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Senate File 2318 - IntroducedA Bill ForAn Act 1relating to the solar energy system tax credit available
2against the individual or corporate income tax, the
3franchise tax, and the moneys and credits tax, and including
4effective date and retroactive applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 422.11L, Code 2022, is amended by
2striking the section and inserting in lieu thereof the
3following:
4422.11L Solar energy system tax credits.
51. As used in this section:
6a. “Commercial solar energy system” means a solar energy
7system on multiresidential property or nonresidential property.
8b. “Residential solar energy system” means a solar energy
9system on residential property.
10c. “Solar energy system” means a system of equipment capable
11of collecting and converting incident solar radiation into
12thermal, mechanical, or electrical energy and transporting the
13energy by a separate apparatus to storage or to a point of use.
142. Beginning with installations completed on or after
15January 1, 2022, the taxes imposed under this subchapter, less
16the credits allowed under section 422.12, shall be reduced by
17a solar energy system tax credit equal to fifty percent of
18the gross cost of the solar energy system, not to exceed the
19following amounts:
20a. For a residential solar energy system, five thousand
21dollars.
22b. For a commercial solar energy system, twenty thousand
23dollars.
243. Any credit in excess of the tax liability is not
25refundable but the excess for the tax year may be credited
26to the tax liability for the following ten years or until
27depleted, whichever is earlier.
284. a. An individual may claim the tax credit allowed a
29partnership, limited liability company, S corporation, estate,
30or trust electing to have the income taxed directly to the
31individual. The amount claimed by the individual shall be
32based upon the pro rata share of the individual’s earnings of
33the partnership, limited liability company, S corporation,
34estate, or trust.
35b. A taxpayer who is eligible to claim a credit under this
-1-1section shall not be eligible to claim a renewable energy tax
2credit under chapter 476C.
3c. A taxpayer may claim more than one credit under this
4section, but may claim only one credit per separate and
5distinct solar energy system installation. The department
6shall establish criteria, by rule, for determining what
7constitutes a separate and distinct installation.
8d. (1) A taxpayer must submit an application to the
9department for each separate and distinct solar energy
10system installation. The application must be approved by the
11department in order to claim the tax credit. The application
12must be filed by May 1 following the year of the installation
13of the solar energy system.
14(2) The department shall accept and approve applications on
15a first-come, first-served basis.
165. The director shall adopt rules pursuant to chapter 17A to
17administer this section.
18 Sec. 2. Section 422.33, subsection 29, Code 2022, is amended
19to read as follows:
2029. a. The taxes imposed under this subchapter shall be
21reduced by a solar energy system tax credit equal to sixty
22percent of the federal energy credit related to solar energy
23systems provided in section 48(a)(2)(A)(i)(II) and section
2448(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
25twenty thousand dollars. For installations occurring on or
26after January 1, 2016, the applicable percentage of the federal
27energy credit related to solar energy systems shall be fifty
28percent.
29b. The taxpayer may claim the credit pursuant to this
30subsection and according to the same requirements, conditions,
31and limitations as provided pursuant to section 422.11L.
32 Sec. 3. Section 422.60, subsection 12, Code 2022, is amended
33to read as follows:
3412. a. The taxes imposed under this subchapter shall be
35reduced by a solar energy system tax credit equal to sixty
-2-1percent of the federal energy credit related to solar energy
2systems provided in section 48(a)(2)(A)(i)(II) and section
348(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
4twenty thousand dollars. For installations occurring on or
5after January 1, 2016, the applicable percentage of the federal
6energy credit related to solar energy systems shall be fifty
7percent.
8b. The taxpayer may claim the credit pursuant to this
9subsection and according to the same requirements, conditions,
10and limitations as provided pursuant to section 422.11L.
