, apply with respect to the tax
23authorized under this chapter, in the same manner and with the
24same effect as if the excise taxes on equipment sales or use
25were retail sales taxes within the meaning of those statutes.
26Notwithstanding this subsection, the director shall provide
27for quarterly monthly filing of returns and for other than
28quarterly monthly filing of returns both as prescribed in
29section 423.31. All taxes collected under this chapter by a
30retailer or any user are deemed to be held in trust for the
31state of Iowa.
32 Sec. 50. Section 423G.5, subsection 3, Code 2022, is amended
33to read as follows:
343. Section 422.25, subsection 4, sections 422.30, 422.67,
35and 422.68, section 422.69, subsection 1, sections 422.70,
-19-1422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
21, and sections 423.23, 423.24, 423.25, 423.31 through
3423.35, 423.37 through 423.42, and 423.47, consistent with the
4provisions of this chapter, shall apply with respect to the tax
5authorized under this chapter, in the same manner and with the
6same effect as if the excise taxes on the sale or furnishing of
7a water service were retail sales taxes within the meaning of
8those statutes. Notwithstanding this subsection, the director
9shall provide for quarterly monthly filing of returns and
10for other than quarterly monthly filing of returns both as
11prescribed in section 423.31. All taxes collected under this
12chapter by a retailer or any user are deemed to be held in trust
13for the state of Iowa.
14 Sec. 51. Section 728.1, subsection 6, Code 2022, is amended
15to read as follows:
166. “Place of business” means the premises of a business
17required to obtain a sales or use tax permit pursuant to
18chapter 423, the premises of a nonprofit or not-for-profit
19organization, and the premises of an establishment which is
20open to the public at large or where entrance is limited by a
21cover charge or membership requirement.
22 Sec. 52. Section 728.5, subsection 1, unnumbered paragraph
231, Code 2022, is amended to read as follows:
24An owner, manager, or person who exercises direct control
25over a place of business required to obtain a sales or use tax
26permit shall be guilty of a serious misdemeanor under any of
27the following circumstances:
28 Sec. 53. REPEAL. Section 423.32, Code 2022, is repealed.
29DIVISION IV
30DISTRIBUTIONS OF REVENUE TO LOCAL GOVERNMENTS AND SCHOOL
31DISTRICTS
32 Sec. 54. Section 423B.7, subsection 2, paragraph a, Code
332022, is amended to read as follows:
34a. The director of revenue by August 15 of each fiscal
35year the last day of each month shall send transfer to each
-20-1city or county where the local option tax is imposed, an
2estimate of the amount of tax moneys remitted to the department
3attributable to each city or county will receive for the year
4and for each month of the year from the preceding month. At the
5end of each month, the director may revise the estimates for
6the year and remaining months.
7 Sec. 55. Section 423B.7, subsection 2, paragraphs b and c,
8Code 2022, are amended by striking the paragraphs.
9 Sec. 56. Section 423F.2, subsection 4, paragraph a, Code
102022, is amended to read as follows:
11a. The director of revenue by August 15 of each fiscal year
12 the last day of each month shall send transfer to each school
13district an estimate of the amount of tax moneys remitted
14to the department attributable to each school district will
15receive for the year and for each month of the year from the
16preceding month. At the end of each month, the director may
17revise the estimates for the year and remaining months.
18 Sec. 57. Section 423F.2, subsection 4, paragraphs b and c,
19Code 2022, are amended by striking the paragraphs.
20 Sec. 58. TRANSITION PROVISION FOR LOCAL OPTION SALES TAX
21AND SECURING AN ADVANCED VISION FOR EDUCATION — TRANSFER
22AMOUNTS. Notwithstanding any other provision of law to the
23contrary, the department of revenue shall estimate monthly
24local option sales tax and securing an advanced vision for
25education transfer amounts through the end of the 2022 calendar
26year. The department of revenue shall transfer estimated
27amounts to each local government or school district for the
28months of July, August, and September 2022. Beginning with the
29October 2022 transfer, the department shall not use estimated
30amounts and shall transfer the amount of tax attributable to
31each local government or school district for the tax remitted
32in September 2022. Any adjustment amount that is necessary to
33the July, August, or September 2022 estimated transfer amount
34to reflect the accurate attributable amount shall be made by
35the department of revenue or the local government or school
-21-1district by the close of business on December 30, 2022.
2DIVISION V
3SALE OF CERTAIN QUALIFIED STOCK — NET CAPITAL GAIN EXCLUSION
4 Sec. 59. Section 422.7, Code 2022, is amended by adding the
5following new subsection:
6 NEW SUBSECTION. 63. a. Subtract the following percentage
7of the net capital gain from the sale or exchange of capital
8stock of a qualified corporation for which an election is made
9by an employee-owner:
10(1) For the tax year beginning in the 2023 calendar year,
11thirty-three percent.
12(2) For the tax year beginning in the 2024 calendar year,
13sixty-six percent.
14(3) For tax years beginning on or after January 1, 2025, one
15hundred percent.
16b. (1) An employee-owner is entitled to make one
17irrevocable lifetime election to exclude the net capital gain
18from the sale or exchange of capital stock of one qualified
19corporation which capital stock was acquired by the employee-
20owner while employed and on account of employment by such
21qualified corporation.
22(2) The election shall apply to all subsequent sales
23or exchanges of qualifying capital stock of the elected
24corporation within fifteen years of the date of the election,
25provided that the subsequent sales or exchanges were of capital
26stock in the same qualified corporation and were acquired by
27the employee-owner while employed and on account of employment
28by such qualified corporation.
29(3) The election shall apply to qualifying capital stock
30that has been transferred by inter vivos gift from the
31employee-owner to the employee-owner’s spouse or to a trust
32for the benefit of the employee-owner’s spouse following the
33transfer. This subparagraph (3) shall apply to a spouse
34only if the spouse was married to the employee-owner on the
35date of the sale or exchange or the date of death of the
-22-1employee-owner.
2(4) If the employee-owner dies after having sold or
3exchanged qualifying capital stock without having made an
4election under this subsection, the surviving spouse or, if
5there is no surviving spouse, the personal representative of
6the employee-owner’s estate, may make the election that would
7have qualified under this subsection.
8(5) The election shall be made in the manner and form
9prescribed by the department and shall be included with the
10taxpayer’s state income tax return for the taxable year in
11which the election is made.
12c. For purposes of this subsection:
13(1) “Capital stock” means common or preferred stock, either
14voting or nonvoting. “Capital stock” does not include stock
15rights, stock warrants, stock options, or debt securities.
16(2) “Employee-owner” means an individual who owns capital
17stock in a qualified corporation for at least ten years, which
18capital stock was acquired by the individual while employed and
19on account of employment by such corporation for at least ten
20cumulative years.
21(3) “Personal representative” means the same as defined in
22section 633.3, or if there is no such personal representative
23appointed, then the person legally authorized to perform
24substantially the same functions.
25(4) (a) “Qualified corporation” means, with respect to an
26employee-owner, a corporation which, at the time of the first
27sale or exchange for which an election is made by the employee-
28owner under this subsection, meets all of the following
29conditions:
30(i) The corporation employed individuals in this state for
31at least ten years.
32(ii) The corporation has had at least five shareholders for
33the ten years prior to the first sale or exchange under this
34subsection.
35(iii) The corporation has had at least two shareholders or
-23-1groups of shareholders who are not related for the ten years
2prior to the first sale or exchange under this subsection.
3Two persons are considered related when, under section 318 of
4the Internal Revenue Code, one is a person who owns, directly
5or indirectly, capital stock that if directly owned would be
6attributed to the other person, or is the brother, sister,
7aunt, uncle, cousin, niece, or nephew of the other person who
8owns capital stock either directly or indirectly.
9(b) “Qualified corporation” includes any member of an Iowa
10affiliated group if the Iowa affiliated group includes a member
11that has employed individuals in this state for at least ten
12years. For purposes of this subparagraph division, “Iowa
13affiliated group” means an affiliated group that has made a
14valid election to file an Iowa consolidated income tax return
15under section 422.37 in the year in which the deduction under
16this subsection is claimed. “Member” includes any entity
17included in the consolidated return under section 422.37,
18subsection 2, for the tax year in which the deduction is
19claimed.
20(c) “Qualified corporation” also includes any corporation
21that was a party to a reorganization that was entirely or
22substantially tax free if such reorganization occurred during
23or after the employment of the employee-owner.
24 Sec. 60. EFFECTIVE DATE. This division of this Act takes
25effect January 1, 2023.
26 Sec. 61. APPLICABILITY. This division of this Act applies
27to tax years beginning on or after January 1, 2023.
28DIVISION VI
29RETIRED FARMER LEASE INCOME EXCLUSION
30 Sec. 62. Section 422.7, Code 2022, is amended by adding the
31following new subsection:
32 NEW SUBSECTION. 21A. a. Subtract, to the extent included,
33net income received by an eligible individual pursuant to a
34farm tenancy agreement covering real property held by the
35eligible individual for ten or more years, if the eligible
-24-1individual materially participated in a farming business for
2ten or more years.
3b. An individual who elects to exclude income received
4pursuant to a farm tenancy agreement under this subsection
5shall not claim any of the following in the tax year in which
6the election is made or in any succeeding year:
7(1) The capital gain exclusion under section 422.7,
8subsection 21.
9(2) The beginning farmer tax credit under section 422.11E.
10c. Married individuals who file separate state income tax
11returns shall allocate their combined annual exclusion limit
12to each spouse in the proportion that each spouse’s respective
13net income from a farm tenancy agreement bears to the total net
14income from a farm tenancy agreement.
15d. The department shall establish criteria, by rule,
16relating to whether and how a surviving spouse may claim the
17income exclusion for which a deceased eligible individual would
18have been eligible under this subsection.
19e. Net income from a farm tenancy agreement earned,
20received, or reported by an entity taxed as a partnership
21for federal tax purposes, an S corporation, or a trust or
22estate is not eligible for the election and deduction in this
23subsection, even if such net income ultimately passes through
24to an eligible individual.
25f. For purposes of this subsection:
26(1) “Eligible individual” means an individual who is
27disabled or who is fifty-five years of age or older at the time
28the election is made, who no longer materially participates in
29a farming business at the time the election is made, and who,
30as an owner-lessor, is party to a farm tenancy agreement.
31(2) “Farm tenancy agreement” means a written agreement
32outlining the rights and obligations of an owner-lessor and a
33tenant-lessee where the tenant-lessee has a farm tenancy as
34defined in section 562.1A. A “farm tenancy agreement” includes
35cash leases, crop share leases, or livestock share leases.
-25- 1(3) “Farming business” means the production, care, growing,
2harvesting, preservation, handling, or storage of crops
3or forest or fruit trees; the production, care, feeding,
4management, and housing of livestock; or horticulture, all
5intended for profit.
6(4) “Livestock” means the same as defined in section 717.1.
7(5) “Materially participated” means the same as “material
8participation” in section 469(h) of the Internal Revenue Code.
9 Sec. 63. EFFECTIVE DATE. This division of this Act takes
10effect January 1, 2023.
11 Sec. 64. APPLICABILITY. This division of this Act applies
12to tax years beginning on or after January 1, 2023.
13DIVISION VII
14RETIRED FARMER CAPITAL GAIN EXCLUSION
15 Sec. 65. Section 422.7, subsection 21, Code 2022, is amended
16by striking the subsection and inserting in lieu thereof the
17following:
1821. a. For purposes of this subsection:
19(1) “Farming business” means the production, care, growing,
20harvesting, preservation, handling, or storage of crops
21or forest or fruit trees; the production, care, feeding,
22management, and housing of livestock; or horticulture, all for
23intended profit.
24(2) “Held” shall be determined with reference to the holding
25period provisions of section 1223 of the Internal Revenue Code
26and the federal regulations pursuant thereto.
27(3) “Livestock” means the same as defined in section 717.1.
28(4) “Materially participated” means the same as “material
29participation” in section 469(h) of the Internal Revenue Code.
30(5) (a) “Real property used in a farming business” means
31all tracts of land and the improvements and structures located
32on such tracts which are in good faith used primarily for
33a farming business. Buildings which are primarily used or
34intended for human habitation are deemed to be used in a
35farming business when the building is located on or adjacent
-26-1to the parcel used in the farming business. Land and the
2nonresidential improvements and structures located on such land
3that shall be considered to be used primarily in a farming
4business include but are not limited to land, improvements
5or structures used for the storage or maintenance of farm
6machinery or equipment, for the drying, storage, handling,
7or preservation of agricultural crops, or for the storage of
8farm inputs, feed, or manure. Real property used in a farming
9business shall also include woodland, wasteland, pastureland,
10and idled land used for the conservation of natural resources
11including soil and water.
12(b) Real property classified as agricultural property for
13Iowa property tax purposes, except real property described
14in section 441.21, subsection 12, paragraph “a” or “b”,
15shall be presumed to be real property used in a farming
16business. This presumption is rebuttable by the department by
17a preponderance of evidence that the real property did not meet
18the requirements of subparagraph division (a).
19(6) “Relative” means a person that satisfies one or more of
20the following conditions:
21(a) The individual is related to the taxpayer by
22consanguinity or affinity within the second degree as
23determined by common law.
24(b) The individual is a lineal descendent of the taxpayer.
25For purposes of this subparagraph division, “lineal descendent”
26means children of the taxpayer, including legally adopted
27children and biological children, stepchildren, grandchildren,
28great-grandchildren, and any other lineal descendent of the
29taxpayer.
30(c) An entity in which an individual who satisfies the
31conditions of either subparagraph division (a) or (b) has a
32legal or equitable interest as an owner, member, partner, or
33beneficiary.
34(7) “Retired farmer” means an individual who is disabled
35or who is fifty-five years of age or older and who no longer
-27-1materially participates in a farming business when an exclusion
2and deduction is claimed under this subsection.
3b. Subtract the net capital gain from the sale of real
4property used in a farming business if one of the following
5conditions are satisfied:
6(1) The taxpayer has materially participated in a farming
7business for a minimum of ten years and has held the real
8property used in a farming business for a minimum of ten years.
9If the taxpayer is a retired farmer, the taxpayer is considered
10to meet the material participation requirement if the taxpayer
11materially participated in a farming business for ten years or
12more in the aggregate, prior to making an election under this
13subsection.
14(2) The taxpayer has held the real property used in a
15farming business which is sold to a relative of the taxpayer.
16c. For a taxpayer who is a retired farmer, subtract the
17net capital gain from the sale of cattle or horses held by
18the taxpayer for breeding, draft, dairy, or sporting purposes
19for a period of twenty-four months or more from the date of
20acquisition; but only if the taxpayer materially participated
21in the farming business for five of the eight years preceding
22the farmer’s retirement or disability and who has sold all or
23substantially all of the taxpayer’s interest in the farming
24business by the time the election under this paragraph is made.
25d. For a taxpayer who is a retired farmer, subtract the net
26capital gain from the sale of breeding livestock, other than
27cattle and horses, if the livestock is held by the taxpayer for
28a period of twelve months or more from the date of acquisition;
29but only if the taxpayer materially participated in the farming
30business for five of the eight years preceding the farmer’s
31retirement or disability and who has sold all or substantially
32all of the taxpayer’s interest in the farming business by the
33time the election under this paragraph is made.
34e. A taxpayer who is a retired farmer may make, subject to
35the limitations described in paragraphs “f” and “g”, a single,
-28-1lifetime election to exclude all qualifying capital gains under
2paragraphs “b”, “c”, and “d”.
3f. A taxpayer who is a retired farmer who elects to exclude
4capital gains under paragraph “b”, “c”, or “d” shall not claim
5the beginning farmer tax credit under section 422.11E or the
6exclusion for net income received pursuant to a farm tenancy
7agreement in section 422.7, subsection 21A, in the tax year in
8which this election is made or in any subsequent year.
9g. A taxpayer who is a retired farmer who claims the
10beginning farmer tax credit under section 422.11E shall not,
11in the same year, make an election under this subsection. A
12taxpayer who is a retired farmer and who elects to exclude
13the net income received from a farm tenancy agreement under
14section 422.7, subsection 21A, shall not, in the same tax year
15or in any subsequent tax year, make the election under this
16subsection.
17h. Married individuals who file separate state income tax
18returns shall allocate their combined annual net capital gain
19exclusion under paragraphs “b”, “c”, and “d” to each spouse in
20the proportion that each spouse’s respective net capital gain
21bears to the total net capital gain.
22i. The department shall establish criteria, by rule,
23relating to whether and how a surviving spouse may claim the
24income exclusion for which a deceased retired farmer would have
25been eligible under this subsection.
26 Sec. 66. REPEAL. 2018 Iowa Acts, chapter 1161, section 113,
27is repealed.
28 Sec. 67. REPEAL. 2019 Iowa Acts, chapter 162, section 1,
29is repealed.
30 Sec. 68. EFFECTIVE DATE. This division of this Act takes
31effect January 1, 2023.
32 Sec. 69. APPLICABILITY.
331. This division of this Act applies to tax years beginning
34on or after January 1, 2023.
352. This division of this Act applies to sales consummated on
-29-1or after the effective date of this division of this Act, and
2sales consummated prior to the effective date of this division
3of this Act shall be governed by the law as it existed prior to
4the effective date of this division of this Act.
5DIVISION VIII
6INDIVIDUAL INCOME TAX RATES — PHASE IN
7 Sec. 70. Section 422.5, subsection 3, paragraph b, Code
82022, is amended to read as follows:
9b. (1) In lieu of the computation in subsection 1 or
102, or in paragraph “a” of this subsection, if the married
11persons’, filing jointly or filing separately on a combined
12return, head of household’s, or surviving spouse’s net income
13exceeds thirteen thousand five hundred dollars, the regular
14tax imposed under this subchapter shall be the lesser of the
15maximum alternate state individual income tax rate specified in
16subparagraph (2) times the portion of the net income in excess
17of thirteen thousand five hundred dollars or the regular tax
18liability computed without regard to this sentence. Taxpayers
19electing to file separately shall compute the alternate tax
20described in this paragraph using the total net income of the
21husband and wife spouses. The alternate tax described in this
22paragraph does not apply if one spouse elects to carry back or
23carry forward the loss as provided in section 422.9, subsection
243.
25(2) (a) (i) For the tax year beginning on or after January
261, 2023, but before January 1, 2024, the alternate tax rate is
276.00 percent.
28(ii) For the tax year beginning on or after January 1, 2024,
29but before January 1, 2025, the alternate tax rate is 5.70
30percent.
31(iii) For the tax year beginning on or after January 1,
322025, but before January 1, 2026, the alternate tax rate is
335.20 percent.
34(iv) For the tax year beginning on or after January 1, 2026,
35but before January 1, 2027, the alternate tax rate is 4.35
-30-1percent.
2(b) For tax years beginning on or after January 1, 2027,
3the alternate tax rate shall be one-half of one percent higher
4than the maximum individual income tax rate unless the maximum
5individual rate is zero, and in such a case the alternate tax
6rate shall be zero.
7 Sec. 71. Section 422.5, subsection 3B, paragraph b, Code
82022, is amended to read as follows:
9b. (1) In lieu of the computation in subsection 1, 2, or 3,
10if the married persons’, filing jointly or filing separately on
11a combined return, head of household’s, or surviving spouse’s
12net income exceeds thirty-two thousand dollars, the regular
13tax imposed under this subchapter shall be the lesser of the
14maximum alternate state individual income tax rate specified in
15subparagraph (2) times the portion of the net income in excess
16of thirty-two thousand dollars or the regular tax liability
17computed without regard to this sentence. Taxpayers electing
18to file separately shall compute the alternate tax described in
19this paragraph using the total net income of the husband and
20wife spouses. The alternate tax described in this paragraph
21does not apply if one spouse elects to carry back or carry
22forward the loss as provided in section 422.9, subsection 3.
23(2) (a) (i) For the tax year beginning on or after January
241, 2023, but before January 1, 2024, the alternate tax rate is
256.00 percent.
