Bill > SSB1205

Introduced Session

This bill relates to matters under the purview of the Iowa economic development authority (authority), including tax credit limits, targeted jobs tax credits, and the major economic growth attraction program; creation of the S.F. _____ H.F. _____ business incentives for growth program, the seed investor tax credit program, the Iowa film production incentive program, the research and development tax credit program, and the sustainable aviation fuel production tax credit program; elimination of the high quality jobs program, the investments in qualifying businesses tax credit, employer child care tax credits, assistive device tax credits, endow Iowa tax credits, and research activities tax credits; and makes conforming changes. DIVISION I —— ECONOMIC DEVELOPMENT PROGRAMS —— TAX CREDIT LIMITS. Under the bill, the authority shall not authorize for any one fiscal year an aggregate amount of tax credits for business development programs in excess of $110 million for allocation among the business programs as follows: (1) for tax credits for investments in an innovation fund and the seed investor tax credit the authority shall allocate a total of $10 million; (2) for the renewable chemical production tax credit and the sustainable aviation fuel production tax credit the authority shall allocate a total of $10 million; (3) for the research and development tax credit the authority shall allocate $40 million; and (4) for the business incentives for growth program for the fiscal year beginning July 1, 2026, and for each fiscal year thereafter, the authority shall not allocate more than $50 million. DIVISION II —— ECONOMIC DEVELOPMENT PROGRAMS —— TAX CREDIT LIMITS —— CONFORMING CHANGES. The bill makes conforming changes to Code sections 15.293A(6), 15.293B(6), 15.318(3)(e), 15.354(4), and 15.354(6)(d). DIVISION III —— BUSINESS INCENTIVES FOR GROWTH PROGRAM. The bill creates a business incentives for growth program (BIG program), effective January 1, 2026, to provide tax incentives to eligible businesses. The qualifications for an eligible business are provided in the bill. Applications for the BIG program shall be submitted to the authority. For a proposed project that will result in elevated water consumption by S.F. _____ H.F. _____ the business, the application must be accompanied by a water conservation and waste reduction plan. The terms of, and aggregate value of, a tax incentive may be negotiated between an eligible business and the authority, but the aggregate value of the tax incentives that any one eligible business may receive shall not exceed 5 percent of the eligible business’s qualifying investment. The board may authorize any combination of tax incentives available for an eligible business. An eligible business that is approved by the authority to participate in the BIG program shall enter into an agreement with the authority specifying the criteria for successful completion of the program requirements. The requirements for the program agreement are detailed in the bill. An eligible business issued a tax incentive under the BIG program shall be entitled to a refund of certain sales and use taxes, after filing a claim with the department of revenue as detailed in the bill. A contractor or subcontractor that willfully makes a false report of taxes paid is guilty of an aggravated misdemeanor, and shall be liable for payment of the tax and any applicable penalty and interest. An eligible business may not receive a tax credit certificate until the eligible business’s project, or a portion of the project, has been placed in service. The department of revenue shall remit the tax credit to the eligible business over five tax years. If within five years of the date the authority issues an eligible business a tax credit, the eligible business sells, disposes of, razes, or otherwise renders unusable all or a part of the land, buildings, or other structures for which the tax credit was claimed, the tax liability of the eligible business for that year shall be increased by the amounts detailed in the bill. An eligible business may apply for and be eligible to receive other tax incentives; however, the authority may prohibit an eligible business that has been issued tax incentives under the S.F. _____ H.F. _____ BIG program from receiving any additional tax incentive, tax credit, grant, loan, or other financial assistance under any program administered by the authority. A community in which an eligible business’s project is located may grant the eligible business a property tax exemption for a portion of the actual value added by improvements to real property through the project for a period not to exceed 10 years beginning the year that the improvements to real property are first assessed for taxation. The bill authorizes the establishment of one or more funds within the state treasury, under the control of the authority, to be used for assistance for certain programs and projects as detailed in the bill. This division of the bill takes effect upon enactment. DIVISION IV —— ELIMINATION OF THE HIGH QUALITY JOBS PROGRAM. The bill repeals the high quality jobs program on June 30, 2026, and provides for fulfillment of agreements entered into under the program on or before December 1, 2025. The sections of the bill creating the business incentives for growth program take effect on December 31, 2025. DIVISION V —— HIGH QUALITY JOBS PROGRAM —— CONFORMING CHANGES. The bill makes conforming changes to Code sections 2.48(3)(a)(1), 2.48(3)(a)(2), 8G.3(8), 15.106B(5)(b), 15.293B(3), 15.317(5), 15.318(2)(b), 15.318(4), 15.354(1)(b)(2), 15.354(1)(c), 15.354(3)(b), 15.354(5), 15.499(1), 15E.351(1), 15E.362(1)(c), 15H.5, 159A.6B(2), 266.19, 422.10(5), 422.11F(2), 