11 Sec. 4. CUMULATIVE VALUE OF SOLAR ENERGY SYSTEM TAX CREDIT
12— INSTALLATIONS PRIOR TO JANUARY 1, 2022. The following
13applicants shall be eligible to claim the solar energy system
14tax credit for the tax year beginning on or after January 1,
152022, but before January 1, 2023, for the credit described in
16section 422.11L, subsection 1, paragraph “a”, Code 2021, as
17if the credit did not expire, and as if the annual cumulative
18value of the tax credit allowed to be claimed in Code section
19422.11L, subsection 4, paragraph “a”, Code 2021, does not
20apply: an applicant with a valid application who was on the
21wait list as of December 31, 2021, and who did not receive the
22credit; an applicant whose application went through the review
23process of the department of revenue and who otherwise had a
24valid application but was nevertheless sent a denial letter by
25the department of revenue for the 2021 award year regardless
26of whether or not the applicant appealed the denial letter; an
27applicant whose application was in the review process of the
28department of revenue but whose application expired due to the
29expiration of the credit, regardless of whether the applicant
30appealed the denial letter; and an applicant who has not
31submitted an application for an installation that was completed
32during the 2021 calendar year.
33 Sec. 5. EFFECTIVE DATE. This Act, being deemed of immediate
34importance, takes effect upon enactment.
35 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies
-3-1retroactively to January 1, 2022, for tax years ending on or
2after that date.
3EXPLANATION
4The inclusion of this explanation does not constitute agreement with
5the explanation’s substance by the members of the general assembly.
6This bill relates to the solar energy system tax credit
7available against individual and corporate income taxes, the
8franchise tax, and the moneys and credits tax.
9BACKGROUND. Currently, the solar energy system tax credit
10for residential installations has expired for installations
11completed after December 31, 2021. The solar energy system tax
12credit remains available for the construction of a commercial
13solar energy system commenced before calendar year 2022.
14Under existing law, the Iowa solar energy system tax credit
15available against the individual or corporate income tax, the
16franchise tax, or the moneys and credits tax equals the sum of
1750 percent of the federal residential energy efficient property
18credit, not to exceed $5,000, plus 50 percent of the federal
19energy credit related to solar energy systems, not to exceed
20$20,000.
21CHANGES. The bill strikes provisions basing the Iowa solar
22energy system tax credit as a percentage of federal energy tax
23credits and creates a new Iowa solar energy system tax credit
24for installations completed on or after January 1, 2022. The
25bill creates a residential solar energy system tax credit equal
26to 50 percent of the gross cost of the system, up to $5,000.
27The bill creates a separate commercial solar energy system
28tax credit not to exceed 50 percent of the gross cost of the
29system, up to $20,000. The tax credit is available against the
30individual and corporate income taxes, the franchise tax, and
31the moneys and credits tax.
32The bill defines “residential solar energy system” to mean a
33solar energy project on residential property.
34The bill defines “commercial solar energy system” to mean
35a solar energy system on a multiresidential property or a
-4-1nonresidential property.
2Any tax credit approved under the bill is not refundable
3but the excess for the tax year may be credited to the tax
4liability for the following 10 years or until depleted,
5whichever is earlier.
6A taxpayer eligible to claim a credit under the bill is not
7eligible to claim a renewable energy tax credit under Code
8chapter 476C.
9The bill provides that a taxpayer may claim more than one tax
10credit, but may claim only one credit per separate and distinct
11solar energy system installation.
12The bill removes the $5 million maximum cumulative value
13of solar energy system tax credits annually available for
14installations completed on or after January 1, 2022. The
15bill also removes the $5 million maximum cumulative value of
16solar energy system tax credits available in a tax year for
17installations completed prior to January 1, 2022, for the
18following applicants: an applicant with a valid application
19who was on the wait list as of December 31, 2021, and who did
20not receive the credit; an applicant whose application went
21through the review process of the department of revenue and
22who otherwise had a valid application but was nevertheless
23sent a denial letter by the department of revenue for the
242021 award year regardless of whether or not the applicant
25appealed the denial letter; an applicant whose application
26was in the review process of the department of revenue but
27whose application expired due to the expiration of the credit,
28regardless of whether the applicant appealed the denial letter;
29and an applicant who has not submitted an application for an
30installation that was completed during the 2021 calendar year.
31The bill takes effect upon enactment and applies
32retroactively to January 1, 2022, for tax years ending on or
33after that date.