26(ii) For the tax year beginning on or after January 1, 2024,
27but before January 1, 2025, the alternate tax rate is 5.70
28percent.
29(iii) For the tax year beginning on or after January 1,
302025, but before January 1, 2026, the alternate tax rate is
315.20 percent.
32(iv) For the tax year beginning on or after January 1, 2026,
33but before January 1, 2027, the alternate tax rate is 4.35
34percent.
35(b) For tax years beginning on or after January 1, 2027,
-31-1the alternate tax rate shall be one-half of one percent higher
2than the maximum individual income tax rate unless the maximum
3individual rate is zero, and in such a case the alternate tax
4rate shall be zero.
5 Sec. 72. Section 422.5, subsection 6, Code 2022, is amended
6to read as follows:
76. a. Upon determination of the latest cumulative inflation
8factor, the director shall multiply each dollar amount set
9forth in section 422.5A by this cumulative inflation factor,
10shall round off the resulting product to the nearest one
11dollar, and shall incorporate the result into the income tax
12forms and instructions for each tax year.
13b. This subsection is repealed on January 1, 2026.
14 Sec. 73. Section 422.5A, Code 2022, is amended by striking
15the section and inserting in lieu thereof the following:
16422.5A Tax rates.
171. The tax imposed in section 422.5 shall be calculated
18using the following rates in the following tax years in the
19case of married persons filing jointly:
20a. For the tax year beginning on or after January 1, 2023,
21but before January 1, 2024:
22(1) On taxable income from 0 through $12,000, the rate of
234.40 percent.
24(2) On taxable income exceeding $12,000 but not exceeding
25$60,000, the rate of 4.82 percent.
26(3) On taxable income exceeding $60,000 but not exceeding
27$150,000, the rate of 5.70 percent.
28(4) On taxable income exceeding $150,000, the rate of 6.00
29percent.
30b. For the tax year beginning on or after January 1, 2024,
31but before January 1, 2025:
32(1) On taxable income from 0 through $12,000, the rate of
334.40 percent.
34(2) On taxable income exceeding $12,000 but not exceeding
35$60,000, the rate of 4.82 percent.
-32- 1(3) On taxable income exceeding $60,000, the rate of 5.70
2percent.
3c. For the tax year beginning on or after January 1, 2025,
4but before January 1, 2026:
5(1) On taxable income from 0 through $12,000, the rate of
64.40 percent.
7(2) On taxable income exceeding $12,000, the rate of 4.82
8percent.
92. The tax imposed in section 422.5 shall be calculated
10using the following rates in the following tax years in the
11case of any other taxpayer other than married persons filing
12jointly:
13a. For the tax year beginning on or after January 1, 2023,
14but before January 1, 2024:
15(1) On taxable income from 0 through $6,000, the rate of
164.40 percent.
17(2) On taxable income exceeding $6,000 but not exceeding
18$30,000, the rate of 4.82 percent.
19(3) On taxable income exceeding $30,000 but not exceeding
20$75,000, the rate of 5.70 percent.
21(4) On taxable income exceeding $75,000, the rate of 6.00
22percent.
23b. For the tax year beginning on or after January 1, 2024,
24but before January 1, 2025:
25(1) On taxable income from 0 through $6,000, the rate of
264.40 percent.
27(2) On taxable income exceeding $6,000 but not exceeding
28$30,000, the rate of 4.82 percent.
29(3) On taxable income exceeding $30,000, the rate of 5.70
30percent.
31c. For the tax year beginning on or after January 1, 2025,
32but before January 1, 2026:
33(1) On taxable income from 0 through $6,000, the rate of
344.40 percent.
35(2) On taxable income exceeding $6,000, the rate of 4.82
-33-1percent.
2 Sec. 74. REPEAL. 2018 Iowa Acts, chapter 1161, section 107,
3is repealed.
4 Sec. 75. EFFECTIVE DATE. This division of this Act takes
5effect January 1, 2023.
6 Sec. 76. APPLICABILITY. This division of this Act applies
7to tax years beginning on or after January 1, 2023.
8DIVISION IX
9INDIVIDUAL INCOME TAX — FLAT RATE — contingent elimination
10 Sec. 77. Section 421.27, subsection 9, paragraph a,
11subparagraph (3), Code 2022, is amended to read as follows:
12(3) In the case of all other entities, including
13corporations described in section 422.36, subsection 5, and all
14other entities required to file an information return under
15section 422.15, subsection 2, the entity’s Iowa net income
16after the application of the Iowa business activity ratio,
17if applicable, multiplied by the top income tax rate imposed
18under section 422.5A 422.5 for the tax year, less any Iowa tax
19credits available to the entity.
20 Sec. 78. Section 422.5, subsection 1, paragraph a, Code
212022, is amended to read as follows:
22a. (1) A tax is imposed upon every resident and nonresident
23of the state which tax shall be levied, collected, and paid
24annually upon and with respect to the entire taxable income
25as defined in this subchapter at rates as provided in section
26422.5A a rate of three and eighty-five hundredths percent for
27the tax year beginning January 1, 2026, but before January 1,
282027, and at a rate of three and six-tenths percent for tax
29years beginning on or after January 1, 2027.
30(2) (a) Notwithstanding the rate in subparagraph (1), the
31department of revenue shall determine the individual income
32tax rate as provided in this subparagraph. The tax rate in
33subparagraph (1) shall remain in effect until the rate is
34adjusted pursuant to this subparagraph. A rate adjusted in
35this subparagraph shall remain in effect until the rate is
-34-1adjusted again pursuant to this subparagraph.
2(b) By November 1, 2028, and by November 1 each year
3thereafter, until the individual income tax rate equals zero,
4the department of management shall determine the amount of
5moneys available in the individual income tax elimination fund
6in section 8.57E, and the net individual income tax receipts
7at the close of the preceding fiscal year. The department of
8revenue shall adjust and apply a new rate based upon the amount
9of moneys available in the individual income tax elimination
10fund as provided in subparagraph division (c).
11(c) (i) The rate shall be adjusted in such a way that the
12rate would have generated an amount equal to the net receipts
13generated from the rate in the preceding fiscal year less the
14amount available in the individual income tax elimination
15fund in section 8.57E that is used in the calculation in this
16subparagraph division.
17(ii) The rate shall not be adjusted unless the rate is able
18to be adjusted at least one-tenth of one percent. The rate,
19when adjusted, shall be rounded down to the nearest one-tenth
20of one percent.
21(iii) If a determination is made by the department of
22revenue that the rate is subject to adjustment, the department
23of revenue shall adjust the rate specified in subparagraph
24(1), or if the rate has been previously adjusted, adjust the
25previously adjusted rate.
26(d) If an adjustment is made pursuant to subparagraph
27division (c), the amount of moneys in the individual income
28tax elimination fund used in the calculation in subparagraph
29division (c) shall be transferred to the general fund of the
30state in the fiscal year the rate is adjusted.
31(e) If a rate is adjusted pursuant to subparagraph division
32(c), the director of revenue shall cause an advisory notice
33containing the new individual income tax rate to be published
34in the Iowa administrative bulletin and on the internet site
35of the department of revenue. The calculation and publication
-35-1of the adjusted tax rate by the director of revenue is exempt
2from chapter 17A, and shall be submitted for publication by the
3first December 31 following the determination date to adjust
4the rate.
5 Sec. 79. Section 422.16B, subsection 2, paragraph a, Code
62022, is amended to read as follows:
7a. (1) A pass-through entity shall file a composite return
8on behalf of all nonresident members and shall report and pay
9the income or franchise tax imposed under this chapter at the
10maximum state income or franchise tax rate applicable to the
11member under section 422.5A 422.5, 422.33, or 422.63 on the
12nonresident members’ distributive shares of the income from the
13pass-through entity.
14(2) The tax rate applicable to a tiered pass-through entity
15shall be the maximum state income tax rate under section 422.5A
16 422.5.
17 Sec. 80. Section 422.25A, subsection 5, paragraph c,
18subparagraphs (3), (4), and (5), Code 2022, are amended to read
19as follows:
20(3) Determine the total distributive share of all final
21federal partnership adjustments and positive reallocation
22adjustments as modified by this title that are reported to
23nonresident individual partners and nonresident fiduciary
24partners and allocate and apportion such adjustments as
25provided in section 422.33 at the partnership or tiered
26partner level, and multiply the resulting amount by the maximum
27 individual income tax rate pursuant to section 422.5A 422.5 for
28the reviewed year.
29(4) For the total distributive share of all final federal
30partnership adjustments and positive reallocation adjustments
31as modified by this title that are reported to tiered partners:
32(a) Determine the amount of such adjustments which are of a
33type that would be subject to sourcing to Iowa under section
34422.8, subsection 2, paragraph “a”, as a nonresident, and then
35determine the portion of this amount that would be sourced to
-36-1Iowa under those provisions as if the tiered partner were a
2nonresident.
3(b) Determine the amount of such adjustments which are of
4a type that would not be subject to sourcing to Iowa under
5section 422.8, subsection 2, paragraph “a”, as a nonresident.
6(c) Determine the portion of the amount in subparagraph
7division (b) that can be established, as prescribed by the
8department by rule, to be properly allocable to indirect
9partners that are nonresident partners or other partners not
10subject to tax on the adjustments.
11(d) Multiply the total of the amounts determined in
12subparagraph divisions (a) and (b), reduced by any amount
13determined in subparagraph division (c), by the highest
14 individual income tax rate pursuant to section 422.5A 422.5 for
15the reviewed year.
16(5) For the total distributive share of all final federal
17partnership adjustments and positive reallocation adjustments
18as modified by this title that are reported to resident
19individual partners and resident fiduciary partners, multiply
20that amount by the highest individual income tax rate pursuant
21to section 422.5A 422.5 for the reviewed year.
22 Sec. 81. EFFECTIVE DATE. This division of this Act takes
23effect January 1, 2026.
24 Sec. 82. APPLICABILITY. This division of this Act applies
25to tax years beginning on or after January 1, 2026.
26DIVISION X
27Retirement Income
28 Sec. 83. Section 422.5, subsection 3, paragraph a, Code
292022, is amended to read as follows:
30a. The tax shall not be imposed on a resident or nonresident
31whose net income, as defined in section 422.7, is thirteen
32thousand five hundred dollars or less in the case of married
33persons filing jointly or filing separately on a combined
34return, heads of household, and surviving spouses or nine
35thousand dollars or less in the case of all other persons; but
-37-1in the event that the payment of tax under this subchapter
2would reduce the net income to less than thirteen thousand five
3hundred dollars or nine thousand dollars as applicable, then
4the tax shall be reduced to that amount which would result
5in allowing the taxpayer to retain a net income of thirteen
6thousand five hundred dollars or nine thousand dollars as
7applicable. The preceding sentence does not apply to estates
8or trusts. For the purpose of this subsection, the entire net
9income, including any part of the net income not allocated
10to Iowa, shall be taken into account. For purposes of this
11subsection, net income includes all amounts of pensions or
12other retirement income, except for military retirement pay
13excluded under section 422.7, subsection 31A, paragraph “a”, or
14section 422.7, subsection 31B, paragraph “a”, received from any
15source which is not taxable under this subchapter as a result
16of the government pension exclusions in section 422.7, or any
17other state law. If the combined net income of a husband and
18wife exceeds thirteen thousand five hundred dollars, neither
19of them shall receive the benefit of this subsection, and it
20is immaterial whether they file a joint return or separate
21returns. However, if a husband and wife file separate returns
22and have a combined net income of thirteen thousand five
23hundred dollars or less, neither spouse shall receive the
24benefit of this paragraph, if one spouse has a net operating
25loss and elects to carry back or carry forward the loss as
26provided in section 422.9, subsection 3. A person who is
27claimed as a dependent by another person as defined in section
28422.12 shall not receive the benefit of this subsection if
29the person claiming the dependent has net income exceeding
30thirteen thousand five hundred dollars or nine thousand dollars
31as applicable or the person claiming the dependent and the
32person’s spouse have combined net income exceeding thirteen
33thousand five hundred dollars or nine thousand dollars as
34applicable.
35 Sec. 84. Section 422.5, subsection 3B, paragraph a, Code
-38-12022, is amended to read as follows:
2a. The tax shall not be imposed on a resident or nonresident
3who is at least sixty-five years old on December 31 of
4the tax year and whose net income, as defined in section
5422.7, is thirty-two thousand dollars or less in the case
6of married persons filing jointly or filing separately on a
7combined return, heads of household, and surviving spouses or
8twenty-four thousand dollars or less in the case of all other
9persons; but in the event that the payment of tax under this
10subchapter would reduce the net income to less than thirty-two
11thousand dollars or twenty-four thousand dollars as applicable,
12then the tax shall be reduced to that amount which would result
13in allowing the taxpayer to retain a net income of thirty-two
14thousand dollars or twenty-four thousand dollars as applicable.
15The preceding sentence does not apply to estates or trusts.
16For the purpose of this subsection, the entire net income,
17including any part of the net income not allocated to Iowa,
18shall be taken into account. For purposes of this subsection,
19net income includes all amounts of pensions or other retirement
20income, except for military retirement pay excluded under
21section 422.7, subsection 31A, paragraph “a”, or section 422.7,
22subsection 31B, paragraph “a”, received from any source which is
23not taxable under this subchapter as a result of the government
24pension exclusions in section 422.7, or any other state law.
25 If the combined net income of a husband and wife exceeds
26thirty-two thousand dollars, neither of them shall receive the
27benefit of this subsection, and it is immaterial whether they
28file a joint return or separate returns. However, if a husband
29and wife file separate returns and have a combined net income
30of thirty-two thousand dollars or less, neither spouse shall
31receive the benefit of this paragraph, if one spouse has a net
32operating loss and elects to carry back or carry forward the
33loss as provided in section 422.9, subsection 3. A person
34who is claimed as a dependent by another person as defined in
35section 422.12 shall not receive the benefit of this subsection
-39-1if the person claiming the dependent has net income exceeding
2thirty-two thousand dollars or twenty-four thousand dollars
3as applicable or the person claiming the dependent and the
4person’s spouse have combined net income exceeding thirty-two
5thousand dollars or twenty-four thousand dollars as applicable.
6 Sec. 85. Section 422.7, subsection 31, Code 2022, is amended
7to read as follows:
831. a. For a person who is disabled, or is fifty-five years
9of age or older, or is the surviving spouse of an individual or
10a survivor having an insurable interest in an individual who
11would have qualified for the exemption under this subsection
12 for the tax year, subtract Subtract, to the extent included,
13the total amount of received from a governmental or other
14pension or retirement pay plan, including, but not limited
15to, defined benefit or defined contribution plans, annuities,
16individual retirement accounts, plans maintained or contributed
17to by an employer, or maintained or contributed to by a
18self-employed person as an employer, and deferred compensation
19plans or any earnings attributable to the deferred compensation
20plans, up to a maximum of six thousand dollars for a person,
21other than a husband or wife, who files a separate state income
22tax return and up to a maximum of twelve thousand dollars
23for a husband and wife who file a joint state income tax
24return. However, a surviving spouse who is not disabled or
25fifty-five years of age or older can only exclude the amount
26of pension or retirement pay received as a result of the death
27of the other spouse. A husband and wife filing separate state
28income tax returns or separately on a combined state return
29are allowed a combined maximum exclusion under this subsection
30 of up to twelve thousand dollars. The twelve thousand dollar
31exclusion shall be allocated to the husband or wife in the
32proportion that each spouse’s respective pension and retirement
33pay received bears to total combined pension and retirement
34pay received received by a person who is disabled, or is
35fifty-five years of age or older, or is the surviving spouse of
-40-1an individual or is a survivor having an insurable interest in
2an individual who would have qualified for the exemption under
3this subsection for the tax year.
4b. Married taxpayers who file separate state income tax
5returns shall allocate their combined annual exclusion amount
6to each spouse in the proportion that each spouse’s respective
7income received from a pension or retirement plan bears to the
8total combined pension or retirement pay received.
9c. A taxpayer who is not disabled or fifty-five years of
10age or older and who receives pension or retirement pay as a
11surviving spouse or as a survivor with an insurable interest
12in an individual who would have qualified for the exemption
13for the tax year may only exclude the amount received from a
14pension or retirement plan in the tax year as a result of the
15death of the decedent.
16 Sec. 86. EFFECTIVE DATE. This division of this Act takes
17effect January 1, 2023.
18 Sec. 87. APPLICABILITY. This division of this Act applies
19to tax years beginning on or after January 1, 2023.
20DIVISION XI
21CORPORATE INCOME TAX
22 Sec. 88. Section 422.33, subsection 1, paragraphs a, b, c,
23and d, Code 2022, are amended to read as follows:
24a. On the first twenty-five thousand dollars of taxable
25income, or any part thereof, the rate of six percent for tax
26years beginning prior to January 1, 2021, and the rate of
27five and one-half percent for tax years beginning on or after
28January 1, 2021, but before January 1, 2024.
29b. On taxable income between twenty-five thousand dollars
30and one hundred thousand dollars or any part thereof, the rate
31of eight percent for tax years beginning prior to January 1,
322021, and the rate of five and one-half percent for tax years
33beginning on or after January 1, 2021, but before January 1,
342024.
35c. On taxable income between one hundred thousand dollars
-41-1and two hundred fifty thousand dollars or any part thereof, the
2rate of ten percent for tax years beginning prior to January 1,
32021, and the rate of nine percent for tax years beginning on
4or after January 1, 2021, but before January 1, 2024.
5d. On taxable income of two hundred fifty thousand dollars
6or more, the rate of twelve percent for tax years beginning
7prior to January 1, 2021, and the rate of nine and eight-tenths
8percent for tax years beginning on or after January 1, 2021,
9but before January 1, 2024.
10DIVISION XII
11FUTURE CORPORATE INCOME TAX RATES
12 Sec. 89. Section 422.33, subsection 1, Code 2022, as
13amended by this Act, is amended by striking the subsection and
14inserting in lieu thereof the following:
151. a. A tax is imposed annually upon each corporation doing
16business in this state, or deriving income from sources within
17this state, in an amount computed by applying the following
18rates of taxation to the net income received by the corporation
19during the income year:
20(1) For the tax year beginning on or after January 1, 2023,
21but before January 1, 2024:
22(a) On taxable income from zero through one hundred thousand
23dollars, or any part thereof, the rate of five and one-half
24percent.
25(b) On taxable income between one hundred thousand dollars
26and two hundred fifty thousand dollars, or any part thereof,
27the rate of nine percent.
28(c) On taxable income of two hundred fifty thousand dollars
29or more, the rate of nine and eight-tenths percent.
30(2) For the tax year beginning on or after January 1, 2024,
31but before January 1, 2025:
32(a) On taxable income from zero through one hundred thousand
33dollars, or any part thereof, the rate of five and one-half
34percent.
35(b) On taxable income between one hundred thousand dollars
-42-1and two hundred fifty thousand dollars, or any part thereof,
2the rate of nine percent.
3(c) On taxable income of two hundred fifty thousand dollars
4or more, the rate of nine and four-tenths percent.
5(3) For the tax year beginning on or after January 1, 2025,
6but before January 1, 2026:
7(a) On taxable income from zero through one hundred thousand
8dollars, or any part thereof, the rate of five and one-half
9percent.
10(b) On taxable income exceeding one hundred thousand
11dollars, the rate of nine percent.
12(4) For the tax year beginning on or after January 1, 2026,
13but before January 1, 2027:
14(a) On taxable income from zero through one hundred thousand
15dollars, or any part thereof, the rate of five and four-tenths
16percent.
17(b) On taxable income exceeding one hundred thousand
18dollars, the rate of eight and six-tenths percent.
19(5) For the tax year beginning on or after January 1, 2027,
20but before January 1, 2028:
21(a) On taxable income from zero through one hundred thousand
22dollars, or any part thereof, the rate of five and four-tenths
23percent.
24(b) On taxable income exceeding one hundred thousand
25dollars, the rate of eight and two-tenths percent.