422.33(5)(h), 422.33(12)(b), 422.33(19), 422.60(5)(b), 422.60(8), 427B.17(8)(b), 432.12C(2), 455B.104(2), and 533.329(2)(c) and (d). The bill repeals Code sections 15E.231, 15E.232, 15E.233, 422.11U, and 432.12H. This division of the bill takes effect December 31, 2025. DIVISION VI —— SEED INVESTOR TAX CREDIT PROGRAM. The bill creates the seed investor tax credit program (seed program) for the purpose of stimulating job growth, creating wealth, and S.F. _____ H.F. _____ accelerating the creation of new ventures. The bill allows a tax credit for a portion of a taxpayer’s equity investment in a qualifying business as provided in the bill. The amount of the tax credit shall equal 20 percent of the taxpayer’s equity investment if the qualifying business is located in an urban area, or 35 percent if the qualifying business is located in a rural area. The maximum amount of a tax credit that may be issued per calendar year to a person and the person’s spouse or dependent shall not exceed $100,000 combined. The maximum amount of a tax credit that may be issued per calendar year for equity investments in any one qualifying business shall not exceed $500,000. The department of revenue shall adopt rules for the administration of the seed program. For an equity investment to qualify for a tax credit, the business in which the investment is made must be a qualified business as described in the bill. All information or records in the possession of the authority with respect to the seed program shall be a trade secret and kept confidential by the authority unless otherwise ordered by a court, or unless considered public information. The authority shall submit the annual report to the governor and the general assembly on the activities conducted pursuant to the seed program including a listing of eligible qualifying businesses and the number of tax credit certificates and the amount of tax credits issued by the authority. The bill requires that, as part of the innovation fund investment tax credit program, an innovation fund submit an application for certification to the board. The board shall approve the application and certify the innovation fund if, in addition to the criteria under current law, the fund proposes to obtain at least $3 million in binding investment commitments and to invest a minimum of $3 million in companies that have a principal place of business in the state. DIVISION VII —— ELIMINATION OF INVESTMENTS IN QUALIFYING S.F. _____ H.F. _____ BUSINESS TAX CREDIT PROGRAM. The bill repeals the investments in qualifying businesses tax credit program on June 30, 2026, and provides for the validity of tax credits issued under the program before June 30, 2025. DIVISION VIII —— INVESTMENTS IN QUALIFYING BUSINESS TAX CREDIT PROGRAM —— CONFORMING CHANGES. The bill makes conforming changes to Code sections 2.48(3)(d)(1), 15E.52(4), 422.11F(1), 422.33(12)(a), 422.60(5)(a), 432.12C(1), and 533.329(2). DIVISION IX —— IOWA FILM PRODUCTION INCENTIVE PROGRAM AND FUND. The bill establishes the Iowa film production incentive program and fund within the authority. The bill requires the authority to administer the Iowa film production incentive program (film program) for the purpose of providing rebates to qualified production facilities for qualified expenditures incurred to produce a qualified production. “Qualified production” and “qualified production facility” are defined in the bill. The bill requires the authority to establish eligibility criteria by rule. The criteria for qualified production facilities must require that a facility have a soundstage with dimensions covering at least 12,500 square feet, a permanent grid system or an alternative rigging support structure rated for overhead suspension, production and postproduction sound rooms, sufficient electric service that does not require use of an electric generator, and an agreement between the authority and the facility that the phrase “filmed in Iowa” appears at the beginning of any credits. The criteria for a qualified production must include a fully funded production budget of at least $1 million, and the qualified production must be made available to the public for purchase. The criteria for qualified expenditures must include expenses for industry standard activities for cast members, S.F. _____ H.F. _____ equipment, studio production facilities, hospitality services, certified public accountant services, per diem payments, payments to businesses located in this state, accommodations, and any other expenses allowed by the authority. Qualified expenditures do not include expenses for entertainment, studio executive airfare, royalties, and publicity for the qualified production. The criteria for qualified expenditures must include a written acknowledgment by the facility that no qualified expenses were incurred prior to approval of the application by the authority. Prior to disbursement of the rebate, the facility must comply with additional requirements as detailed in the bill. The bill provides that the rebate amount shall equal 30 percent of the gross amount of qualified expenditures incurred to produce a qualified production excluding any sales, use, and hotel and motel taxes paid. The bill creates an Iowa film production incentive fund in the state treasury under the control of the authority. The cumulative value of rebates claimed pursuant to the bill shall not exceed $10 million per fiscal year. The bill applies to qualified expenditures incurred between July 1, 2025 and July 1, 2027. The program is repealed on July 1, 2027. DIVISION X —— TARGETED JOBS WITHHOLDING CREDIT MODIFICATIONS AND REPEAL. The targeted jobs withholding credit is provided to certain employers in pilot project cities equal to 3 percent