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2against the individual or corporate income tax, the
3franchise tax, and the moneys and credits tax, and including
4effective date and retroactive applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 422.11L, Code 2022, is amended by
2striking the section and inserting in lieu thereof the
3following:
4422.11L Solar energy system tax credits.
51. As used in this section:
6a. “Commercial solar energy system” means a solar energy
7system on multiresidential property or nonresidential property.
8b. “Residential solar energy system” means a solar energy
9system on residential property.
10c. “Solar energy system” means a system of equipment capable
11of collecting and converting incident solar radiation into
12thermal, mechanical, or electrical energy and transporting the
13energy by a separate apparatus to storage or to a point of use.
142. Beginning with installations completed on or after
15January 1, 2022, the taxes imposed under this subchapter, less
16the credits allowed under section 422.12, shall be reduced by
17a solar energy system tax credit equal to fifty percent of
18the gross cost of the solar energy system, not to exceed the
19following amounts:
20a. For a residential solar energy system, five thousand
21dollars.
22b. For a commercial solar energy system, twenty thousand
23dollars.
243. Any credit in excess of the tax liability is not
25refundable but the excess for the tax year may be credited
26to the tax liability for the following ten years or until
27depleted, whichever is earlier.
284. a. An individual may claim the tax credit allowed a
29partnership, limited liability company, S corporation, estate,
30or trust electing to have the income taxed directly to the
31individual. The amount claimed by the individual shall be
32based upon the pro rata share of the individual’s earnings of
33the partnership, limited liability company, S corporation,
34estate, or trust.
35b. A taxpayer who is eligible to claim a credit under this
-1-1section shall not be eligible to claim a renewable energy tax
2credit under chapter 476C.
3c. A taxpayer may claim more than one credit under this
4section, but may claim only one credit per separate and
5distinct solar energy system installation. The department
6shall establish criteria, by rule, for determining what
7constitutes a separate and distinct installation.
8d. (1) A taxpayer must submit an application to the
9department for each separate and distinct solar energy
10system installation. The application must be approved by the
11department in order to claim the tax credit. The application
12must be filed by May 1 following the year of the installation
13of the solar energy system.
14(2) The department shall accept and approve applications on
15a first-come, first-served basis.
165. The director shall adopt rules pursuant to chapter 17A to
17administer this section.
18 Sec. 2. Section 422.33, subsection 29, Code 2022, is amended
19to read as follows:
2029. a. The taxes imposed under this subchapter shall be
21reduced by a solar energy system tax credit equal to sixty
22percent of the federal energy credit related to solar energy
23systems provided in section 48(a)(2)(A)(i)(II) and section
2448(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
25twenty thousand dollars. For installations occurring on or
26after January 1, 2016, the applicable percentage of the federal
27energy credit related to solar energy systems shall be fifty
28percent.
29b. The taxpayer may claim the credit pursuant to this
30subsection and according to the same requirements, conditions,
31and limitations as provided pursuant to section 422.11L.
32 Sec. 3. Section 422.60, subsection 12, Code 2022, is amended
33to read as follows:
3412. a. The taxes imposed under this subchapter shall be
35reduced by a solar energy system tax credit equal to sixty
-2-1percent of the federal energy credit related to solar energy
2systems provided in section 48(a)(2)(A)(i)(II) and section
348(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
4twenty thousand dollars. For installations occurring on or
5after January 1, 2016, the applicable percentage of the federal
6energy credit related to solar energy systems shall be fifty
7percent.
8b. The taxpayer may claim the credit pursuant to this
9subsection and according to the same requirements, conditions,
10and limitations as provided pursuant to section 422.11L.