26b. For tax years beginning on or after January 1, 2028, a
27tax is imposed annually upon each corporation doing business
28in this state, or deriving income from sources within this
29state, in an amount computed by applying the following rates of
30taxation to the net income received by the corporation during
31the income year:
32(1) On taxable income from zero through one hundred thousand
33dollars, or any part thereof, the rate of five and three-tenths
34percent.
35(2) On taxable income exceeding one hundred thousand
-43-1dollars, the rate of seven and eight-tenths percent.
2 Sec. 90. EFFECTIVE DATE. This division of this Act takes
3effect January 1, 2024.
4DIVISION XIII
5FRANCHISE TAX
6 Sec. 91. Section 422.63, Code 2022, is amended to read as
7follows:
8422.63 Amount of tax.
91. The franchise tax is imposed annually in an amount equal
10to five the percent specified in subsection 2 of the net income
11received or accrued during the taxable year. If the net income
12of the financial institution is derived from its business
13carried on entirely within the state, the tax shall be imposed
14on the entire net income, but if the business is carried on
15partly within and partly without the state, the portion of net
16income reasonably attributable to the business within the state
17shall be specifically allocated or equitably apportioned within
18and without the state under rules of the director.
192. a. For tax years beginning prior to January 1, 2023,
20five percent.
21b. For tax years beginning on or after January 1, 2023, but
22before January 1, 2024, four and four-fifths percent.
23c. For tax years beginning on or after January 1, 2024, but
24before January 1, 2025, four and three-fifths percent.
25d. For tax years beginning on or after January 1, 2025, but
26before January 1, 2026, four and two-fifths percent.
27e. For tax years beginning on or after January 1, 2026, but
28before January 1, 2027, four and one-fifth percent.
29f. For tax years beginning on or after January 1, 2027, four
30percent.
31DIVISION XIV
32INSURANCE PREMIUM TAX
33 Sec. 92. Section 432.1, subsection 2, Code 2022, is amended
34to read as follows:
352. The “applicable percent” for purposes of subsection 1 of
-44-1this section and section 432.2 is the following:
2a. For calendar years beginning before the 2003 calendar
3year, two percent.
4b. For the 2003 calendar year, one and three-fourths
5percent.
6c. For the 2004 calendar year, one and one-half percent.
7d. For the 2005 calendar year, one and one-fourth percent.
8e. For the 2006 and subsequent calendar years year through
9the 2022 calendar year, one percent.
10f. For the 2023 calendar year, ninety-five hundredths of one
11percent.
12g. For the 2024 and subsequent calendar years, nine-tenths
13of one percent.
14 Sec. 93. Section 432.1, subsection 4, Code 2022, is amended
15to read as follows:
164. The “applicable percent” for purposes of subsection 3 is
17the following:
18a. For calendar years beginning before the 2004 calendar
19year, two percent.
20b. For the 2004 calendar year, one and three-fourths
21percent.
22c. For the 2005 calendar year, one and one-half percent.
23d. For the 2006 calendar year, one and one-fourth percent.
24e. For the 2007 and subsequent calendar years year through
25the 2022 calendar year, one percent.
26f. For the 2023 calendar year, ninety-five hundredths of one
27percent.
28g. For the 2024 and subsequent calendar years, nine-tenths
29of one percent.
30DIVISION XV
31AUTOMOBILE RENTAL EXCISE TAX
32 Sec. 94. Section 423C.2, subsection 7, Code 2022, is amended
33by striking the subsection.
34 Sec. 95. Section 423C.3, subsection 1, Code 2022, is amended
35to read as follows:
-45- 11. A tax of five seven percent is imposed upon the rental
2price of an automobile if the rental transaction is subject
3to the sales tax under chapter 423, subchapter II, or the use
4tax under chapter 423, subchapter III. The tax shall not be
5imposed on any rental transaction not taxable under the state
6sales tax, as provided in section 423.3, or the state use tax,
7as provided in section 423.6, on automobile rental receipts.
8 Sec. 96. Section 423C.3, subsection 3, Code 2022, is amended
9by striking the subsection.
10 Sec. 97. Section 423.14A, subsection 1, paragraph b,
11subparagraph (3), Code 2022, is amended by striking the
12subparagraph.
13 Sec. 98. EFFECTIVE DATE. This division of this Act takes
14effect January 1, 2023.
15DIVISION XVI
16EQUIPMENT TAX
17 Sec. 99. Section 423D.2, Code 2022, is amended to read as
18follows:
19423D.2 Tax imposed.
20A tax of five six percent is imposed on the sales price
21or purchase price of all equipment sold or used in the state
22of Iowa. This tax shall be collected and paid over to the
23department by any retailer, retailer maintaining a place of
24business in this state, or user who would be responsible for
25collection and payment of the tax if it were a sales or use tax
26imposed under chapter 423.
27 Sec. 100. EFFECTIVE DATE. This division of this Act takes
28effect January 1, 2023.
29DIVISION XVII
30WATER SERVICE TAX
31 Sec. 101. Section 421.71, subsection 3, Code 2022, is
32amended to read as follows:
333. Private cause of action immunity for overpayment of
34certain taxes.
35a. A taxpayer, or any person required to collect taxes
-46-1imposed under chapters 423, 423A, 423B, 423C, and 423D, and
2chapter 423G, Code 2022, shall be immune from any private cause
3of action arising from or related to the overpayment of taxes
4imposed under chapters 423, 423A, 423B, 423C, and 423D, and
5chapter 423G, Code 2022, that are collected and remitted to the
6department.
7b. Nothing in this subsection shall apply to or otherwise
8limit any of the following:
9(1) Any claim, action, mandate, power, remedy, or
10discretion of the department, or an agent or designee of the
11department.
12(2) A taxpayer’s right to seek a refund from the department
13related to taxes imposed under chapters 423, 423A, 423B, 423C,
14and 423D, and chapter 423G, Code 2022, that are collected from
15or paid by the taxpayer.
16 Sec. 102. Section 423.3, subsection 103, Code 2022, is
17amended by striking the subsection.
18 Sec. 103. REPEAL. Chapter 423G, Code 2022, is repealed.
19 Sec. 104. EFFECTIVE DATE. This division of this Act takes
20effect January 1, 2023.
21DIVISION XVIII
22TAX CREDITS
23 Sec. 105. Section 15.119, subsection 2, paragraph a, Code
242022, is amended by adding the following new subparagraph:
25 NEW SUBPARAGRAPH. (3) In allocating tax credits pursuant
26to this subsection, the authority shall prioritize issuing
27additional research and development tax credits pursuant to
28section 15.335.
29 Sec. 106. Section 15.293A, subsection 1, paragraph c,
30subparagraph (2), unnumbered paragraph 1, Code 2022, is amended
31to read as follows:
32A For the tax year beginning on or after January 1, 2023,
33but before January 1, 2024, seventy-five percent of the tax
34credit in excess of the taxpayer’s liability for the tax year
35is refundable, and for tax years beginning on or after January
-47-11, 2024, fifty percent of the tax credit in excess of the
2taxpayer’s liability for the tax year is refundable, if all of
3the following conditions are met:
4 Sec. 107. Section 15.319, subsection 5, Code 2022, is
5amended to read as follows:
65. Any For the tax year beginning on or after January 1,
72023, but before January 1, 2024, seventy-five percent of any
8 tax credit in excess of the tax liability is refundable. For
9tax years beginning on or after January 1, 2024, fifty percent
10of any tax credit in excess of the tax liability is refundable.
11 In lieu of claiming a refund, the taxpayer may elect to have
12the overpayment shown on the taxpayer’s final, completed return
13credited to the tax liability for the following tax year.
14 Sec. 108. Section 15E.305, subsection 2, paragraph a, Code
152022, is amended to read as follows:
16a. The maximum amount of tax credits granted to a taxpayer
17shall not exceed five percent one hundred thousand dollars of
18the aggregate amount of tax credits authorized.
19 Sec. 109. Section 422.5, subsection 1, paragraph b,
20subparagraph (2), Code 2022, is amended by striking the
21subparagraph.
22 Sec. 110. Section 422.5, subsection 2, paragraph d, Code
232022, is amended to read as follows:
24d. In the case of a resident, including a resident
25estate or trust, the state’s apportioned share of the state
26alternative minimum tax is one hundred percent of the state
27alternative minimum tax computed in this subsection 2. In the
28case of a resident or part-year resident shareholder in an S
29corporation which has in effect for the tax year an election
30under subchapter S of the Internal Revenue Code and carries
31on business within and without the state, a nonresident,
32including a nonresident estate or trust, or an individual,
33estate, or trust that is domiciled in the state for less than
34the entire tax year, the state’s apportioned share of the
35state alternative minimum tax is the amount of tax computed
-48-1under this subsection 2, reduced by the applicable credits in
2sections 422.10 through 422.12 and this result multiplied by
3a fraction with a numerator of the sum of state net income
4allocated to Iowa as determined in section 422.8, subsection 2,
5paragraph “a” or “b” as applicable, plus tax preference items,
6adjustments, and losses under subparagraph (1) attributable
7to Iowa and with a denominator of the sum of total net income
8computed under section 422.7 plus all tax preference items,
9adjustments, and losses under subparagraph (1). In computing
10this fraction, those items excludable under subparagraph (1)
11shall not be used in computing the tax preference items.
12Married taxpayers electing to file separate returns or
13separately on a combined return must allocate the minimum
14tax computed in this subsection in the proportion that each
15spouse’s respective preference items, adjustments, and losses
16under subparagraph (1) bear to the combined preference items,
17adjustments, and losses under subparagraph (1) of both spouses.
18 Sec. 111. Section 422.8, subsection 2, paragraph b, Code
192022, is amended by striking the paragraph.
20 Sec. 112. Section 422.8, subsection 6, Code 2022, is amended
21by striking the subsection.
22 Sec. 113. Section 422.10, subsection 1, paragraph a, Code
232022, is amended by adding the following new subparagraph:
24 NEW SUBPARAGRAPH. (3) The credit provided in this section
25is claimed on a return filed by the due date for filing the
26return, including extensions of time. If timely claimed, the
27business shall not increase the credit claim on an amended
28return or otherwise unless the increase results from an
29audit or examination by the internal revenue service or the
30department.
31 Sec. 114. Section 422.10, subsection 1, paragraph b,
32subparagraph (1), subparagraph divisions (a) and (b), Code
332022, are amended to read as follows:
34(a) Six and one-half Four percent of the excess of qualified
35research expenses during the tax year over the base amount for
-49-1the tax year based upon the state’s apportioned share of the
2qualifying expenditures for increasing research activities.
3(b) Six and one-half Four percent of the basic research
4payments determined under section 41(e)(1)(A) of the Internal
5Revenue Code during the tax year based upon the state’s
6apportioned share of the qualifying expenditures for increasing
7research activities.
8 Sec. 115. Section 422.10, subsection 1, paragraph b, Code
92022, is amended by adding the following new subparagraph:
10 NEW SUBPARAGRAPH. (3) For the purpose of calculating
11the state’s apportioned share of the qualifying expenditures
12for increasing research activities in subparagraph (2), the
13following criteria shall apply only to the determination of
14qualified research expenditures in this state:
15(a) Wages paid to an employee for qualified services,
16or contract research expenses paid to a third party for
17the performance of qualified research services, shall only
18constitute qualified research expenses in this state if the
19services are performed in this state, and if the following
20conditions are met, as applicable:
21(i) For qualified services performed by employees, during
22the period of the tax year that the business is engaging in one
23or more research projects, a majority of the total services
24performed by the employee for the business are directly related
25to those research projects.
26(ii) For the performance of qualified research services
27by a third party, during the period of the business’s tax
28year that the third party is performing research services for
29the business, a majority of the total services performed by
30the person for the third party are directly related to those
31research projects of the business.
32(b) The substantially all rule for determining qualified
33services as described in section 41(b)(2)(B) of the Internal
34Revenue Code and Treas.Reg.1.41-2(d)(2) does not apply.
35(c) Amounts paid for supplies as defined in section
-50-141(b)(2)(C) of the Internal Revenue Code, or for the right to
2use computers as described in section 41(b)(2)(A)(iii) of the
3Internal Revenue Code, shall not be qualified research expenses
4in this state.
5 Sec. 116. Section 422.10, subsection 1, paragraphs c and d,
6Code 2022, are amended to read as follows:
7c. In lieu of the credit amount computed in paragraph “b”,
8subparagraph (1), subparagraph division (a), a taxpayer may
9 shall elect to compute the credit amount for qualified research
10expenses incurred in this state in a manner consistent with the
11alternative simplified credit described in section 41(c)(4)
12of the Internal Revenue Code if the taxpayer elected or was
13required to use the alternative simplified credit method for
14federal income tax purposes for the same taxable year. The
15taxpayer may make this election regardless of the method used
16for the taxpayer’s federal income tax. The election made under
17this paragraph is for the tax year and the taxpayer may use
18another or the same method for any subsequent year.
19d. For purposes of the alternate credit computation method
20in paragraph “c”, the following criteria shall apply:
21(1) Thecredit percentages applicable to qualified research
22expenses described in section 41(c)(4)(A) and clause (ii) of
23section 41(c)(4)(B) of the Internal Revenue Code are four and
24fifty-five hundredths two and eight-tenths percent and one and
25ninety-five hundredths two-tenths percent, respectively.
26(2) Basic research payments and qualified research expenses
27shall only include amounts for research conducted in this
28state. A taxpayer’s qualified research expenses in this state
29and average prior year qualified research expenses in this
30state shall be determined in accordance with the criteria in
31subsection 1, paragraph “b”, subparagraph (3).
32 Sec. 117. Section 422.10, subsection 3, paragraph b, Code
332022, is amended to read as follows:
34b. For purposes of this section, “basic research payment”
35and “qualified research expense” mean the same as defined
-51-1for the federal credit for increasing research activities
2under section 41 of the Internal Revenue Code, except that
3for the alternative simplified credit such amounts are for
4research conducted within this state as otherwise described in
5subsection 1, paragraph “b”, subparagraph (3), and subsection
61, paragraph “d”, subparagraph (2).
7 Sec. 118. Section 422.10, subsection 4, Code 2022, is
8amended to read as follows:
94. a. Any Commencing with the tax year beginning on or
10after January 1, 2023, but before January 1, 2024, seventy-five
11percent of any credit in excess of the tax liability imposed by
12section 422.5 less the amounts of nonrefundable credits allowed
13under this subchapter for the taxable year shall be refunded
14with interest in accordance with section 421.60, subsection
152, paragraph “e”. In lieu of claiming a refund, a taxpayer
16may elect to have the overpayment shown on the taxpayer’s
17final, completed return credited to the tax liability for the
18following taxable year.
19b. Commencing with tax years beginning on or after
20January 1, 2024, fifty percent of any credit in excess of the
21tax liability imposed by section 422.5 less the amounts of
22nonrefundable credits allowed under this subchapter for the
23taxable year shall be refunded with interest in accordance
24with section 421.60, subsection 2, paragraph “e”. In lieu of
25claiming a refund, a taxpayer may elect to have the overpayment
26shown on the taxpayer’s final, completed return credited to the
27tax liability for the following taxable year.
28 Sec. 119. Section 422.11W, Code 2022, is amended by adding
29the following new subsection:
30 NEW SUBSECTION. 5. Commencing with tax years beginning
31on or after January 1, 2023, a charitable conservation
32contribution tax credit shall not be claimed against taxes as
33provided in this section, except for tax credits claimed for
34qualified real property interests conveyed prior to January 1,
352023.
-52-1 Sec. 120. Section 422.12N, Code 2022, is amended by adding
2the following new subsections:
3 NEW SUBSECTION. 6. This section does not apply to a
4geothermal heat pump installation occurring after December 31,
52023.
6 NEW SUBSECTION. 7. This section is repealed January 1,
72034.
8 Sec. 121. Section 422.33, subsection 5, paragraph a,
9subparagraphs (1) and (2), Code 2022, are amended to read as
10follows:
11(1) Six and one-half Four percent of the excess of qualified
12research expenses during the tax year over the base amount for
13the tax year based upon the state’s apportioned share of the
14qualifying expenditures for increasing research activities.
15(2) Six and one-half Four percent of the basic research
16payments determined under section 41(e)(1)(A) of the Internal
17Revenue Code during the tax year based upon the state’s
18apportioned share of the qualifying expenditures for increasing
19research activities.
20 Sec. 122. Section 422.33, subsection 5, paragraph b, Code
212022, is amended to read as follows:
22b. (1) The state’s apportioned share of the qualifying
23expenditures for increasing research activities is a percent
24equal to the ratio of qualified research expenditures in this
25state to the total qualified research expenditures.
26(2) For the purpose of calculating the state’s apportioned
27share of the qualifying expenditures for increasing research
28activities in subparagraph (1), the following criteria
29shall apply only to the determination of qualified research
30expenditures in this state:
31(a) Wages paid to an employee for qualified services,
32or contract research expenses paid to a third party for
33the performance of qualified research services, shall only
34constitute qualified research expenses in this state if the
35services are performed in this state, and if the following
-53-1conditions are met, as applicable:
2(i) For qualified services performed by employees, during
3the period of the tax year that the business is engaging in one
4or more research projects, a majority of the total services
5performed by the employee for the business are directly related
6to those research projects.
7(ii) For the performance of qualified research services
8by a third party, during the period of the business’s tax
9year that the third party is performing research services for
10the business, a majority of the total services performed by
11the person for the third party are directly related to those
12research projects of the business.
13(b) The substantially all rule for determining qualified
14services as described in section 41(b)(2)(B) of the Internal
15Revenue Code and Treas.Reg.1.41-2(d)(2) does not apply.
16(c) Amounts paid for supplies as defined in section
1741(b)(2)(C) of the Internal Revenue Code, or for the right to
18use computers as described in section 41(b)(2)(A)(iii) of the
19Internal Revenue Code, shall not be qualified research expenses
20in this state.
21 Sec. 123. Section 422.33, subsection 5, paragraphs c and d,
22Code 2022, are amended to read as follows:
23c. In lieu of the credit amount computed in paragraph “a”,
24subparagraph (1), a corporation may elect to compute the credit
25amount for qualified research expenses incurred in this state
26in a manner consistent with the alternative simplified credit
27described in section 41(c)(4) of the Internal Revenue Code if
28the taxpayer elected or was required to use the alternative
29simplified credit method for federal income tax purposes for
30the same taxable year. The taxpayer may make this election
31regardless of the method used for the taxpayer’s federal income
32tax. The election made under this paragraph is for the tax
33year and the taxpayer may use another or the same method for
34any subsequent year.
35d. For purposes of the alternate credit computation method
-54-1in paragraph “c”, the following criteria shall apply:
2(1) Thecredit percentages applicable to qualified research
3expenses described in section 41(c)(4)(A) and clause (ii) of
4section 41(c)(4)(B) of the Internal Revenue Code are four and
5fifty-five hundredths two and eight-tenths percent and one and
6ninety-five hundredths two-tenths percent, respectively.
7(2) Basic research payments and qualified research expenses
8shall only include amounts for research conducted in this
9state. A taxpayer’s qualified research expenses in this state
10and average prior year qualified research expenses in this
11state shall be determined in accordance with the rules in
12paragraph “b”, subparagraph (2).
13 Sec. 124. Section 422.33, subsection 5, paragraph e, Code
142022, is amended by adding the following new subparagraph:
15 NEW SUBPARAGRAPH. (3) The credit provided in this
16subsection is claimed on a return filed by the due date for
17filing the return, including extensions of time. If timely
18claimed, the business shall not increase the credit claim on an
19amended return or otherwise unless the increase results from
20an audit or examination by the internal revenue service or the
21department.
22 Sec. 125. Section 422.33, subsection 5, paragraph f,
23subparagraph (2), Code 2022, is amended to read as follows:
24(2) For purposes of this subsection, “basic research
25payment” and “qualified research expense” mean the same as
26defined for the federal credit for increasing research
27activities under section 41 of the Internal Revenue Code,
28except that for the alternative simplified credit such amounts
29are for research conducted within this state as otherwise
30described in paragraph “b”, subparagraph (2), and paragraph “d”,
31subparagraph (2).