of the gross wages paid by the employer to each employee pursuant to a withholding agreement entered into on or prior to June 30, 2027. For withholding agreements entered into on or after the effective date of this division, the bill reduces the withholding credit provided to an employer from 3 percent of gross wages paid to employees to 1.5 percent of gross wages paid to employees. An employer entering into a withholding agreement prior to, S.F. _____ H.F. _____ on, or after the effective date of the division, shall not receive the targeted jobs withholding credit for wages paid to employees after June 30, 2027, coinciding with the date new withholding agreements are no longer permitted pursuant to Code section 403.19A(3)(c)(2). The bill repeals the targeted jobs withholding credit from the Code on January 1, 2038, due to the employer’s ability to carry forward the credit for up to 10 years. The division takes effect upon enactment. DIVISION XI —— EMPLOYER CHILD CARE TAX CREDIT REPEAL. The bill repeals the employer child care tax credit commencing with tax years beginning on or after January 1, 2026. The credit is equal to the employer-provided child care tax credit provided in section 45F of the Internal Revenue Code, and is available against the individual and corporate income taxes, the franchise tax, the insurance premiums tax, and the moneys and credits tax. The bill repeals the tax credit from the Code on January 1, 2031, due to the taxpayer’s ability to carry forward the credit for up to five years. DIVISION XII —— ASSISTIVE DEVICE TAX CREDIT REPEAL. The bill repeals the assistive device refundable tax credit available against the corporate income tax commencing with tax years beginning on or after January 1, 2025. The tax credit was equal to 50 percent of the first $5,000 used to purchase an assistive device. The bill repeals the tax credit from the Code on January 1, 2027, due to the ability of the taxpayer to credit any overpayment in tax liability in the following tax year. DIVISION XIII —— ENDOW IOWA TAX CREDIT REPEAL. The bill repeals the endow Iowa tax credit commencing with tax years beginning on or after January 1, 2026, but the bill repeals the program beginning July 1, 2025. The tax credit is equal to 25 percent of the taxpayer’s endowment gift to an endow Iowa qualified community foundation. However, the bill specifies S.F. _____ H.F. _____ the tax credit shall only be allowed for endowment gifts made prior to July 1, 2025. The tax credit is available against the individual and corporate income taxes, the franchise tax, the insurance premiums tax, and the moneys and credits tax. The tax credit is currently capped at $6 million annually. The bill repeals the tax credit from the Code on January 1, 2031, due to the taxpayer’s ability to carry forward the credit for up to five years. DIVISION XIV —— RESEARCH ACTIVITIES TAX CREDIT REPEAL. The bill repeals the research activities tax credit commencing with tax years beginning on or after January 1, 2026. The bill creates a new research and development tax credit in another division of the bill. The research activities tax credit is a refundable tax credit for qualifying taxpayers conducting research for manufacturing, life sciences, agriscience, software engineering, or aviation and aerospace industry. The tax credit is available against the individual and corporate income taxes. The bill repeals the tax credit from the Code on January 1, 2027, due to the ability of the taxpayer to credit any overpayment in tax liability in the following tax year. DIVISION XV —— RESEARCH AND DEVELOPMENT TAX CREDIT PROGRAM. The bill creates a research and development tax credit program to be administered by the authority. The bill provides a tax credit to eligible businesses that incur qualified research expenses as defined under section 41 of the Internal Revenue Code to the extent such expenses were incurred in the state. The tax credit is available against the individual and corporate income taxes for tax years beginning on or after January 1, 2026. The bill makes the credit available to businesses primarily engaged in advanced manufacturing, bioscience, insurance and finance, and technology innovation. The bill further limits the credit to the following sectors of those businesses: second-generation food innovation, food ingredients and S.F. _____ H.F. _____ supplements, crop protection, hybrid seed technologies, diagnostic analytics and immunotherapies, chip technologies and microelectronics, medical equipment and supplies, software technology, aerospace, pharmaceuticals, consumer products, and any additional sectors included by the authority by rule. A business is required to submit a preapplication for the credit to the authority to determine whether the business is primarily engaged in an eligible sector described in the bill and is actively engaged in qualified research and development. The determination by the authority shall be based on factors including but not limited to the North American industry classification code and sources of revenue, and may include site visits by the authority. A business must be certified by the authority to be eligible for the credit. A business becomes a qualified business if it has been certified by the authority, and a qualified business may remain certified for up to five years. A qualified business may reapply for certification in additional five-year increments. Each year after becoming a qualified business during the five-year period, the bill requires the qualified business to submit an application to the authority for the tax credit based on the amount of eligible expenditures that were made during the previous tax year. Eligible expenditures must be reviewed by agreed