11 Sec. 4. CUMULATIVE VALUE OF SOLAR ENERGY SYSTEM TAX CREDIT
12— INSTALLATIONS PRIOR TO JANUARY 1, 2022. The following
13applicants shall be eligible to claim the solar energy system
14tax credit for the tax year beginning on or after January 1,
152022, but before January 1, 2023, for the credit described in
16section 422.11L, subsection 1, paragraph “a”, Code 2021, as
17if the credit did not expire, and as if the annual cumulative
18value of the tax credit allowed to be claimed in Code section
19422.11L, subsection 4, paragraph “a”, Code 2021, does not
20apply: an applicant with a valid application who was on the
21wait list as of December 31, 2021, and who did not receive the
22credit; an applicant whose application went through the review
23process of the department of revenue and who otherwise had a
24valid application but was nevertheless sent a denial letter by
25the department of revenue for the 2021 award year regardless
26of whether or not the applicant appealed the denial letter; an
27applicant whose application was in the review process of the
28department of revenue but whose application expired due to the
29expiration of the credit, regardless of whether the applicant
30appealed the denial letter; and an applicant who has not
31submitted an application for an installation that was completed
32during the 2021 calendar year.
33 Sec. 5. EFFECTIVE DATE. This Act, being deemed of immediate
34importance, takes effect upon enactment.
35 Sec. 6. RETROACTIVE APPLICABILITY. This Act applies
-3-1retroactively to January 1, 2022, for tax years ending on or
2after that date.
3EXPLANATION
4The inclusion of this explanation does not constitute agreement with
5the explanation’s substance by the members of the general assembly.
6This bill relates to the solar energy system tax credit
7available against individual and corporate income taxes, the
8franchise tax, and the moneys and credits tax.
9BACKGROUND. Currently, the solar energy system tax credit
10for residential installations has expired for installations
11completed after December 31, 2021. The solar energy system tax
12credit remains available for the construction of a commercial
13solar energy system commenced before calendar year 2022.
14Under existing law, the Iowa solar energy system tax credit
15available against the individual or corporate income tax, the
16franchise tax, or the moneys and credits tax equals the sum of
1750 percent of the federal residential energy efficient property
18credit, not to exceed $5,000, plus 50 percent of the federal
19energy credit related to solar energy systems, not to exceed
20$20,000.
21CHANGES. The bill strikes provisions basing the Iowa solar
22energy system tax credit as a percentage of federal energy tax
23credits and creates a new Iowa solar energy system tax credit
24for installations completed on or after January 1, 2022. The
25bill creates a residential solar energy system tax credit equal
26to 50 percent of the gross cost of the system, up to $5,000.
27The bill creates a separate commercial solar energy system
28tax credit not to exceed 50 percent of the gross cost of the
29system, up to $20,000. The tax credit is available against the
30individual and corporate income taxes, the franchise tax, and
31the moneys and credits tax.
32The bill defines “residential solar energy system” to mean a
33solar energy project on residential property.
34The bill defines “commercial solar energy system” to mean
35a solar energy system on a multiresidential property or a
-4-1nonresidential property.
2Any tax credit approved under the bill is not refundable
3but the excess for the tax year may be credited to the tax
4liability for the following 10 years or until depleted,
5whichever is earlier.
6A taxpayer eligible to claim a credit under the bill is not
7eligible to claim a renewable energy tax credit under Code
8chapter 476C.
9The bill provides that a taxpayer may claim more than one tax
10credit, but may claim only one credit per separate and distinct
11solar energy system installation.
12The bill removes the $5 million maximum cumulative value
13of solar energy system tax credits annually available for
14installations completed on or after January 1, 2022. The
15bill also removes the $5 million maximum cumulative value of
16solar energy system tax credits available in a tax year for
17installations completed prior to January 1, 2022, for the
18following applicants: an applicant with a valid application
19who was on the wait list as of December 31, 2021, and who did
20not receive the credit; an applicant whose application went
21through the review process of the department of revenue and
22who otherwise had a valid application but was nevertheless
23sent a denial letter by the department of revenue for the
242021 award year regardless of whether or not the applicant
25appealed the denial letter; an applicant whose application
26was in the review process of the department of revenue but
27whose application expired due to the expiration of the credit,
28regardless of whether the applicant appealed the denial letter;
29and an applicant who has not submitted an application for an
30installation that was completed during the 2021 calendar year.
31The bill takes effect upon enactment and applies
32retroactively to January 1, 2022, for tax years ending on or
33after that date.
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