32 Sec. 126. Section 422.33, subsection 5, paragraph g, Code
332022, is amended to read as follows:
34g. (1) Any Commencing with the tax year beginning on or
35after January 1, 2023, but before January 1, 2024, seventy-five
-55-1percent of any credit in excess of the tax liability for the
2taxable year shall be refunded with interest in accordance
3with section 421.60, subsection 2, paragraph “e”. In lieu of
4claiming a refund, a taxpayer may elect to have the overpayment
5shown on its final, completed return credited to the tax
6liability for the following taxable year.
7(2) Commencing with tax years beginning on or after January
81, 2024, fifty percent of any credit in excess of the tax
9liability for the taxable year shall be refunded with interest
10in accordance with section 421.60, subsection 2, paragraph “e”.
11In lieu of claiming a refund, a taxpayer may elect to have the
12overpayment shown on its final, completed return credited to
13the tax liability for the following taxable year.
14 Sec. 127. Section 422.33, subsection 25, Code 2022, is
15amended by striking the subsection and inserting in lieu
16thereof the following:
1725. The taxes imposed under this subchapter shall be reduced
18by a charitable conservation contribution tax credit as allowed
19under section 422.11W for each tax year the taxpayer has
20credit, in excess of tax liability, for qualified real property
21interests conveyed prior to January 1, 2023.
22 Sec. 128. PRESERVATION OF EXISTING RIGHTS.
231. This division of this Act is not intended to and shall
24not limit, modify, or otherwise adversely affect any amount
25of tax credit issued, awarded, or allowed prior to January 1,
262023, nor shall it limit, modify, or otherwise adversely affect
27a taxpayer’s right to claim or redeem a tax credit issued,
28awarded, or allowed prior to January 1, 2023, including but not
29limited to any tax credit carryforward amount.
302. The repeal of a provision of law pursuant to this
31division of this Act shall not constitute grounds for
32rescission or modification of agreements entered into under
33those provisions of law, if any. Any agreement entered into
34prior to January 1, 2023, under a provision of law repealed
35in this division of this Act, shall remain in effect until
-56-1it expires under its own terms, and shall be governed by the
2applicable provisions of law as they existed immediately prior
3to January 1, 2023.
4 Sec. 129. TAX CREDIT REVIEW STUDY COMMITTEE DURING 2029
5LEGISLATIVE INTERIM. The legislative council is requested to
6authorize a study committee to review tax credits available
7against state taxes by developing options for replacing tax
8credits that produce equivalent results as the tax credit
9being replaced. The study committee shall review tax credits
10including but not limited to the adoption tax credit in section
11422.12A, the tuition and textbook tax credit in section 422.12,
12and the school tuition organization tax credit in section
13422.11S.
14The study committee shall consist of five voting members of
15the senate, three of whom shall be appointed by the majority
16leader of the senate and two of whom shall be appointed by the
17minority leader of the senate, and five voting members of the
18house of representatives, three of whom shall be appointed by
19the speaker of the house of representatives and two of whom
20shall be appointed by the minority leader of the house of
21representatives. The co-chairpersons of the committee shall
22also appoint taxpayer representatives as nonvoting members of
23the committee. The study committee shall meet during the 2029
24legislative interim to make appropriate recommendations for
25consideration during the 2029 legislative session in a report
26submitted to the general assembly by January 15, 2030.
27 Sec. 130. EFFECTIVE DATE. This division of this Act takes
28effect January 1, 2023.
29 Sec. 131. APPLICABILITY. This division of this Act applies
30to tax years beginning on or after January 1, 2023.
31DIVISION XIX
32TAX EXPENDITURE committee
33 Sec. 132. Section 2.45, subsection 5, Code 2022, is amended
34by striking the subsection.
35 Sec. 133. Section 2.48, subsections 1 and 2, Code 2022,
-57-1are amended by striking the subsections and inserting in lieu
2thereof the following:
31. As used in this section, “tax expenditure” means an
4exclusion from the operation or collection of a tax imposed in
5this state. Tax expenditures include tax credits, exemptions,
6deductions, and rebates. Tax expenditures also include sales
7tax refunds issued pursuant to section 423.3 or 423.4.
82. a. (1) The department administering a tax expenditure
9described in subsection 3 shall engage in a review of the
10tax expenditure based upon the schedule in subsection 3. If
11multiple departments administer the tax expenditure, the
12departments shall cooperate in the review.
13(2) The review shall consist of evaluating any tax
14expenditure described in subsection 3 and assess its equity,
15simplicity, competitiveness, public purpose, adequacy,
16and extent of conformance with the original purpose of the
17legislation that enacted the tax expenditure, as those issues
18pertain to taxation in Iowa.
19b. (1) The department shall file a report detailing the
20review with the general assembly no later than December 15 of
21the year the credit is scheduled to be reviewed in subsection
223.
23(2) The report may include recommendations for better
24aligning tax expenditures with the original intent of the
25legislation that enacted the tax expenditure.
26 Sec. 134. Section 2.48, subsection 3, unnumbered paragraph
271, Code 2022, is amended to read as follows:
28The committee applicable department shall review the
29following tax expenditures and incentives according to the
30following schedule:
31 Sec. 135. Section 2.48, subsection 3, paragraph b,
32subparagraph (3), Code 2022, is amended to read as follows:
33(3) Funding of urban renewal projects with increased local
34sales and services tax revenues under section 423B.10.
35 Sec. 136. Section 2.48, subsection 4, Code 2022, is amended
-58-1to read as follows:
24. Subsequent additional review. A tax expenditure or
3incentive reviewed pursuant to subsection 3 shall be reviewed
4again not more than five years after the tax expenditure or
5incentive was most recently reviewed.
6DIVISION XX
7INDIVIDUAL INCOME TAX ELIMINATION FUND
8 Sec. 137. Section 8.55, subsection 2, paragraph a, Code
92022, is amended to read as follows:
10a. The difference between the actual net revenue for the
11general fund of the state for the fiscal year and the adjusted
12revenue estimate for the fiscal year shall be transferred to
13the taxpayer relief individual income tax elimination fund
14created in section 8.57E.
15 Sec. 138. Section 8.57E, Code 2022, is amended to read as
16follows:
178.57E Taxpayer relief Individual income tax elimination fund.
181. A taxpayer relief An individual income tax elimination
19 fund is created. The fund shall be separate from the general
20fund of the state and the balance in the fund shall not be
21considered part of the balance of the general fund of the
22state. The moneys credited to the fund are not subject to
23section 8.33 and shall not be transferred, used, obligated,
24appropriated, or otherwise encumbered except as provided in
25this section.
262. Moneys in the taxpayer relief fund shall only be used
27pursuant to appropriations or transfers made by the general
28assembly for tax relief, including but not limited to increases
29in the general retirement income exclusion under section 422.7,
30subsection 31, or reductions in income tax rates.
313. a. Moneys in the taxpayer relief fund may be used for
32cash flow purposes during a fiscal year provided that any
33moneys so allocated are returned to the fund by the end of that
34fiscal year.
35b. Except as provided in section 8.58, the taxpayer relief
-59-1 fund shall be considered a special account for the purposes of
2section 8.53 in determining the cash position of the general
3fund of the state for the payment of state obligations.
44. Notwithstanding section 12C.7, subsection 2, interest or
5earnings on moneys deposited in the taxpayer relief fund shall
6be credited to the fund.
7 Sec. 139. Section 8.58, Code 2022, is amended to read as
8follows:
98.58 Exemption from automatic application.
101. To the extent that moneys appropriated under section
118.57 do not result in moneys being credited to the general fund
12under section 8.55, subsection 2, moneys appropriated under
13section 8.57 and moneys contained in the cash reserve fund,
14rebuild Iowa infrastructure fund, environment first fund, Iowa
15economic emergency fund, taxpayer relief individual income tax
16elimination fund, state bond repayment fund, Iowa coronavirus
17fiscal recovery fund, and Iowa coronavirus capital projects
18fund shall not be considered in the application of any formula,
19index, or other statutory triggering mechanism which would
20affect appropriations, payments, or taxation rates, contrary
21provisions of the Code notwithstanding.
222. To the extent that moneys appropriated under section
238.57 do not result in moneys being credited to the general
24fund under section 8.55, subsection 2, moneys appropriated
25under section 8.57 and moneys contained in the cash reserve
26fund, rebuild Iowa infrastructure fund, environment first
27fund, Iowa economic emergency fund, taxpayer relief individual
28income tax elimination fund, state bond repayment fund, Iowa
29coronavirus fiscal recovery fund, and Iowa coronavirus capital
30projects fund shall not be considered by an arbitrator or in
31negotiations under chapter 20.
32DIVISION XXI
33NATIONAL GUARD PAY
34 Sec. 140. Section 422.7, subsection 42A, Code 2022, is
35amended to read as follows:
-60- 142A. Subtract, to the extent included, all pay received by
2the taxpayer from the federal government for military service
3performed while on active duty status in the armed forces, the
4armed forces military reserve, or the national guard, including
5pay for full-time service performed pursuant to 32 U.S.C.
6§502(f) and 32 U.S.C. §709(a) and (b).
7 Sec. 141. APPLICABILITY. This division of this Act applies
8to tax years beginning on or after January 1, 2023.
9DIVISION XXII
10LOCAL OPTION TAXES
11 Sec. 142. Section 15J.7, subsection 2, Code 2022, is amended
12to read as follows:
132. In addition to the moneys received pursuant to section
1415J.6, a municipality may deposit in the reinvestment project
15fund any other moneys lawfully at the municipality’s disposal,
16including but not limited to local sales and services tax
17receipts collected revenues received under chapter 423B if such
18use is a purpose authorized for the municipality under chapter
19423B.
20 Sec. 143. Section 28A.17, Code 2022, is amended to read as
21follows:
2228A.17 Local sales and services tax.
231. If an authority is established as provided in section
2428A.6 and after approval of a referendum by a simple majority
25of votes cast in each metropolitan area in favor of the sales
26and services tax, the governing board of a county in this state
27within a metropolitan area which is part of the authority shall
28impose, at the request of the authority, a local sales and
29services tax at the rate of one-fourth of one percent on the
30sales price taxed by this state under section 423.2, within
31the metropolitan area located in this state. The referendum
32shall be called by resolution of the board and shall be held
33as provided in section 28A.6 to the extent applicable. The
34ballot proposition shall contain a statement as to the specific
35purpose or purposes for which the revenues shall be expended
-61-1and the date of expiration of the tax. The local sales and
2services tax shall be imposed on the same basis, with the same
3exceptions, and following the same administrative procedures as
4provided for a county under sections 423B.5 and 423B.6, Code
52022. The amount of the sale, for the purposes of determining
6the amount of the local sales and services tax under this
7section, does not include the amount of any local sales and
8services tax imposed under sections 423B.5 and 423B.6, Code
92022.
102. The treasurer of state shall credit the local sales
11and services tax receipts and interest and penalties to the
12authority’s account. Moneys in this account shall be remitted
13quarterly to the authority. The proceeds of the tax imposed
14under this section shall be used only for the construction,
15reconstruction, or repair of metropolitan facilities as
16specified in the referendum. The local sales and services tax
17imposed under this section may be suspended for not less than
18a fiscal quarter or more than one year by action of the board.
19The suspension may be renewed or continued by the board, but
20the board shall act on the suspension at least annually.
21The local sales and services tax may also be repealed by a
22petition and favorable referendum following the procedures and
23requirements of sections 28A.5 and 28A.6 as applicable. The
24board shall give the department of revenue at least forty days’
25notice of the repeal, suspension, or reinstatement of the tax
26and the effective dates for imposition, suspension, or repeal
27of the tax shall be as provided in section 423B.6, Code 2022.
283. A local sales and services tax authorized under this
29section shall not be imposed or collected on or after January
301, 2023.
31 Sec. 144. Section 76.4, Code 2022, is amended to read as
32follows:
3376.4 Permissive application of funds.
34Whenever the governing authority of such political
35subdivision shall have on hand funds derived from any other
-62-1source than taxation which may be appropriated to the payment
2either of interest or principal, or both principal and interest
3of such bonds, such funds may be so appropriated and used
4and the levy for the payment of the bonds correspondingly
5reduced. This section shall not restrict the authority of a
6political subdivision to apply sales and services tax receipts
7collected received pursuant to chapter 423B for such purpose.
8Notwithstanding section 423F.3, a school district may apply tax
9receipts received pursuant to chapter 423F for the purposes of
10this section.
11 Sec. 145. Section 99B.1, subsection 23, Code 2022, is
12amended to read as follows:
1323. “Net receipts” means gross receipts less amounts awarded
14as prizes and less state and local sales tax paid upon the
15gross receipts.
16 Sec. 146. Section 99B.14, subsection 1, Code 2022, is
17amended to read as follows:
181. A licensed qualified organization shall certify
19that the receipts from all charitable gambling conducted
20by the organization under this chapter, less reasonable
21expenses, charges, fees, taxes, and deductions, either will
22be distributed as prizes to participants or will be dedicated
23and distributed for educational, civic, public, charitable,
24patriotic, or religious uses. Reasonable expenses, charges,
25fees, taxes other than the state and local sales tax, and
26deductions allowed by the department shall not exceed forty
27percent of net receipts.
28 Sec. 147. Section 99G.4, subsection 2, Code 2022, is amended
29to read as follows:
302. The income and property of the authority shall be exempt
31from all state and local taxes, and the sale of lottery tickets
32and shares issued and sold by the authority and its retail
33licensees shall be exempt from all state and local sales taxes.
34 Sec. 148. Section 99G.30A, subsection 2, paragraph a, Code
352022, is amended to read as follows:
-63- 1a. The director of revenue shall administer the monitor
2vending machine excise tax as nearly as possible in conjunction
3with the administration of state sales tax laws. The director
4shall provide appropriate forms or provide appropriate entries
5on the regular state tax forms for reporting local sales and
6services tax liability.
7 Sec. 149. Section 279.63, subsection 2, paragraph a, Code
82022, is amended to read as follows:
9a. All property tax levies, and income surtaxes, and local
10option sales taxes in place in the school district, listed by
11type of levy, rate, amount, duration, and notification of the
12maximum rate and amount limitations permitted by statute.
13 Sec. 150. Section 321.40, subsection 5, Code 2022, is
14amended by striking the subsection.
15 Sec. 151. Section 321.130, Code 2022, is amended to read as
16follows:
17321.130 Fees in lieu of taxes.
18The registration fees imposed by this chapter upon private
19passenger motor vehicles or semitrailers are in lieu of all
20state and local taxes, except local vehicle taxes, to which
21motor vehicles or semitrailers are subject.
22 Sec. 152. Section 418.13, subsection 2, Code 2022, is
23amended to read as follows:
242. In addition to the moneys received pursuant to section
25418.10 or 418.12, a governmental entity may deposit in the
26flood project fund any other moneys lawfully received by the
27governmental entity, including but not limited to local sales
28and services tax receipts collected amounts received under
29chapter 423B.
30 Sec. 153. Section 421.26, Code 2022, is amended to read as
31follows:
32421.26 Personal liability for tax due.
33If a licensee or other person under section 452A.65, a
34retailer or purchaser under chapter 423A, 423B, 423C, 423D,
35or 423E, or section 423.14, 423.14A, 423.29, 423.31, 423.32,
-64-1or 423.33, or a user under section 423.34, or a permit holder
2or licensee under section 453A.13, 453A.16, or 453A.44 fails
3to pay a tax under those sections when due, an officer of a
4corporation or association, notwithstanding section 489.304,
5a member or manager of a limited liability company, or a
6partner of a partnership, having control or supervision of
7or the authority for remitting the tax payments and having
8a substantial legal or equitable interest in the ownership
9of the corporation, association, limited liability company,
10or partnership, who has intentionally failed to pay the tax
11is personally liable for the payment of the tax, interest,
12and penalty due and unpaid. However, this section shall
13not apply to taxes on accounts receivable. The dissolution
14of a corporation, association, limited liability company,
15or partnership shall not discharge a person’s liability for
16failure to remit the tax due.
17 Sec. 154. Section 421.28, Code 2022, is amended to read as
18follows:
19421.28 Exceptions to successor liability.
20The immediate successor to a licensee’s or retailer’s
21business or stock of goods under chapter 423A or 423B, or
22section 423.33 or 452A.65, is not personally liable for
23the amount of delinquent tax, interest, or penalty due and
24unpaid if the immediate successor shows that the purchase of
25the business or stock of goods was made in good faith that
26no delinquent tax, interest, or penalty was due and unpaid.
27For purposes of this section the immediate successor shows
28good faith by evidence that the department had provided
29the immediate successor with a certified statement that
30no delinquent tax, interest, or penalty is unpaid, or that
31the immediate successor had taken in good faith a certified
32statement from the licensee, retailer, or seller that no
33delinquent tax, interest, or penalty is unpaid. When requested
34to do so by a person with whom the licensee or retailer is
35negotiating the sale of the business or stock of goods, the
-65-1director of revenue shall, upon being satisfied that such
2a situation exists, inform that person as to the amount of
3unpaid delinquent tax, interest, or penalty due by the licensee
4or the retailer. The giving of the information under this
5circumstance is not a violation of section 422.20, 422.72, or
6452A.63.
7 Sec. 155. Section 421.60, subsection 2, paragraph m,
8subparagraphs (1) and (2), Code 2022, are amended to read as
9follows:
10(1) The director may abate unpaid state sales and use
11taxes and local sales and services taxes owed by a retailer
12in the event that the retailer failed to collect tax from the
13purchaser as a result of erroneous written advice issued by
14the department that was specially directed to the retailer
15by the department and the retailer is unable to collect the
16tax, interest, or penalties from the purchaser. Before the
17tax, interest, and penalties shall be abated on the basis of
18erroneous written advice, the retailer must present a copy of
19the retailer’s request for written advice to the department and
20a copy of the department’s reply. The department shall not
21maintain a position against the retailer that is inconsistent
22with the erroneous written advice, except on the basis of
23subsequent written advice sent by the department to that
24retailer, or a change in state or federal law, a reported
25court case to the contrary, a contrary rule adopted by the
26department, a change in material facts or circumstances
27relating to the retailer, or the retailer’s misrepresentation
28or incomplete or inadequate representation of material facts
29and circumstances in requesting the written advice.
30(2) (a) The director shall abate the unpaid state sales
31and use taxes and any local sales and services taxes owed by a
32retailer where the retailer failed to collect the tax from the
33purchaser on the charges paid for access to on-line computer
34services as a result of erroneous written advice issued by the
35department regarding the taxability of charges paid for access
-66-1to on-line computer services. To qualify for the abatement
2under this subparagraph, the erroneous written advice shall
3have been issued by the department prior to July 1, 1999, and
4shall have been specially directed to the retailer by the
5department.
6(b) If an abatement of unpaid state sales and use taxes and
7any local sales and services taxes is granted to the retailer
8by the director pursuant to this subparagraph, the department
9is precluded from collecting from the purchaser any unpaid
10state sales and use taxes and any local sales and services
11taxes which were abated.
12 Sec. 156. Section 422.72, subsection 6, paragraph a, Code
132022, is amended to read as follows:
14a. The department may enter into a written informational
15exchange agreement for tax administration purposes with a city
16or county which is entitled to receive funds due to a local
17hotel and motel tax or a local sales and services tax. The
18written informational exchange agreement shall designate no
19more than two paid city or county employees that have access to
20actual return information relating to that city’s or county’s
21receipts from a local hotel and motel tax or a local sales and
22services tax.
23 Sec. 157. Section 423.4, subsection 2, paragraph d, Code
242022, is amended by striking the paragraph.