upon procedures prescribed by the authority by rule. The bill requires the eligible expenditures review to be conducted by a certified public accountant authorized to practice in this state. A business shall submit the application to the authority by January 31 of each year the business is certified to be a qualified business. The authority may approve a tax credit in the form of a tax credit certificate issued to the qualified business up to an amount equal to 3.5 percent of the amount of the qualified business’s eligible expenditures. The tax credit must be claimed for the tax year during which the eligible expenditures S.F. _____ H.F. _____ were incurred. Any tax credit in excess of the qualified business’s tax liability is refundable. In lieu of claiming a refund, the taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year. The research and development tax credit certificates issued pursuant to this division are not transferable. The maximum amount of research and development tax credits the authority may issue each fiscal year shall not exceed $40 million. The bill requires a qualified business claiming the credit to annually report to the authority the following: the total amount of investment made in research and development; the location in this state where the research and development occurred; and the number of jobs created, wages paid, and employee residence locations. DIVISION XVI —— SUSTAINABLE AVIATION FUEL PRODUCTION TAX CREDIT. The bill creates a sustainable aviation fuel tax credit program. The bill defines “sustainable aviation fuel” (SAF) to mean a liquid fuel derived from feedstock not including palm fatty acid distillates and that achieves at least a 50 percent life cycle greenhouse gas emissions reduction in comparison with petroleum-based aviation gasoline, aviation turbine fuel, and jet fuel as determined by other tests further defined in the bill. The bill defines “feedstock” to mean any organic matter processed or refined in the state suitable for sustainable aviation fuel production without further enhancement. “Feedstock” includes but is not limited to ethanol, corn oil, soybean oil, animal fats used in cooking oil, and algae oil. The bill defines “eligible business” to mean a business engaged in the manufacturing of SAF from feedstock. An eligible business that produces SAF in this state during S.F. _____ H.F. _____ a calendar year may apply to the authority for the tax credit for the SAF produced during the 2026 calendar year through the 2035 calendar year. The bill requires an eligible business that produces SAF to apply to the authority for the credit in the manner prescribed by the authority, and in the calendar year following the calendar year in which the SAF is produced. The bill requires the application to include the amount of SAF produced in the state from feedstock by the eligible business during the calendar year, measured in gallons, the types and sources of feedstock used to produce sustainable aviation fuel, and any other information required by the authority. Each application shall be reviewed and scored on a competitive basis by the authority pursuant to rules adopted by the authority. Before being issued a tax credit, the bill requires an eligible business to enter into an agreement with the authority for the successful completion of all requirements of the program. As part of the agreement, the eligible business must agree to collect and provide any information reasonably required by the authority in order to allow the economic development authority board to fulfill its reporting obligation under new Code section 15.514. If all of the requirements of the program and the agreement have been fulfilled, the bill requires the authority to issue a tax credit certificate to the eligible business in an amount equal to the product of 25 cents multiplied by the number of gallons of SAF produced in this state. The SAF tax credit is refundable. In lieu of claiming a refund, the eligible business may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year. The SAF tax credit certificates issued pursuant to this division are not transferable. The maximum amount of SAF tax credits combined with the chemical production tax credit shall not exceed $10 million S.F. _____ H.F. _____ in a fiscal year. The bill specifies the maximum amount of tax credits issued to an eligible business shall not exceed $1 million in a calendar year. An eligible business also shall not be issued more than five tax credit certificates under the program. The bill requires the economic development board and the department of revenue to annually submit to the general assembly and to the governor, or provide to the authority for inclusion in the authority’s annual report under Code section 15.511, a report describing the activities of the program for the most recent calendar year for which the tax credit application period has ended. The division takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2025. The SAF production tax credit is repealed January 1, 2037. DIVISION XVII —— MAJOR ECONOMIC GROWTH ATTRACTION PROGRAM. The bill permits an eligible business that is entitled to a sales and use tax refund pursuant to the major economic growth attraction program to receive the sales and tax refund on a quarterly basis rather than annually over a five-year period. The bill also specifies that if an eligible business does not comply with the requirements of the program, a county may take action to recover the value of the property taxes not collected as a result of the exemption provided to the eligible business.

Committee Categories

No sponsors listed

Other Sponsors (1)

Committee report approving bill, renumbered as SF 657. (on 05/12/2025)

Official Document