25 Sec. 158. Section 423.4, subsection 5, paragraph f, Code
262022, is amended to read as follows:
27f. Notwithstanding the state sales tax imposed in section
28423.2, a rebate issued pursuant to this subsection shall not
29exceed an amount equal to five percent of the sales price
30of the tangible personal property or services furnished to
31purchasers at the automobile racetrack facility. Any local
32option taxes paid and collected shall not be subject to rebate
33under this subsection.
34 Sec. 159. Section 423.4, subsection 7, paragraph f, Code
352022, is amended to read as follows:
-67- 1f. The refund in this subsection applies only to state
2sales and use tax paid and does not apply to local option
3sales and services taxes imposed pursuant to chapter 423B.
4 Notwithstanding the state sales tax imposed in section 423.2,
5a refund issued pursuant to this section shall not exceed
6an amount equal to five percent of the sales price of the
7fuel used to create heat, power, and steam for processing
8or generating electrical current or from the sale price
9of electricity consumed by computers, machinery, or other
10equipment for operation of the data center business facility.
11 Sec. 160. Section 423.4, subsection 8, paragraph g, Code
122022, is amended to read as follows:
13g. The refund in this subsection applies only to state
14sales and use tax paid and does not apply to local option
15sales and services taxes imposed pursuant to chapter 423B.
16 Notwithstanding the state sales tax imposed in section 423.2,
17a refund issued pursuant to this section shall not exceed an
18amount equal to five percent of the sales price of the items
19listed in paragraph “a”, subparagraphs (1), (2), and (3).
20 Sec. 161. Section 423.14A, subsection 2, Code 2022, is
21amended to read as follows:
222. In addition to and not in lieu of any application of
23this chapter to sellers who are retailers and sellers who are
24retailers maintaining a place of business in this state, any
25person described in subsection 3, or the person’s agents,
26shall be considered a retailer in this state and a retailer
27maintaining a place of business in this state for purposes of
28this chapter on or after January 1, 2019, and shall be subject
29to all requirements of this chapter imposed on retailers and
30retailers maintaining a place of business in this state,
31including but not limited to the requirement to collect and
32remit sales and use taxes pursuant to sections 423.14 and
33423.29, and local option taxes under chapter 423B.
34 Sec. 162. Section 423.33, subsection 1, paragraph c, Code
352022, is amended to read as follows:
-68- 1c. If the retailer fails to collect sales tax at the time
2of the transaction, the retailer shall thereafter remit the
3applicable sales tax, or the purchaser thereafter shall remit
4the applicable use tax. If the purchaser remits all applicable
5use tax, the retailer remains liable for any local sales and
6services tax under chapter 423B that the retailer failed to
7collect.
8 Sec. 163. Section 423.34A, unnumbered paragraph 1, Code
92022, is amended to read as follows:
10A purchaser is relieved of liability for payment of state
11sales or use tax, for payment of any local option sales tax,
12 for payment of interest, or for payment of any penalty for
13nonpayment of tax which nonpayment is not fraudulent, willful,
14or intentional, under the following circumstances:
15 Sec. 164. Section 423.36, subsection 9, paragraph a, Code
162022, is amended to read as follows:
17a. Except as provided in paragraph “b”, purchasers, users,
18and consumers of tangible personal property, specified digital
19products, or enumerated services taxed pursuant to subchapter
20II or III of this chapter or chapter 423B may be authorized,
21pursuant to rules adopted by the director, to remit tax owed
22directly to the department instead of the tax being collected
23and paid by the seller. To qualify for a direct pay tax permit,
24the purchaser, user, or consumer must accrue a tax liability
25of more than four thousand dollars in tax under subchapters
26II and III in a semimonthly period and make deposits and file
27returns pursuant to section 423.31. This authority shall not
28be granted or exercised except upon application to the director
29and then only after issuance by the director of a direct pay
30tax permit.
31 Sec. 165. Section 423B.1, Code 2022, is amended by striking
32the section and inserting in lieu thereof the following:
33423B.1 Use of revenues deposited in the local sales and use
34tax fund — revenue purpose statement.
351. a. Revenues credited to and deposited in each county’s
-69-1account within the local sales and use tax fund shall be
2expended by each recipient county and city as required by the
3revenue purpose statement, subject to the requirements of
4section 423B.7, subsection 7, and approved under this section
5for the city or for the county for the unincorporated areas of
6the county, or as required by subsection 3.
7b. A revenue purpose statement for the use of local option
8sales and services tax revenue previously collected under
9this chapter and in effect on January 1, 2023, and the use of
10revenues received under this chapter for purposes authorized
11under section 423B.10 for ordinances in effect and approved
12before January 1, 2023, shall continue in effect for revenues
13received under this chapter until the expiration of the revenue
14purpose statement or ordinance, if applicable, or until the
15county board of supervisors or city council, as applicable,
16adopts a new revenue purpose statement under subsection 2 or
17repeals or amends the ordinance for the use of revenues under
18section 423B.10.
192. The board of supervisors of each county and the city
20council of each city may adopt by resolution a revenue purpose
21statement for the expenditure of funds received under this
22chapter.
233. Each city and county without a valid revenue purpose
24statement shall expend the revenues received for the following
25purposes in the order prescribed in this subsection, except
26that the payment of bonds for which the revenues have been
27pledged shall be paid first:
28a. Reduction of the county’s basic levies under section
29331.423 or reduction of the city general fund levy under
30section 384.1, as applicable.
31b. Reduction of any debt service levy of the county or city,
32as applicable.
33c. Reduction of the city’s additional taxes levied under
34section 384.12 or the county’s supplemental levies under
35section 331.424, as applicable.
-70- 1d. Reduction of any other property tax levy of the county
2or city, as applicable.
3 Sec. 166. Section 423B.7, subsection 1, Code 2022, is
4amended to read as follows:
51. a. Except as provided in paragraphs paragraph “b” and
6“c”, the director shall credit the local sales and services tax
7receipts and interest and penalties from a county-imposed tax
8 as specified in section 423.2A, subsection 2, paragraph “a”,
9including any interest and penalties, to the county’s account
10in the local sales and services use tax fund for the county in
11 from which the tax was collected. The director shall credit
12the use tax receipts as specified in section 423.43, subsection
131, paragraph “b”, subparagraph (1), including any interest
14and penalties, to the county’s account in the local sales and
15use tax fund for the county from which the use tax was paid.
16 If the director is unable to determine from which county any
17of the receipts were collected or paid, as applicable, those
18receipts shall be allocated among the possible counties based
19on allocation rules adopted by the director.
20b. The director shall credit the designated amount of the
21increase in local sales and services tax receipts, as computed
22in section 423B.10, collected in an urban renewal area of an
23eligible city that has adopted an ordinance pursuant to section
24423B.10, subsection 2, into a special city account in the local
25sales and services use tax fund.
26c. The director shall credit the local sales and services
27tax receipts and interest and penalties from a city-imposed tax
28under section 423B.1, subsection 2, to the city’s account in
29the local sales and services tax fund.
30 Sec. 167. Section 423B.7, subsection 2, paragraph a, Code
312022, as amended by this Act, is amended by striking the
32paragraph and inserting in lieu thereof the following:
33a. The director of revenue by the last day of each month
34shall transfer to each city or county the amount of tax
35receipts remitted to the department attributable to each city
-71-1or county from the preceding month.
2 Sec. 168. Section 423B.7, subsections 3 and 4, Code 2022,
3are amended to read as follows:
43. Seventy-five percent of each county’s account shall be
5remitted on the basis of the county’s population residing in
6the unincorporated area where the tax was imposed and those the
7 incorporated areas where the tax was imposed as follows:
8a. To the board of supervisors a pro rata share based upon
9the percentage of the above population of the county residing
10in the unincorporated area of the county where the tax was
11imposed according to the most recent certified federal census.
12b. To each city in the county where the tax was imposed
13 a pro rata share based upon the percentage of the city’s
14population residing in the county to the above population of
15the county according to the most recent certified federal
16census.
17c. If a subsequent certified census exists which modifies
18that most recent certified federal census for a participating
19 jurisdiction under paragraphs “a” and “b”, the computations
20under paragraphs “a” and “b” shall utilize the subsequent
21certified census in the distribution formula under rules
22established by the director of revenue.
234. Twenty-five percent of each county’s account shall
24be remitted based on the sum of property tax dollars levied
25by the board of supervisors if the tax was imposed in the
26unincorporated areas and by each city in the county where the
27tax was imposed during the three-year period beginning July 1,
281982, and ending June 30, 1985, as follows:
29a. To the board of supervisors a pro rata share based upon
30the percentage of the total property tax dollars levied by the
31board of supervisors during the above three-year period.
32b. To each city council where the tax was imposed a pro rata
33share based upon the percentage of property tax dollars levied
34by the city during the above three-year period of the above
35total property tax dollars levied by the board of supervisors
-72-1and each city where the tax was imposed during the above
2three-year period.
3 Sec. 169. Section 423B.7, subsection 5, Code 2022, is
4amended by striking the subsection.
5 Sec. 170. Section 423B.7, subsections 6 and 7, Code 2022,
6are amended to read as follows:
76. From each special city account under subsection 1,
8paragraph “b”, the sales and services tax revenues shall be
9remitted to the city council for deposit in the special fund
10created in section 403.19, subsection 2, to be used by the city
11as provided in section 423B.10. The distribution from the
12special city account is not subject to the distribution formula
13provided in subsections 3, and 4, and 5.
147. a. Subject to the requirement of paragraph “b” and the
15requirements under section 423B.1, subsection 3, local sales
16and services tax moneys amounts received by a city or county
17may be expended for any lawful purpose of the city or county,
18including but not limited to expenses related to providing
19emergency medical services within the applicable city or
20county.
21b. Each city located in whole or in part in a qualified
22county and each qualified county for the unincorporated area
23for which the imposition of the local sales and services tax
24in the city or portion thereof or the unincorporated area, as
25applicable, was revenue purpose statement approved at election
26 on or after January 1, 2019 2023, shall require the use of
27 not less than fifty percent of the moneys received from the
28qualified county’s applicable county account in the local sales
29and services use tax fund for property tax relief.
30 Sec. 171. Section 423B.9, subsection 1, paragraphs b and c,
31Code 2022, are amended to read as follows:
32b. “Designated portion” means the portion of the local
33option sales and services tax revenues received under this
34chapter which is authorized to be expended for one or a
35combination of purposes under an adopted public measure.
-73- 1c. “Secondary recipient” means a political subdivision of
2the state which is to receive revenues amounts from a local
3option sales and services tax revenues under this chapter
4 over a period of years pursuant to the terms of a chapter 28E
5agreement with one or more cities or counties.
6 Sec. 172. Section 423B.9, subsections 2 and 3, Code 2022,
7are amended to read as follows:
82. An issuer of public bonds which is a recipient of
9revenues from a local option sales and services tax imposed
10 pursuant to this chapter may issue bonds in anticipation of
11the collection of one or more designated portions of the
12local option sales and services tax such revenues and may
13pledge irrevocably an amount of the revenue derived from the
14designated portions for each of the years the bonds remain
15outstanding to the payment of the bonds. Bonds may be issued
16only for one or more of the purposes set forth on the ballot
17proposition concerning the imposition of the local option sales
18and services tax in the revenue purpose statement, except bonds
19shall not be issued which are payable from that portion of tax
20revenues designated for property tax relief. The bonds may be
21issued in accordance with the procedures set forth in either
22subsection 3 or 4.
233. The governing body of an issuer may authorize the
24issuance of bonds which are payable from the designated portion
25of the revenues of the local option sales and services tax
26 received under this chapter, and not from property tax, by
27following the authorization procedures set forth for cities
28in section 384.83. Bonds may be issued for the purpose of
29refunding outstanding and previously issued bonds under this
30subsection without otherwise complying with the provisions of
31this subsection.
32 Sec. 173. Section 423B.9, subsection 4, paragraph b, Code
332022, is amended to read as follows:
34b. The provisions of chapter 76 apply to the bonds payable
35as provided in this subsection, except that the mandatory levy
-74-1to be assessed pursuant to section 76.2 shall be at a rate
2to generate an amount which together with the receipts from
3the pledged designated portion of the local option sales and
4services tax revenues received under this chapter is sufficient
5to pay the interest and principal on the bonds. All amounts
6collected as a result of the levy assessed pursuant to section
776.2 and paid out in the first instance for bond principal
8and interest shall be repaid to the bond issuer which levied
9the tax from the first available designated portion of local
10option sales and services tax collections revenues received
11under this chapter in excess of the requirement for the payment
12of the principal and interest of the bonds and when repaid
13shall be applied in reduction of property taxes. The amount
14of bonds which may be issued under section 76.3 shall be the
15amount which could be retired from the actual collections of
16the designated portions of the local option sales and services
17tax revenues received under this chapter for the last four
18calendar quarters, as certified by the director of revenue.
19The amount of tax revenues pledged jointly by other cities or
20counties may be considered for the purpose of determining the
21amount of bonds which may be issued. If the local option sales
22and services tax has been in effect revenues have been received
23under this chapter for less than four calendar quarters, the
24tax collected revenues received within the shorter period may
25be adjusted to project the collections amount of the designated
26portion for the full year for the purpose of determining the
27amount of the bonds which may be issued. The provisions of
28this section constitute separate authorization for the issuance
29of bonds and shall prevail in the event of conflict with
30any other provision of the Code limiting the amount of bonds
31which may be issued or the source of payment of the bonds.
32Bonds issued under this section shall not limit or restrict
33the authority of the bond issuer to issue bonds under other
34provisions of the Code.
35 Sec. 174. Section 423B.9, subsection 5, Code 2022, is
-75-1amended to read as follows:
25. A city or county, jointly with one or more other
3political subdivisions as provided in chapter 28E, may pledge
4irrevocably any amount derived from the designated portions
5of the revenues of the local option sales and services tax
6 received under this chapter to the support or payment of bonds
7of an issuer, issued for one or more purposes set forth on
8the ballot proposition concerning the imposition of the local
9option sales and services tax in the revenue purpose statement
10 or a political subdivision may apply the proceeds of its bonds
11to the support of any such purpose.
12 Sec. 175. Section 423B.10, subsection 1, paragraph b, Code
132022, is amended to read as follows:
14b. “Eligible city” means a city in which a local sales and
15services tax imposed by the county applies or a city described
16in section 423B.1, subsection 2, paragraph “a”, and in which an
17urban renewal area has been designated.
18 Sec. 176. Section 423B.10, subsections 2, 3, 5, and 6, Code
192022, are amended to read as follows:
202. a. Upon approval by the board of supervisors of each
21applicable county pursuant to paragraph “b”, an eligible city
22may by ordinance of the city council provide for the use of a
23designated amount of the increased local sales and services
24tax revenues collected received under this chapter which are
25attributable to retail establishments in an urban renewal
26area to fund urban renewal projects located in the area. The
27designated amount may be all or a portion of such increased
28revenues.
29b. A city shall not adopt an ordinance under paragraph
30“a” unless the board of supervisors of each county where the
31urban renewal area from which such local sales and services
32tax revenues are to be collected and used to fund urban
33renewal projects is located first adopts a resolution approving
34the collection and use of such local sales and services tax
35revenues.
-76- 13. To determine the revenue increase for purposes of
2subsection 2, revenue amounts shall be calculated by the
3department of revenue as follows:
4a. Determine the amount of local sales and services tax
5revenue collected and attributable to a one percent sales and
6services tax from retail establishments located in the area
7comprising the urban renewal area during the base year.
8b. Determine the current year one percent sales and services
9tax revenue amount for each fiscal year following the base year
10in the manner specified in paragraph “a”.
11c. The excess of the amount determined in paragraph “b” over
12the base year revenue amount determined in paragraph “a” is the
13increase in the local sales and services tax revenues of which
14the designated amount is to be deposited in the special city
15account created in section 423B.7, subsection 6.
165. In addition to the moneys received pursuant to the
17ordinance authorized under subsection 2, an eligible city
18may deposit any other local sales and services tax revenues
19received by it the city pursuant to the distribution formula in
20section 423B.7, subsections 3, 4, and 5, to the special fund
21described in section 403.19, subsection 2.
226. For purposes of this section, the eligible city shall
23assist the department of revenue in identifying retail
24establishments in the urban renewal area that are collecting
25the local sales and services tax. This process shall be
26ongoing until the ordinance is repealed.
27 Sec. 177. REPEAL. 2019 Iowa Acts, chapter 151, section 21,
28is repealed.
29 Sec. 178. REPEAL. Sections 423B.2, 423B.3, 423B.4, 423B.5,
30423B.6, and 423B.8, Code 2022, are repealed.
31 Sec. 179. EFFECTIVE DATE. This division of this Act takes
32effect January 1, 2023.
33DIVISION XXIII
34NATURAL RESOURCES AND OUTDOOR RECREATION TRUST FUND
35 Sec. 180. Section 2.45, Code 2022, is amended by adding the
-77-1following new subsection:
2 NEW SUBSECTION. 5A. a. The legislative natural resources
3and outdoor recreation trust fund review committee which
4shall be composed of ten members of the general assembly,
5consisting of five members from each chamber, to be appointed
6by the legislative council. In appointing the five members
7of each chamber to the committee, the council shall appoint
8three members from the majority party and two members from the
9minority party.
10b. The legislative natural resources and outdoor recreation
11trust fund review committee shall have the powers and duties
12described in section 2.49.
13c. This subsection is repealed December 31, 2051.
14 Sec. 181. NEW SECTION. 2.49 Legislative natural resources
15and outdoor recreation trust fund review committee.
161. The legislative natural resources and outdoor recreation
17trust fund review committee shall meet during the legislative
18interim in calendar years 2030, 2040, and 2050. The committee
19shall consider the most effective ways to manage trust fund
20moneys to further the purpose of Article VII, section 10, of
21the Constitution of the State of Iowa. As part of its duties,
22the committee may consider any of the following:
23a. The administration of the trust fund, trust accounts, and
24designated funds as provided in chapter 461.
25b. The effectiveness of initiatives supported by trust fund
26moneys as provided in chapter 461.
272. The committee shall report to the legislative council
28the results of its considerations, which may include
29recommendations and proposed legislation for consideration
30during the next session of the general assembly.
313. This section is repealed December 31, 2051.
32 Sec. 182. Section 8.57, subsection 5, paragraph f,
33subparagraph (1), subparagraph division (c), Code 2022, is
34amended by striking the subparagraph division.
35 Sec. 183. Section 8.57, subsection 5, paragraph f,
-78-1subparagraph (1), subparagraph division (f), Code 2022, is
2amended to read as follows:
3(f) For the fiscal year beginning July 1, 2018, and for
4each fiscal year thereafter, the total moneys in excess of the
5moneys deposited under this paragraph “f” in the revenue bonds
6debt service fund, the revenue bonds federal subsidy holdback
7fund, the vision Iowa fund, the water quality infrastructure
8fund, the Iowa skilled worker and job creation fund, and the
9general fund of the state shall be deposited in the rebuild
10Iowa infrastructure fund and shall be used as provided in this
11section, notwithstanding section 8.60.
12 Sec. 184. Section 8.57B, subsection 1, Code 2022, is amended
13to read as follows:
141. a. A water quality infrastructure fund is created within
15the division of soil conservation and water quality of the
16department of agriculture and land stewardship.
17b. The fund shall consist of moneys deposited in the
18fund pursuant to section 8.57, subsection 5, paragraph “f”,
19subparagraph (1), subparagraph division (c), moneys all of the
20following:
21(1) (a) Moneystransferred to the fund pursuant to section
22423G.6, and 461.33.
23(b) This subparagraph (1) is repealed December 31, 2051.
24(2) Moneys transferred orappropriations made to the fund
25and transfers of interest, earnings, and moneys from other
26funds as provided by law.
27 Sec. 185. Section 16.134A, subsection 2, paragraph a,
28subparagraphs (1) and (2), Code 2022, are amended to read as
29follows:
30(1) Moneys transferred to the fund pursuant to section
31423G.6 461.34.
32(2) This paragraph “a” is repealed on January 1, 2040
33 December 31, 2051.
34 Sec. 186. Section 455A.17, Code 2022, is amended by striking
35the section and inserting in lieu thereof the following:
-79- 1455A.17 Regional meetings.
21. Beginning in calendar year 2023, and every four
3calendar years thereafter, the department shall arrange
4and conduct regional meetings to identify opportunities for
5regional resource enhancement and protection, and to review
6and recommend changes in resource enhancement and protection
7policies, programs, and funding. The department shall provide
8outreach and educational services to those attending, which
9shall include the distribution of information regarding
10resource enhancement and protection expenditures. The
11department shall promote attendance of interested persons for
12each regional meeting.
132. The expenses of the department in making the arrangements
14for and conducting regional meetings and providing outreach and
15educational services shall be paid from moneys credited to the
16administration fund created in section 456A.17.
17 Sec. 187. Section 455A.18, subsection 1, Code 2022, is
18amended to read as follows:
191. a. An Iowa resources enhancement and protection fund is
20created in the office of the treasurer of state.
21b. The fund consists of all revenues of the following:
22(1) (a) Moneys allocated from the natural resources and
23outdoor recreation trust fund as provided in section 461.35.
24(b) This subparagraph (1) is repealed December 31, 2051.
25(2) Revenuesand all other moneys lawfully credited or
26transferred to the fund. The director shall certify monthly
27the portions of the fund that are allocated to the various
28accounts as provided under section 455A.19. The director shall
29certify before the twentieth of each month the portions of
30the fund resulting from the previous month’s receipts to be
31allocated to the various accounts.
32 Sec. 188. Section 455A.18, subsection 3, paragraph a, Code
332022, is amended by striking the paragraph.
34 Sec. 189. Section 455A.18, subsection 3, paragraph b, Code
352022, is amended to read as follows:
-80- 1b. Section 8.33 does not apply to moneys appropriated under
2this subsection credited to the fund.
3 Sec. 190. Section 461.2, Code 2022, is amended to read as
4follows:
5461.2 Definitions.
6As used in this chapter, unless the context otherwise
7requires:
81. “Authority” means the economic development authority
9created in section 15.105.
102. “Department” “Custodial department” means the department
11of agriculture and land stewardship, the department of
12management, the department of natural resources, or the
13department of transportation.
143. “Designated fund” means the water quality infrastructure
15fund created in section 8.57B, the water quality financial
16assistance fund created in section 16.134A, or the Iowa
17resources enhancement and protection fund created in section
18455A.18.
192. 4. “Fiscal year” means the state fiscal year effective
20as provided in section 3.12.
213. 5. “Initiative” includes a program, project, practice,
22strategy, or plan established or administered by an agency that
23furthers, or under the supervision or oversight of, a custodial
24department or the Iowa finance authority, if the initiative is
25supported in whole or in part by trust fund moneys to further a
26constitutional purpose as provided in section 461.3.
276. “Iowa nutrient reduction strategy” means the same as
28defined in section 455B.171.
297. “Nonpoint source” means a source of pollution other than
30a point source.
318. “Point source” means the same as defined in section
32455B.171.
339. “Public use area” means a park, preserve, recreation
34area, forest, water body, or a land or water trail owned or
35managed by the state or a political subdivision of the state.
-81- 14. 10. “Recreational purpose” includes means only hunting,;
2 trapping,; angling,; horseback riding,; swimming,; boating,;
3 camping,; picnicking,; hiking,; biking; recreational shooting;
4archery; using land or water trails; bird watching,; nature
5study,; water skiing,; snowmobiling;, other summer and winter
6sports, and viewing or enjoying historical, archaeological,
7scenic, or scientific sites.
811. “Trust account” means the natural resources trust
9account created in section 461.32, the soil conservation and
10nonpoint source water protection trust account created in
11section 461.33, the watershed protection trust account created
12in section 461.34, the local conservation partnership trust
13account created in section 461.36, the water and land trails
14trust account created in section 461.37, or the lake and stream
15restoration trust account created in section 461.38.
165. 12. “Trust fund” means the natural resources and outdoor
17recreation trust fund created in section 461.31.
186. 13. “Trust fund moneys” means moneys originating from
19 credited to the natural resources and outdoor recreation trust
20fund or moneys allocated from the trust fund, including but not
21limited to moneys allocated to a trust account or allocated or
22transferred to a designated fund.
2314. “Water trail” means a point-to-point travel system on a
24navigable water body capable of supporting a floating vessel
25capable of carrying one or more persons on a recommended route
26connecting the points.
27 Sec. 191. Section 461.3, Code 2022, is amended to read as
28follows:
29461.3 Constitutional purpose, and implementation, and
30revenue.
311. This chapter is created for the constitutional purposes
32of protecting and enhancing water quality and natural areas
33in this state, including parks, trails, and fish and wildlife
34habitat, and conserving agricultural soils in this state.
352. This chapter is intended to implement Article VII,
-82-1section 10, of the Constitution of the State of Iowa by
2establishing the natural resources and outdoor recreation
3trust fund, accounts in the including trust fund accounts,
4and appropriating or allocating trust fund moneys to support
5initiatives specified in subchapter IV. This chapter shall not
6be construed to require the state to appropriate, allocate,
7or transfer other moneys to support those initiatives or
8constitutional purposes.
9 Sec. 192. Section 461.11, subsection 2, Code 2022, is
10amended to read as follows:
112. The heads of each department receiving trust fund moneys
12 the custodial departments and the director of the authority
13 shall regularly meet and whenever practicable collaborate in
14decision making including by adopting rules providing for
15the administration of the trust fund and trust accounts,
16establishing funding priorities, and determining when it is
17beneficial to provide joint funding of initiatives.
18 Sec. 193. NEW SECTION. 461.20 Information regarding trust
19fund moneys.
201. Each year the department of revenue shall calculate
21an estimate of the total revenue to be transferred to the
22trust fund during the following fiscal year as required
23pursuant to section 423.2A. Not later than May 1 of each
24year, the department of revenue shall submit the estimate to
25each custodial department, the authority, and the legislative
26services agency.
272. A custodial department shall at least annually notify the
28legislative services agency of transfers of trust fund moneys
29from a trust account to another trust account or designated
30fund as authorized in this chapter.
31 Sec. 194. Section 461.21, Code 2022, is amended to read as
32follows:
33461.21 Audit.
341. The auditor of state or a certified public accounting
35firm appointed by the auditor of state shall conduct an annual
-83-1 audit of the trust fund and all trust accounts and transactions
2of the trust fund and trust accounts in the same manner as
3provided for departments pursuant to chapter 11, subchapter I.
42. The auditor of state or the certified public accounting
5firm appointed by the auditor as provided in subsection 1
6shall be paid from trust fund moneys without reducing the
7percentage of trust fund moneys distributed allocated to the
8Iowa resources enhancement and protection fund or any one a
9trust account established or designated fund pursuant to this
10chapter subchapter IV.
11 Sec. 195. Section 461.22, Code 2022, is amended to read as
12follows:
13461.22 Report Trust fund report.
14The three departments department of management shall jointly
15prepare and submit to the governor and the general assembly not
16later than January 15 of each year a complete trust fund report
17in an electronic format detailing all of the following:
181. The receipts and expenditures of the trust fund and its
19trust accounts, a summary of initiatives supported by trust
20fund moneys, the results of those expenditures, any performance
21goals or measurements, and plans for future short-term or
22long-term expenditures.
232. Recommendations An evaluation of the use of trust fund
24moneys to further progress in achieving the goals of the Iowa
25nutrient reduction strategy as prepared by the department of
26agriculture and land stewardship, the department of natural
27resources, and the college of agriculture and life sciences
28of the Iowa state university of science and technology. The
29evaluation shall be based on the latest credible findings and
30recommendations recognized by those entities. The evaluation
31may include recommendations to the governor and general
32assembly, including legislation proposed by one or more of the
33departments entities.
34 Sec. 196. Section 461.23, Code 2022, is amended to read as
35follows:
-84- 1461.23 Rules.
2The department of revenue, the department of agriculture and
3land stewardship, the department of management, the department
4of natural resources, and the department of transportation, the
5Iowa finance authority, and the economic development authority
6 shall adopt rules separately or jointly as necessary in order
7to implement and administer this chapter.
8 Sec. 197. Section 461.24, Code 2022, is amended by striking
9the section and inserting in lieu thereof the following:
10461.24 Public listing.
11The department of management shall publish and maintain a
12public listing of moneys credited to and allocated from the
13trust fund, trust fund moneys allocated or transferred from
14trust accounts, and trust fund moneys allocated or transferred
15to designated funds to support initiatives. This section does
16not require the disclosure of information that is confidential
17as provided by rules adopted pursuant to section 461.23.
18 Sec. 198. NEW SECTION. 461.25 Use of trust fund moneys.
191. A custodial department shall not appropriate, allocate,
20or transfer trust fund moneys except as provided in this
21chapter. However, this subsection shall not be construed to
22limit a custodial department from using trust fund moneys with
23another person, including a custodial department, when engaging
24in a joint initiative as authorized by law.
252. During any fiscal year, a custodial department shall not
26use more than five percent of trust fund moneys allocated to
27a trust account to pay for expenses incurred in administering
28trust fund moneys allocated to that trust account.
293. In administering the use of trust fund moneys allocated
30to a trust account, a custodial department shall provide a
31higher priority to supporting initiatives that further goals of
32the Iowa nutrient reduction strategy.
334. A custodial department shall administer the use of
34trust fund moneys to support an initiative having primarily
35a recreational purpose only if such use is in cooperation
-85-1with the authority. The authority shall review, score, and
2rank applications to support such initiatives as part of a
3competitive evaluation process. The scoring criteria must
4further the economic development policy of the state as
5provided in chapter 15.
65. When making a determination to support competing
7proposed initiatives relating to a public use area that
8benefits a locality, a custodial department or the authority
9shall provide a higher priority to supporting an initiative to
10improve an existing public use area.
116. When making a determination to support a proposed
12initiative to establish, improve, or expand a land trail,
13the proposal shall not be approved unless the sponsor of the
14proposal demonstrates to the custodial department or other
15entity making the funding decision how the trail is to be
16maintained by other sources of revenue.
177. In administering the use of trust fund moneys allocated
18to a trust account to support an initiative relating to
19the management of land, this chapter does not do any of the
20following:
21a. Prohibit the farming of the land in a manner that is
22consistent with the Iowa nutrient reduction strategy.
23b. Require a separation distance between an animal feeding
24operation and a public use area that is more restrictive than
25if the land were not managed pursuant to the initiative.
268. Trust fund moneys shall not be used to support any of the
27following:
28a. An initiative that establishes, improves, or expands a
29single or multipurpose athletic field, baseball or softball
30diamond, tennis court, golf course, swimming pool, or other
31group or organized sport facility.
32b. The taking of property by exercising the power of eminent
33domain, including by acquiring property as provided in chapters
346A and 6B.
35 Sec. 199. Section 461.31, Code 2022, is amended to read as
-86-1follows:
2461.31 Natural resources and outdoor recreation trust fund
3— creation.
41. A natural resources and outdoor recreation trust fund
5is created within the state treasury. The trust fund shall be
6administered by the department of management.
72. a. The trust fund shall be composed comprised of moneys
8 all of the following:
9(1) Moneys transferred to the trust fund pursuant to section
10423.2A.
11(2) Other moneysrequired to be credited to the trust
12fund by law and moneys accepted by a custodial department for
13placement in an account established in this subchapter and the
14trust fund from any source.
15b. Trust fund moneys are exclusively appropriated by law
16to carry out the constitutional purposes provided described in
17section 461.3.
18c. Trust fund moneys shall supplement and not replace
19moneys appropriated by the general assembly to support the
20constitutional purposes provided in section 461.3.
21d. Trust fund moneys shall only be used to support voluntary
22initiatives and shall not be used for regulatory efforts,
23enforcement actions, or litigation.
243. In administering a trust fund account, a custodial
25 department may contract, sue and be sued, and authorize payment
26for costs, fees, commissions, and other reasonable expenses
27from the trust account. However, a custodial department shall
28not in any manner directly or indirectly pledge the credit of
29this state.
304. a. Except as provided in paragraph “b”, the treasurer
31of state shall, each month as directed by the department of
32management, allocate all trust fund moneys that have been
33credited to the trust fund, including moneys transferred to the
34trust fund as provided in section 423.2A, to each trust account
35and designated fund as provided in this subchapter.
-87- 1b. Notwithstanding sections 461.32 through 461.38, for the
2fiscal year beginning July 1, 2023, and for each subsequent
3fiscal year, only that amount as authorized by an Act of
4the general assembly shall be allocated from the trust fund
5to a trust account or designated fund as provided in this
6subchapter. However, if for a fiscal year no Act of the
7general assembly authorizes trust fund moneys to be allocated
8from the trust fund, the trust fund moneys shall be allocated
9from the trust fund to the trust accounts and designated funds
10as provided in this subchapter by operation of law.
115. a. Notwithstanding section 8.33, any unexpended balance
12in the trust fund or in an a trust account created within the
13trust fund at the end of each fiscal year shall be retained in
14the trust fund or the respective trust account.
15b. Notwithstanding section 12C.7, subsection 2, interest or
16earnings on investments or time deposits of the moneys in the
17trust fund and its respective trust accounts shall be credited
18to the trust fund and its respective trust accounts.
19c. The recapture of awards originating from an a trust
20 account and other repayments to an a trust account shall be
21retained in that trust account.
22 Sec. 200. Section 461.32, Code 2022, is amended to read as
23follows:
24461.32 Natural resources trust account — allocations.
251. A natural resources trust account is created in the trust
26fund. Twenty-three The trust account shall be administered by
27the department of natural resources.
282. Eighteenpercent of the moneys credited to the trust fund
29shall be allocated to the trust account.
302. 3. The trust account shall be used by the department of
31natural resources to support all of the following initiatives:
32a. The establishment, restoration, or enhancement of state
33parks, state preserves, state forests, wildlife areas, wildlife
34habitats, native prairies, and wetlands.
35(1) A higher priority shall be provided to supporting
-88-1initiatives for the maintenance, preservation, or restoration
2of land and a lower priority shall be provided to supporting
3initiatives for the purchase or acquisition of land.
4(2) The department shall utilize an index that includes a
5comprehensive assessment mechanism to produce a statistically
6verifiable basis for determining whether to approve or
7disapprove the purchase or acquisition of the land. The
8department shall establish index criteria that justifies the
9land’s removal from private ownership and use.
10b. The construction or improvement of facilities located on
11land owned or managed by the department.
12b. c. Wildlife diversity.
13c. d. Recreational purposes.
14d. e. Technical assistance and financial incentives
15provided to private landowners to promote the management of
16forests, fisheries, recreational areas, wetlands, and wildlife.
17e. f. The improvement of water trails, rivers, and streams.
18f. g. Education and outreach that provide instruction
19regarding natural history and the outdoors. The subjects
20of such instruction may relate to opportunities involving a
21 recreational purposes purpose, outdoor safety, and or ethics.
223. The department of natural resources shall to every extent
23possible consider its comprehensive plan provided in section
24456A.31 when making funding decisions.
25 Sec. 201. Section 461.33, Code 2022, is amended to read as
26follows:
27461.33 Soil conservation and nonpoint source water protection
28trust account — allocations.
291. A soil conservation and nonpoint source water protection
30trust account is created in the trust fund. Twenty The trust
31account shall be administered by the department of agriculture
32and land stewardship.
332. Thirty-fourpercent of the moneys credited to the trust
34fund shall be allocated to the trust account.
353. Forty-seven percent of trust fund moneys allocated to
-89-1the trust account shall first be transferred as directed by the
2department to any or all of the following:
3a. The water quality infrastructure fund created in section
48.57B to support water quality agriculture infrastructure
5programs created in section 466B.43 in order to reduce nutrient
6loads from nonpoint sources.
7b. The water quality financial assistance fund created
8in section 16.134A to support the water quality urban
9infrastructure program created in section 466B.44.
102. 4. a. The account shall be used by the department of
11agriculture and land stewardship remaining trust fund moneys
12allocated to the trust account shall be used by the department
13 to support all of the following initiatives:
14a. (1) Soil conservation and watershed protection,
15including by supporting the department’s division of
16soil conservation and water quality within the department
17of agriculture and land stewardship and soil and water
18conservation district commissioners. The department and
19commissioners may provide for the installation establishment of
20conservation practices and watershed protection improvements as
21provided in chapters 161A, 161C, 461A, and 466, and 466B.
22b. (2) The conservation of highly erodible land. The
23department of agriculture and land stewardship may execute
24contracts with private landowners who agree to reserve such
25land only for uses that prevent erosion in excess of the
26applicable soil loss limits as established in section 161A.44.
27c. (3) Soil conservation or crop management practices
28used on land producing biomass for biorefineries, including
29cellulosic ethanol production.
303. b. The department of agriculture and land stewardship
31 may use unencumbered or unobligated trust fund moneys allocated
32to the trust account to provide financial incentives or
33technical assistance to landowners.
345. During a fiscal year, the department may transfer
35unencumbered or unobligated trust fund moneys allocated to
-90-1the trust account for use by the department as is provided in
2subsection 4 to any of the following:
3a. The water quality infrastructure fund created in section
48.57B to support water quality agriculture infrastructure
5programs created in section 466B.43 in order to reduce nutrient
6loads from nonpoint sources.
7b. The water quality financial assistance fund created
8in section 16.134A to support the water quality urban
9infrastructure program created in section 466B.44.
10 Sec. 202. Section 461.34, Code 2022, is amended to read as
11follows:
12461.34 Watershed protection trust account — allocations.
131. A watershed protection trust account is created in the
14trust fund. Fourteen The trust account shall be administered
15by the department of natural resources.
162. Fifteenpercent of the moneys credited to the trust fund
17shall be allocated to the trust account.
183. Forty-seven percent of trust fund moneys allocated
19to the trust account shall first be transferred to the water
20quality financial assistance fund created in section 16.134A
21for appropriation as provided in that section.
222. 4. The account Of the remaining trust fund moneys
23allocated to the trust account, fifty percent shall be used
24cooperatively distributed for use by the department of
25natural resources and the department of agriculture and land
26stewardship to support all of the following initiatives:
27a. Water water quality resource projects administered by
28the department of natural resources to preserve watersheds,
29including but not limited to all of the following:
30(1) a. Projects to protect, restore, or enhance water
31quality in the state through the provision of financial
32assistance to communities for impairment-based, locally
33directed watershed projects. The department may use the
34account trust fund moneys to support the water resource
35restoration sponsor program as provided in section 455B.199.
-91- 1(2) b. Regional and community watershed assessment,
2planning, and prioritization efforts, including as provided in
3chapter 466B.
4c. Water quality protection programs provided in section
5466.7 that relate to any of the following:
6(1) The administration of geographic information systems
7for use in developing, monitoring, and displaying local
8watershed information.
9(2) An activity to support the collection and analysis of
10water quality monitoring.
11(3) Floodplain permitting.
12(4) Flood protection education to provide information to
13local officials regarding floodplain management.
14b. 5. Surface Of the remaining trust fund moneys allocated
15to the trust account, fifty percent shall be distributed for
16use by the department of agriculture and land stewardship
17to support surface water protection projects and practices
18administered by the department of agriculture and land
19stewardship or the department of natural resources, as
20described in the Iowa nutrient reduction strategy including but
21not limited to the installation of permanent vegetation cover,
22filter strips, grass waterways, edge-of-field practices, and
23riparian forest buffers; dredging; and bank stabilization. The
24departments of agriculture and land stewardship and natural
25resources department may use the account trust fund moneys
26 to support the conservation buffer strip program provided in
27section 466.4 and the conservation reserve enhancement program
28as provided in section 466.5.
293. 6. The departments’ A decision by a department to
30prioritize initiatives may be based on the priority list of
31watersheds provided in section 456A.33A.
327. During a fiscal year, the department of natural
33resources or the department of agriculture and land stewardship
34may transfer unencumbered or unobligated trust fund moneys
35distributed to the custodial department pursuant to subsection
-92-14 or 5 to the water quality financial assistance fund created
2in section 16.134A.
3 Sec. 203. Section 461.35, Code 2022, is amended to read as
4follows:
5461.35 Iowa resources enhancement and protection fund —
6allocation.
7Thirteen Ten percent of the moneys credited to the trust
8fund shall be allocated to the Iowa resources enhancement
9and protection fund created in section 455A.18 for further
10allocation as provided in section 455A.19.
11 Sec. 204. Section 461.36, Code 2022, is amended by striking
12the section and inserting in lieu thereof the following:
13461.36 Local conservation partnership trust account —
14allocations.
151. A local conservation partnership trust account is
16created in the trust fund. The trust account shall be
17administered by the department of natural resources.
182. Nine percent of the moneys credited to the trust fund
19shall be allocated to the trust account.
203. The department shall allocate the trust fund moneys
21credited to the account to local communities participating
22in the local conservation partnership program as provided in
23section 461.36A.
24 Sec. 205. NEW SECTION. 461.36A Local conservation
25partnership program.
261. As used in this section, unless the context otherwise
27requires:
28a. “Department” means the department of natural resources.
29b. “Local community” includes a political subdivision or
30a watershed management authority created pursuant to section
31466B.22.
322. The department shall establish and administer a local
33conservation partnership program to provide financing to local
34communities to do any of the following:
35a. Maintain and improve parks, preserves, wildlife areas,
-93-1wildlife habitats, native prairies, forests, or wetlands.
2b. Promote wildlife diversity.
3c. Further a recreational purpose.
4d. Improve rivers and streams.
5e. Sponsor education and outreach programs and projects that
6provide instruction regarding natural history and the outdoors.
7The subjects of such instruction may relate to opportunities
8involving a recreational purpose, outdoor safety, or ethics.
9The programs and projects may assist Iowa students studying in
10fields of science, technology, engineering, and mathematics.
11f. Further any other purpose described in section 350.1.
123. As part of a local conservation partnership under the
13program, two or more local communities may enter into chapter
1428E agreements, and a local community may cooperate with
15the federal government or a nongovernmental organization.
16A nongovernmental organization shall not be eligible to
17participate in a local community partnership under the program
18unless the nongovernmental organization submits an application
19in association with a political subdivision or county
20conservation board and enters into a chapter 28E agreement with
21the political subdivision or county conservation board.
224. a. A local community is not eligible to receive moneys
23from the department under the program to support a local
24conservation partnership, unless the local community finances
25a minimum percentage of the estimated or total cost of the
26initiative, whichever is less.
27b. The minimum amount of the cost-share contribution by a
28local community, as described in paragraph “a”, shall be as
29follows:
30(1) Ten percent for a local community located in a county
31having a population of fifteen thousand or less.
32(2) Twenty-five percent for a local community located in a
33county having a population of more than fifteen thousand but
34less than one hundred thousand.
35(3) Seventy-five percent for a local community located in a
-94-1county having a population of one hundred thousand or more.
2 Sec. 206. Section 461.37, Code 2022, is amended to read as
3follows:
4461.37 Trails Water and land trails trust account —
5allocations.
61. A water and land trails trust account is created in the
7trust fund. Ten The trust account shall be administered by the
8department of transportation.
92. Fourpercent of the moneys credited to the trust fund
10shall be allocated to the trust account.
112. 3. The Of the amount of trust fund moneys allocated
12to the trust account, fifty percent shall be distributed for
13use by the department of transportation and the department of
14natural resources shall use moneys in the account to support
15initiatives related to the design, establishment, maintenance,
16improvement, and expansion of land trails.
173. 4. The Of the amount of trust fund moneys allocated to
18the trust account, fifty percent shall be distributed for use
19by the department of natural resources may use the account to
20support the design, establishment, maintenance, improvement,
21and expansion of water trails. The department shall provide
22priority to stream restoration.
235. a. During a fiscal year, and pursuant to an agreement
24between the department of transportation and the department
25of natural resources, either custodial department that is
26distributed trust fund moneys for use under this section may
27transfer unencumbered or unobligated trust fund moneys to the
28other custodial department for use by the other custodial
29department as provided in this section.
30b. During a fiscal year, and pursuant to an agreement
31between the department of transportation and the department
32of natural resources, the department of transportation
33may transfer unencumbered or unobligated trust fund moneys
34allocated to the trust account and distributed for use by
35the department of transportation to another trust account
-95-1administered by the department of natural resources for use by
2the department of natural resources.
3 Sec. 207. Section 461.38, Code 2022, is amended to read as
4follows:
5461.38 Lake and stream restoration trust account —
6allocations.
71. A lake and stream restoration trust account is created in
8the trust fund. Seven The trust account shall be administered
9by the department of natural resources.
102. Tenpercent of the moneys credited to the trust fund
11shall be allocated to the trust account.
122. 3. The department of natural resources shall use moneys
13in allocated to the trust account to support public all of the
14following:
15a. Publiclake restoration initiatives as follows:
16a. (1) An initiative shall account for a lake’s
17recreational purpose, and provide for environmental, aesthetic,
18ecological, and social value. It must improve water quality
19 further a goal of the Iowa nutrient reduction strategy.
20b. (2) The department’s A decision by the department to
21prioritize an initiative may be based on the department’s lake
22restoration plan and report as provided in section 456A.33B and
23the Iowa nutrient reduction strategy.
24b. The stabilization and restoration of stream banks.
25 Sec. 208. NEW SECTION. 461.51 Repeal.
26This chapter is repealed December 31, 2051.
27 Sec. 209. CODE EDITOR DIRECTIVE.
281. The Code editor is directed to make the following
29transfers:
30a. Section 461.36A, as enacted in this division of this Act,
31to section 455A.31.
32b. Section 461.35, as amended in this division of this Act,
33to section 461.41.
342. The Code editor shall correct internal references in the
35Code and in any enacted legislation as necessary due to the
-96-1enactment of this section.
2 Sec. 210. REPEAL. Section 455A.20, Code 2022, is repealed.
3 Sec. 211. EFFECTIVE DATE. This division of this Act takes
4effect January 1, 2023.
5DIVISION XXIV
6contingent code editor directive
7 Sec. 212.CONTINGENT CODE EDITOR DIRECTIVE.
8The Code editor is directed to harmonize amendments to
9sections 421.26, 422.33, 423B.5, 423B.6, and 423B.7, if
10necessary, which are amended by two or more divisions of this
11Act, and to harmonize any other Code provision amended in two
12or more operations or divisions of this Act, and to make other
13related changes, if necessary, to effectuate such changes.
14EXPLANATION
15The inclusion of this explanation does not constitute agreement with
16the explanation’s substance by the members of the general assembly.
17This bill relates to state and local revenue and finances
18and modifies sales and use taxes, individual and corporate
19income taxes, the franchise tax, the insurance premiums tax,
20the equipment tax, the automobile rental excise tax, the water
21service tax, the local option tax, and credits moneys to the
22natural resource and outdoor recreation trust fund.
23DIVISION I — SALES AND USE TAX. An amendment to the Iowa
24Constitution was ratified on November 2, 2010, which created
25a natural resources and outdoor recreation trust fund (fund)
26and dedicated a portion of state revenues to the fund for
27the purposes of protecting and enhancing water quality and
28natural areas in the state including parks, trails, and fish
29and wildlife habitat, and conserving agricultural soils in
30the state (Article VII, section 10). The fund is codified in
31Code section 461.31. Pursuant to the amendment, the amount
32credited to the fund will be equal to the amount generated
33by an increase in the state sales tax rate occurring after
34the effective date of the constitutional amendment, but shall
35not exceed the amount that a state sales tax rate of 0.375
-97-1percent would generate. The state sales tax rate has not
2been increased since the effective date of the constitutional
3amendment, so no amounts have been credited to the fund. The
4bill increases the sales tax rate and the use tax rate from 6
5percent to 7 percent beginning January 1, 2023. In lieu of the
6local option and sales services tax revenue repealed in another
7division of the bill, the bill transfers a specified amount of
8the state sales and use tax revenues collected to the local
9sales and use tax fund established under Code chapter 423B,
10for allocation and expenditure in a manner similar to that
11which was provided for local sales and services tax revenues.
12The bill, as the result of Article VII, section 10, of the
13Constitution of the State of Iowa, also amends the transfer
14of sales tax revenues to the secure an advanced vision for
15education fund in Code section 423.2A(2).
16DIVISION II — SALES AND USE TAX ON SERVICES AND EXEMPTIONS.
17 The bill strikes “software as a service” and substitutes “cloud
18computing” as a service for purposes of imposing sales tax.
19The bill makes the following services subject to the sales tax:
20web hosting, digital automated services, and scooter.
21The bill strikes the sales and use tax exemption on the
22sales price from the sale or rental of computer or computer
23peripherals by an insurance company, financial institution, or
24commercial enterprise.
25The bill strikes “professions and occupations” from
26the definition of “commercial enterprise” in Code section
27423.3(104) thus making sales to professions and occupations
28related to prewritten software, specified digital services, and
29other services subject to the sales tax.
30The division takes effect January 1, 2023.
31DIVISION III — SALES, USE, AND EXCISE TAX — RETURNS DUE.
32The bill allows a taxpayer to have a combined sales and use tax
33permit and to file a combined return for sales and use taxes.
34Currently, a taxpayer must possess a separate sales and use tax
35permit and file separate sales and use tax returns.
-98- 1The bill changes numerous references to the phrase “sales
2tax permit” in the Code to the phrase “sales or use tax
3permit”.
4Currently, a person is required to file a sales or use tax
5return on a quarterly basis. The bill changes this filing
6requirement from a quarterly basis to a monthly basis. The
7bill does allow a person required to file a sales or use tax
8return and who collects less than $1,200 in sales or use tax in
9a calendar year, to file a return once a year on or before the
10last day of the month following the close of the calendar year.
11The bill allows certain persons required to collect sales
12or use tax who do not meet the definition of a “retailer
13maintaining a business in this state” in Code section
14423.1(48)(a)(1), to be issued only one sales or use tax permit.
15The bill allows the director of revenue, if necessary to
16ensure the payment of sales or use tax, to require a sales or
17use tax return be filed on a different basis other than on a
18monthly basis.
19The bill strikes a provision allowing a person required to
20file a sales or use tax return to take a credit against the
21total quarterly amount of tax due, upon a proper showing of
22necessity, allowing for the balance of tax due to be paid up to
2330 days after the return was due.
24The bill strikes a provision requiring a seller, who
25collects more than $30,000 of sales or use tax in the preceding
26calendar year, to make additional remittances to the state
27under the rules adopted by the director of revenue.
28DIVISION IV — DISTRIBUTIONS OF REVENUE TO LOCAL GOVERNMENTS
29AND SCHOOL DISTRICTS. Currently, by August 15, the department
30of revenue estimates the local option sale tax (LOST) and
31securing an advanced vision for education (SAVE) tax amounts
32that will be transferred to each local government or school
33district on a fiscal year and monthly basis. The transfer
34estimates may be revised for the year and remaining months by
35the director of revenue if the estimates are incorrect.
-99- 1Commencing with the fiscal year beginning July 1, 2022, the
2bill changes the LOST and SAVE transfer amount procedures,
3subject to changes to LOST and SAVE in other divisions of the
4bill, by requiring the department of revenue to transfer the
5actual LOST and SAVE taxes collected that are attributable
6to each local government or school district to that local
7government or school district.
8The bill also creates a transition procedure for the LOST
9and SAVE tax amounts transferred during July and August 2022.
10Under the transition procedure, the department of revenue shall
11transfer estimated amounts of LOST and SAVE to each local
12government or school district for the months of July, August,
13and September 2022. However, beginning with the October 2022
14transfer, the department of revenue shall transfer the actual
15amount of tax attributable to each local government or school
16district for the LOST and SAVE tax remitted in September 2022.
17The bill requires any adjustment amount that is necessary to
18the July, August, or September 2022 estimated transfer amounts
19be made by the close of business on December 30, 2022.
20DIVISION V — SALE OF CERTAIN QUALIFIED STOCK — NET
21CAPITAL GAIN EXCLUSION. The bill grants an employee-owner one
22irrevocable lifetime election to exclude from state individual
23income tax the net capital gain from the state of the capital
24stock on one qualified corporation. The election applies to
25all subsequent sales or exchanges of capital stock.
26The bill phases in over a three-year period the complete
27exclusion from the individual income tax the net capital gain
28from the sale of capital stock on one qualified corporation.
29The percentage of the capital gain that is excluded for tax
30years beginning in 2023, 2024, and 2025 and beyond is 33
31percent, 66 percent, and 100 percent, respectively. Several
32requirements must be met for the capital stock to qualify
33as capital stock of a qualified corporation. The qualified
34corporation must have employed individuals in this state for
35at least 10 years. The qualified corporation must have had at
-100-1least five shareholders for the 10 years prior to the first
2sale or exchange pursuant to the bill, and the corporation must
3have had at least two shareholders or groups of shareholders
4who are not related for the 10 years prior to the sale or
5exchange. The bill requires the capital stock to be common or
6preferred stock, and may be either voting or nonvoting, but
7does not include warrants, stock options, or debt securities.
8The bill provides that the election applies to transfers of
9the capital stock by inter vivos gift from the employee-owner
10to a spouse, or to a trust for the benefit of the
11employee-owner’s spouse. The election will apply to a spouse
12only if the spouse was married to the employee-owner on the
13date of the sale or the date of the employee-owner’s death.
14If, after making a valid inter vivos gift of stock that meets
15all the requirements for an election, an employee-owner dies
16without making an election, the surviving spouse, or if there
17is no surviving spouse, the personal representative of the
18employee-owner’s estate, may make the election.
19An election under the bill is made on a form prescribed by
20the department of revenue and included with the taxpayer’s
21state income tax return for the taxable year in which the
22election is made.
23The division takes effect January 1, 2023, and applies to tax
24years beginning on or after that date.
25DIVISION VI — RETIRED FARMER LEASE INCOME EXCLUSION.
26 Commencing with tax years beginning on or after January 1,
272023, the bill excludes from the individual income tax a
28retired farmer’s total net income received pursuant to a
29farm tenancy agreement covering real property held by the
30retired farmer for 10 or more years, if the farmer materially
31participated in a farming business for 10 or more years.
32Net income from a farm tenancy agreement earned by an
33entity taxed as a partnership for federal tax purposes, an S
34corporation, or a trust or estate is not eligible for the lease
35income exclusion, even if the net income passes through to a
-101-1retired farmer.
2A retired farmer is not eligible for the lease income
3exclusion unless the farmer is at least 55 years of age and no
4longer materially participating in farming.
5A retired farmer who elects to claim the lease income
6exclusion is not eligible, in the tax year the election is made
7or in succeeding tax years, to claim the capital gain exclusion
8under Code section 422.7(21), as amended by another division of
9the bill, or the beginning farmer tax credit.
10The division takes effect January 1, 2023, and applies to tax
11years beginning on or after that date.
12DIVISION VII — RETIRED FARMER CAPITAL GAIN EXCLUSION. The
13bill modifies the individual income tax capital gain exclusion
14for the sale of real property used in a farming business which
15otherwise would have gone into effect in tax year 2023, which
16was enacted in 2018 Iowa Acts, chapter 1161, section 113,
17and later modified in 2019 Iowa Acts, chapter 162. The bill
18repeals both 2018 Iowa Acts, chapter 1161, section 113, and
192019 Iowa Acts, chapter 162, and creates a new capital gain
20exclusion provision based upon the 2019 Iowa Acts, chapter
21162 provisions, effective for tax years beginning on or after
22January 1, 2023.
23Under the provisions in 2019 Iowa Acts, chapter 162, section
241, which otherwise would have gone into effect during the 2023
25tax year, a taxpayer who materially participates in a farming
26business for at least 10 years and held real property used
27in such a business for at least 10 years, may make a single
28lifetime exclusion election from the individual income tax of
29the capital gain of the sale of such property.
30The bill modifies the term “materially participated” in a
31farming business to include a retired farmer if the retired
32farmer materially participated in a farming business for 10
33years or more, in the aggregate, prior to making the election
34to exclude the capital gain of the sale of real property used
35in a farming business.
-102- 1In addition to a single lifetime exclusion of the capital
2gain from the sale of real property used in a farming business,
3the bill also allows a retired farmer to make a single lifetime
4exclusion of the net capital gain from the sale of cattle
5or horses if held by the retired farmer for breeding, draft,
6dairy, or sporting purposes for more than 24 months, and
7only if the retired farmer materially participated in the
8farming business for five of the eight years preceding the
9retired farmer’s retirement or disability, and who sold all
10or substantially all of the retired farmer’s interest in the
11farming business by the time the election to exclude capital
12gain of the sale of livestock from the individual income tax
13is made.
14Additionally, the bill allows a retired farmer to make a
15single lifetime exclusion of the net capital gain from the
16sale of breeding livestock, other than cattle and horses, if
17the livestock is held by the retired farmer for more than 12
18months, and only if the retired farmer materially participated
19in the farming business for five of the eight years preceding
20the retired farmer’s retirement or disability, and who sold all
21or substantially all of the retired farmer’s interest in the
22farming business by the time the election to exclude capital
23gain of the sale of livestock from the individual income tax
24is made.
25Under the bill, a retired farmer is not eligible for the
26capital gain exclusion if the retired farmer claims the
27beginning farmer tax credit in the same tax year. A retired
28farmer electing the capital gain exclusion is not eligible to
29elect to exclude retired farmer lease income in the same tax
30year or any succeeding tax year.
31The division takes effect January 1, 2023, and applies to
32sales consummated on or after that date.
33For sales consummated prior to January 1, 2023, the existing
34law in Code section 422.7(21) shall govern.
35DIVISION VIII — INDIVIDUAL INCOME TAX — PHASE IN. The bill
-103-1repeals the individual income tax rates and brackets described
2in 2018 Iowa Acts, chapter 1161, section 107, which otherwise
3would have gone into effect January 1, 2023, and strikes and
4replaces the individual income tax rates and brackets for the
5tax year beginning January 1, 2023, in Code section 422.5A.
6 The bill reduces individual income tax rates beginning with
7the 2023 tax year, and reduces the number of individual income
8tax brackets beginning with the 2024 tax year. The modified
9individual income tax rates and brackets are as follows:
10For the 2023 tax year:
11Married filing jointly
12Income over:But not over: Tax rate:
131) $0$12,000 4.40%
142) $12,000$60,000 4.82%
153) $60,000$150,000 5.70%
164) $150,0006.00%
17All other filers other than married filing jointly
18Income over:But not over: Tax rate:
191) $0$6,000 4.40%
202) $6,000$30,000 4.82%
213) $30,000$75,000 5.70%
224) $75,0006.00%
23For the 2024 tax year:
24Married filing jointly
25Income over:But not over: Tax rate:
261) $0$12,000 4.40%
272) $12,000$60,000 4.82%
283) $60,0005.70%
29All other filers other than married filing jointly
30Income over:But not over: Tax rate:
311) $0$6,000 4.40%
322) $6,000$30,000 4.82%
333) $30,0005.70%
34For the 2025 tax year:
35Married filing jointly
-104- 1Income over:But not over: Tax rate:
21) $0$12,000 4.40%
32) $12,0004.82%
4All other filers other than married filing jointly
5Income over:But not over: Tax rate:
61) $0$6,000 4.40%
72) $6,0004.82%
8Currently, an alternate income tax calculation exists
9in Code section 422.5. The alternate income tax is an
10alternate method of calculating income tax liability in lieu
11of the regular income tax calculation. The alternate method
12multiplies the taxpayer’s taxable income above the income tax
13filing thresholds in Code section 422.5(3)(b) or 422.5(3B)(b)
14by the highest existing individual income tax rate until
15the taxpayer’s tax liability is equal to the tax liability
16that would have been calculated under the regular income tax
17calculation method, then after such point the regular income
18tax calculation with the regular income tax rates are used.
19The bill phases in changes to the alternate tax rate until the
20rate is set at 4.10 percent commencing with tax years beginning
21on or after January 1, 2027. After the alternate rate is set
22at 4.10 percent, the bill proportionally reduces the alternate
23rate as the individual income tax rate is reduced.
24The division takes effect January 1, 2023, and applies to tax
25years beginning on or after that date.
26DIVISION IX — INDIVIDUAL INCOME TAX — FLAT RATE —
27CONTINGENT ELIMINATION. Commencing with the tax year beginning
28on or after January 1, 2026, but before January 1, 2027, the
29bill establishes a flat 3.85 percent individual income tax rate
30on all taxable income and moves the individual income tax rate
31from Code section 422.5A to Code section 422.5.
32Commencing tax years beginning on or after January 1, 2027,
33the bill reduces the flat individual income tax rate from 3.85
34percent to 3.60 percent on all taxable income.
35After reducing the individual income tax rate to 3.60
-105-1percent, the bill establishes a procedure where the individual
2income tax rate may be adjusted commencing with tax years
3beginning on or after January 1, 2029. The bill specifies
4the individual income tax rate shall be adjusted each tax
5year until the rate is zero, if sufficient funds to make
6the adjustment are available in the individual income tax
7elimination fund.
8By November 1, 2028, and by November 1 each year thereafter,
9the department of management shall determine the amount of
10moneys available in the individual income tax elimination fund,
11and the net individual income tax receipts at the close of
12the preceding fiscal year. The department of revenue shall
13adjust and apply a new individual income tax rate based upon
14the amount of money available in the individual income tax
15elimination fund. The bill specifies the department of revenue
16shall adjust and apply a new individual income tax rate in such
17a way that the rate would have generated an amount equal to the
18net receipts generated from the rate in the preceding fiscal
19year less the amount used in the calculation in the individual
20income tax elimination fund.
21The bill prohibits the rate from being adjusted unless the
22rate is able to be adjusted at least one-tenth of one percent.
23The rate, when adjusted, shall be rounded down to the nearest
24one-tenth of one percent.
25The bill requires the moneys in the individual income tax
26elimination fund be transferred to the general fund of the
27state in the fiscal year the rate is adjusted.
28If a tax rate is adjusted, the bill requires the director
29of revenue to cause an advisory notice containing the new
30individual income tax rate to be published in the Iowa
31administrative bulletin and on the internet site of the
32department of revenue. The calculation and publication of the
33adjusted tax rate by the director of revenue is exempt from
34Code chapter 17A, and shall be submitted for publication by the
35first December 31 following the determination date to adjust
-106-1the tax rates.
2The division takes effect January 1, 2026, and applies to tax
3years beginning on or after that date.
4DIVISION X — RETIREMENT INCOME EXCLUSION. Under current
5law, a taxpayer who is disabled, who is at least 55 years of
6age, or who is the surviving spouse or other specified survivor
7of that qualifying taxpayer, may exclude a maximum of $6,000 of
8other retirement income ($12,000 for married persons).
9Commencing with tax years beginning January 1, 2023, the
10bill excludes retirement income from the computation of net
11income for purposes of the individual income tax. In order
12to be eligible for the retirement income exclusion, a person
13must be disabled, at least 55 years of age, or be the surviving
14spouse of an individual or be a survivor having an insurable
15interest in an individual who would have qualified for the
16retirement income exclusion.
17The bill does not change current law allowing a taxpayer
18to exclude all retirement pay, including certain survivor
19benefits, received from the federal government for military
20service performed in the armed forces, the armed forces
21military reserve, or national guard.
22The bill also excludes this retirement income from the
23calculation of net income for purposes of determining whether
24or not a taxpayer’s net income exceeds the amount at which the
25individual income tax will not be imposed pursuant to Code
26section 422.5(3) or 422.5(3B), and for which an individual
27income tax return is not required to be filed, and for purposes
28of calculating the alternate tax in Code section 422.5, and
29further provides that any retirement income excluded from
30the individual income tax will not be added back to these
31calculations for tax years beginning in 2023 or later.
32The division takes effect January 1, 2023, and applies to tax
33years beginning on or after that date.
34DIVISION XI — CORPORATE INCOME TAX. The bill repeals the
35current corporate income tax rates in Code section 422.33(1)
-107-1for tax years beginning on or after January 1, 2024.
2DIVISION XII — FUTURE CORPORATE INCOME TAX RATES. The bill
3phases in reductions to corporate income tax rates commencing
4with the tax year beginning on or after January 1, 2024, but
5before January 1, 2025:
6Income over:But not over:Tax rate:
71) $0$100,0005.50%
82) $100,000$250,0009.00%
93) $250,0009.40%
10For the tax year commencing on or after January 1, 2025, but
11before January 1, 2026, the rates are as follows:
12Income over:But not over:Tax rate:
131) $0$100,0005.50%
142) $100,0009.00%
15For the tax year commencing on or after January 1, 2026, but
16before January 1, 2027, the rates are as follows:
17Income over:But not over:Tax rate:
181) $0$100,0005.40%
192) $100,0008.60%
20For the tax year beginning on or after January 1, 2027, but
21before January 1, 2028, the rates are as follows:
22Income over:But not over:Tax rate:
231) $0$100,0005.40%
242) $100,0008.20%
25For the tax years commencing on or after January 1, 2028, the
26rates are permanently set at the following:
27Income over:But not over:Tax rate:
281) $0$100,0005.30%
292) $100,0007.80%
30DIVISION XIII — FRANCHISE TAX. The bill phases in a
31reduction of the current franchise tax of 5 percent of net
32income as follows: Commencing with the tax years beginning
33during the 2023 calendar year, 4.80 percent; for tax years
34beginning during the 2024 calendar year, 4.60 percent; for tax
35years beginning during the 2025 calendar year, 4.40 percent;
-108-1for tax years beginning during the 2026 calendar year, 4.20
2percent; and for all tax years beginning on or after January
31, 2027, 4.00 percent.
4DIVISION XIV — INSURANCE PREMIUMS TAX. The bill reduces
5the insurance premium tax on the gross amount of premiums
6received by an insurance company from 1 percent to .95 percent
7in calendar year 2023, and from .95 percent to .90 percent for
8the 2024 calendar year and subsequent calendar years.
9The division takes effect January 1, 2023.
10DIVISION XV — AUTOMOBILE RENTAL EXCISE TAX. The bill
11increases the automobile rental excise tax from 5 percent to 7
12percent on the rental of automobiles rented on or after January
131, 2023. The bill repeals an exception for the collection of
14the automobile rental excise tax of a person or an affiliate
15of a person who owns, operates, or controls an automobile
16peer-to-peer sharing marketplace.
17DIVISION XVI — EQUIPMENT TAX. The bill increases the
18equipment tax from 5 percent to 6 percent of the sales price on
19all equipment sold or used in the state on or after January 1,
202023. Code section 423D.1 defines “equipment”.
21DIVISION XVII — WATER SERVICE TAX. The bill repeals Code
22chapter 423G (water service tax) in the amount of six percent
23imposed on the sales price from the sale or furnishing of
24water by a water utility to consumers or users. However, in
25division II of the bill, the sales tax exemption for the sale
26of furnishing of water by a water utility is repealed, thus
27making the sale or furnishing of water to the public subject to
28the seven percent sales tax. The division takes effect January
291, 2023.
30DIVISION XVIII — TAX CREDITS.
31HIGH QUALITY JOBS. The bill specifies that in allocating tax
32credits, the IEDA shall prioritize allocating tax credits for
33additional research activities tax credits allowed pursuant to
34Code section 15.335A.
35REDEVELOPMENT. Currently, 100 percent of the redevelopment
-109-1tax credit in excess of tax liability is refundable if certain
2conditions are met. The bill reduces the refundability of
3the redevelopment tax credit as follows: for the tax year
4beginning on or after January 1, 2023, but before January
51, 2024, the 75 percent of the tax credit in excess of the
6taxpayer’s liability for the tax year is refundable if certain
7conditions are met; and for tax years beginning on or after
8January 1, 2024, 50 percent of the tax credit in excess of tax
9liability is refundable if certain conditions are met.
10ENDOW IOWA. The bill changes the maximum amount of endow
11Iowa tax credits that are available to an individual taxpayer
12from 5 percent of the authorized credits to $100,000 of the
13authorized credits. Currently, the authorized credits shall
14not annually exceed $6 million.
15RENEWABLE CHEMICAL PRODUCTION. Currently, 100 percent of
16the renewable chemical production tax credit in excess of tax
17liability is refundable. The bill reduces the refundability of
18the renewable chemical production tax credit as follows: for
19the tax year beginning on or after January 1, 2023, but before
20January 1, 2024, 75 percent of the tax credit in excess of the
21taxpayer’s liability for the tax year is refundable; and for
22tax years beginning on or after January 1, 2024, 50 percent of
23the tax credit in excess of tax liability is refundable.
24S CORPORATION. The bill repeals the S corporation tax
25credit commencing with tax years beginning on or after January
261, 2023. In lieu of claiming the credit for taxes paid to
27another state, the S corporation tax credit allows resident
28shareholders of S corporations that do business within and
29outside of the state to recompute their individual income tax
30and claim a refund of tax paid if the recomputation is a lower
31amount. The recomputation allocates the resident shareholder’s
32share of the income and expenses of the S corporation, as is
33done for corporate income tax purposes, rather than all the
34resident’s share of the income and expenses being taxed.
35RESEARCH ACTIVITIES. The bill modifies the research
-110-1activities tax credit available against the individual and
2corporate income taxes. The bill specifies the tax credit
3shall be claimed on a return filed by the due date for filing
4the return, including extensions of time. If the tax credit is
5timely claimed, the bill prohibits a taxpayer from increasing
6the claim on an amended return unless the increase resulted
7from an audit by the Internal Revenue Service or the department
8of revenue.
9The bill modifies the calculations for determining the
10state’s apportioned share of the qualifying expenditures for
11increasing research activities.
12The bill requires a taxpayer to use the alternative
13simplified credit calculation described in federal law if
14the taxpayer elected or was required to use the alternative
15simplified credit method for federal income tax purposes for
16the same taxable year. The bill modifies the alternative
17credit computation for state tax purposes to require, for
18purposes of claiming the credit, the basic research payments
19and qualified research expenses to be conducted in this
20state. The bill also specifies the basic research payments
21and qualified research expenses under the alternate credit
22computation shall be determined in accordance with the new
23calculations for determining the state’s apportioned share of
24the qualifying expenditures in the bill.
25The bill reduces the research activities tax credit from
266.5 percent of the excess qualified research expenses or basic
27research payments to 4 percent of such expenses or payments.
28If the taxpayer uses the alternate credit computation described
29in section 41(c)(4) of the Internal Revenue Code, the bill
30reduces the alternate credit computations from 4.55 percent to
312.80 percent and 1.95 percent to 1.20 percent, respectively.
32For individual and corporate income taxpayers, commencing
33with the tax year beginning January 1, 2023, but before January
341, 2024, the bill reduces the refundability of the research
35activities tax credit from 100 percent of the credit in excess
-111-1of the tax liability imposed during the tax year, to 75 percent
2of any credit in excess of the tax liability imposed during
3the tax year. Commencing with tax years beginning on or after
4January 1, 2024, and every tax year thereafter, the bill
5reduces the refundability of the tax credit from 75 percent
6of the credit in excess of the tax liability imposed during
7the tax year, to 50 percent of any credit in excess of the tax
8liability imposed during the tax year.
9GEOTHERMAL HEAT PUMP TAX CREDIT. Currently, the state
10geothermal heat pump tax credit available against the
11individual income tax is based upon the federal tax credit
12which is set to expire for installations occurring on or after
13December 31, 2023. The bill prohibits a taxpayer from claiming
14the state geothermal heat pump tax credit for installations
15occurring after December 31, 2023. The bill delays the repeal
16of the geothermal heat pump tax credit until January 1, 2034,
17to account for the 10-year carryforward period.
18CHARITABLE CONSERVATION CONTRIBUTION. The bill prohibits
19a charitable conservation contribution tax credit from being
20claimed against the individual or corporate income tax, except
21for qualified real property interests conveyed prior to January
221, 2023. The bill allows the credit in excess of tax liability
23to carry forward for qualified real property interests conveyed
24prior to January 1, 2023.
25PRESERVATION OF EXISTING RIGHTS. The bill preserves
26existing rights and is intended to not limit, modify, or
27otherwise adversely affect any amount of the tax credit issued,
28awarded, or allowed prior to the repeal date of any tax credit.
29TAX CREDIT REVIEW STUDY COMMITTEE. During the 2029
30legislative interim, the bill requests the legislative council
31to authorize a study committee to review tax credits available
32against state taxes by developing options for replacing tax
33credits that produce equivalent results as the tax credit
34being replaced. The study shall consist of voting legislative
35members and nonvoting taxpayer representatives.
-112- 1EFFECTIVE AND APPLICABILITY DATE. The division takes effect
2January 1, 2023, and applies to tax years beginning on or after
3that date.
4DIVISION XIX — TAX EXPENDITURE COMMITTEE. The bill
5changes the process of reviewing tax expenditures. The bill
6strikes the review of tax expenditures by the tax expenditure
7committee, and requires the applicable department charged
8with administering a tax expenditure to submit a report to
9the general assembly detailing the review in the year the
10tax expenditure is scheduled to be reviewed. The bill does
11not change the tax expenditure review schedule or the tax
12expenditures to be reviewed.
13DIVISION XX — INDIVIDUAL INCOME TAX ELIMINATION FUND.
14 The bill changes the name of the taxpayer relief fund to the
15individual income tax elimination fund.
16DIVISION XXI — NATIONAL GUARD PAY. The bill exempts from
17the individual income tax all pay received by a taxpayer
18from the federal government for full-time military service
19performed in support of the national guard pursuant to 32
20U.S.C. §502(f) and 32 U.S.C. §709(a) and (b). This exempts
21certain income received by active duty and reserve personnel,
22certain operational support personnel, and certain dual-status
23federal technicians.
24The division applies to tax years beginning on or after
25January 1, 2023.
26DIVISION XXII — LOCAL OPTION TAXES. Code chapter 423B
27authorizes, following approval at election, the imposition of
28a local option sales and services tax at a rate not to exceed
29one percent to be administered similarly to the state sales
30and services tax and authorizes the imposition of a local
31vehicle tax. The bill strikes the authorization for the local
32vehicle tax and also strikes the authorization to impose the
33local option sales and services tax under Code chapter 423B,
34but instead authorizes cities and counties to expend specified
35state sales and use tax revenues that are deposited in the
-113-1local sales and use tax fund following the increase of the
2state sales and use taxes rates in previous sections of the
3bill.
4Under the bill, sales and services tax revenue credited to
5and deposited in each county’s account within the local sales
6and use tax fund must be expended by each recipient county
7and city as required by the jurisdiction’s revenue purpose
8statement, including a revenue purpose statement in effect on
9January 1, 2023, for the use of local option sales and use tax
10revenue previously collected under Code chapter 423B, or be
11used to reduce specified property tax levies.
12The board of supervisors of each county and the city
13council of each city may adopt by resolution a revenue purpose
14statement for the expenditure of funds received under Code
15chapter 423B.
16The revenues transferred to the local sales and use tax fund
17continue to be allocated to the specific county account for
18the county in which the tax was collected. Additionally, all
19cities and counties are eligible to receive the allocation of
20revenues, not just those that had previously approved the local
21option tax.
22Code section 423B.10 allows a city in which a local sales
23and services tax is imposed to, by ordinance and following
24approval of the board of supervisors, to provide for the use
25of a designated amount of increased local option sales and
26services tax revenue for urban renewal purposes. The bill
27modifies provisions governing this authorization to provide for
28the use of a specified amount of the applicable increase state
29sales tax revenues deposited in the local sales and use tax
30fund in lieu of the increased local option sales and services
31tax revenue. The bill allows city ordinances providing for the
32use of certain local option sales and services tax revenues for
33urban renewal purposes in effect on January 1, 2023, to remain
34in effect until expiration, amendment, or repeal.
35The bill also eliminates the authority to impose a local
-114-1sales and services tax under the quad cities interstate
2metropolitan authority compact under Code chapter 28A beginning
3on January 1, 2023.
4The division takes effect January 1, 2023.
5DIVISION XXIII — NATURAL RESOURCES AND OUTDOOR RECREATION
6TRUST FUND. The bill amends provisions in Code chapter 461
7(the natural resources and outdoor recreation Act) that is
8to implement Article VII, section 10, of the Constitution
9of the State of Iowa when the sales tax is increased. The
10bill increases the sales tax in division I. The Code chapter
11establishes the natural resources and outdoor recreation trust
12fund (trust fund) and associated accounts (renamed trust
13accounts) supported by a portion of state revenue generated
14by an increase in the state’s sales tax. The purpose of
15the constitutional provision is to protect and enhance water
16quality and natural areas, including parks, trails, and fish
17and wildlife habitat, and conserve agricultural soils in this
18state.
19ALLOCATIONS OF TRUST FUND MONEYS. The bill alters the
20percentage of moneys to be allocated from the trust fund
21(trust fund moneys) to its trust accounts, including the
22natural resources trust account administered by the department
23of natural resources (DNR), the soil conservation and water
24protection trust account (renamed the soil conservation and
25nonpoint source water protection trust account) administered
26by the department of agriculture and land stewardship (DALS),
27the watershed protection trust account administered by DNR
28in cooperation with DALS, the local conservation partnership
29trust account administered by DNR, the trails trust account
30(renamed the water and land trails trust account) administered
31by DOT in cooperation with DNR, and the lake restoration
32trust account (renamed the lake and stream restoration trust
33account) administered by DNR. It also reduces the allocations
34of trust fund moneys to the Iowa resources enhancement and
35protection (REAP) fund administered by DNR. It transfers
-115-1trust fund moneys allocated to the renamed soil conservation
2and nonpoint source water protection trust account and the
3watershed protection trust account to the water quality
4infrastructure fund used to support nonpoint water quality
5programs administered by DALS; and to the water quality
6financial assistance fund administered by the Iowa finance
7authority (IFA) to support the wastewater and drinking water
8treatment financial assistance program (administered by IFA),
9the water quality financing program (administered by IFA), and
10the water quality urban infrastructure program (administered by
11DALS). The bill revises provisions in the local conservation
12partnership trust account as a program to be administered
13by DNR. The bill provides that trust fund moneys may be
14transferred from the renamed soil conservation and nonpoint
15source water protection trust account to the water quality
16infrastructure fund and from the watershed protection trust
17account to the water quality financial assistance fund upon
18direction by the custodial department. The bill eliminates
19current funding sources, including the annual appropriation
20to the REAP fund from the general fund which is due to expire
21on June 30, 2026, and both a tax on the sales price on water
22service, which another division of the bill repeals, and the
23use of wagering tax receipts, which would otherwise expire on
24July 1, 2039.
25ADMINISTRATION. The bill provides that the legislative
26council is to appoint a committee to review the trust fund and
27its allocations. The bill requires the economic development
28authority to be involved in decisions that use trust fund
29moneys to support initiatives with a recreational purpose. In
30making decisions to expend trust fund moneys, a higher priority
31is given to supporting an initiative that furthers a goal of
32the Iowa nutrient reduction strategy. A higher priority is
33provided to maintaining or preserving existing public use lands
34rather than acquiring new land. Several provisions place
35restrictions upon the use of trust fund moneys for support
-116-1relating to certain initiatives, including athletic fields or
2facilities. Trust fund moneys cannot be used to support an
3exercise of eminent domain powers.
4REPEAL. Code chapter 461 is repealed December 31, 2051.
5EFFECTIVE DATE. The division of the bill takes effect
6January 1, 2023.
7DIVISION XXIV — CONTINGENT CODE EDITOR DIRECTIVE. The Code
8editor is directed to harmonize amendments to sections of the
9bill, if necessary, which are amended by two or more divisions
10of the bill, and to make other related changes, if necessary,
11to effectuate such changes.
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