Bill > HF1054

Introduced Session

This bill relates to state tax credits and tax incentive programs. 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, except that for the fiscal year beginning July 1, 2025, the allocation shall be reduced by any tax credit authorized by the authority prior to July 1, 2026, for an investment in a qualifying business; (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; (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; and (5) for the high-quality jobs program prior to January 1, 2026, and for the business incentives for growth program on or after January 1, 2026, the authority shall allocate $50 million in the aggregate. 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(2)(a), 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 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, unless the eligible business’s project is located in a rural county, in which case the maximum aggregate value of the tax incentives that any one eligible business may receive shall not exceed 7.5 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 under Code section 15.505(3) until the eligible business’s project, or a portion of the project, has been placed in service. An eligible business may claim the tax credit authorized and issued by the authority. The tax credit shall be amortized 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 BIG program from receiving any additional tax incentive, tax credit, grant, loan, or other financial assistance under any program administered by the authority. If an eligible business has been authorized by the board to receive tax incentives under the program, 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 31, 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), 15.355(2)(b)(3)(a), 15.499(1), 15E.351(1), 15E.362(1)(c), 15H.5, 159A.6B(2), 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, 266.19, 422.11U, and 432.12H. This division of the bill takes effect December 31, 2025. DIVISION VI —— SEED INVESTOR TAX CREDIT PROGRAM AND INNOVATION FUND INVESTMENT TAX CREDITS. The bill creates the seed investor tax credit program (seed program) for the purpose of stimulating job growth, creating wealth, and 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, and the maximum amount of a tax credit that may be issued per calendar year to a corporation or other entity, shall not exceed $100,000 combined, as detailed in the bill. 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. An application received by the authority that exceeds the maximum amount of permissible tax credits shall be denied, in whole or in part, regardless of whether the investment would otherwise be eligible to qualify for a tax credit. 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 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 an agreement between the authority and the facility that the phrase “filmed in Iowa” appears noticeably in the credits of the qualified production. The criteria for a qualified production must include a total production budget of at least $1 million, including at least $500,000 in qualified expenditures and evidence that the total production budget is fully funded, and the qualified production must be made available to the public for viewing at a venue where admission is charged, or availability for purchase, for rental, or through a streaming service that requires a subscription. The criteria for qualified expenditures must include expenses for industry standard activities for cast members, 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 documentation that all qualified expenses were incurred following approval of the application for rebate by the authority. Prior to disbursement of the rebate, the facility must comply with additional requirements as detailed in the bill. An application for a rebate under the program shall be submitted by a qualified production facility to the authority for approval as prescribed by the authority. In determining whether to approve a rebate, the authority shall consider the factors detailed in the bill. The bill provides that, if a qualified production facility’s application is approved by the authority, the maximum rebate paid to the facility shall equal 30 percent of the facility’s documented qualified expenditures 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 —— 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 XI —— 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 XII —— ENDOW IOWA TAX CREDIT MODIFICATIONS. The bill modifies the endow Iowa tax credit by reducing the aggregate amount of the tax credit authorized from $6 million to $3.5 million annually. The bill reduces the maximum amount of tax credits that may be granted to a taxpayer from $100,000 to $50,000. The bill also places additional requirements upon endow Iowa qualified community foundations in order for a taxpayer to receive a tax credit for a gift provided to the foundation. The division takes effect January 1, 2026, and applies to tax years beginning on or after that date. DIVISION XIII —— 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 XIV —— 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 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 that continues to meet the requirements of the program may remain certified for up to five years. A qualified business may reapply for certification in additional five-year increments. A business that does not demonstrate an increase in eligible expenditures may be denied recertification by the authority, but may reapply. 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 based upon the amount of eligible expenditures that were included on the business’s most recently filed and accepted federal tax return. The bill requires the eligible expenditures to be verified by a certified public accountant authorized to practice in this state. Each fiscal year, the authority shall approve tax credit awards by apportioning the amount of tax credits available pursuant to Code section 15.119, as amended by the bill, on a pro rata basis, based on the total amount of eligible expenditures incurred by all qualified businesses that are awarded a tax credit. Up to 5 percent of the amount of tax credits available pursuant to Code section 15.119 may be awarded as additional tax credits to qualified businesses that demonstrate an increase in eligible expenditures. If the qualified business fails to comply with any requirements of the program or any agreement entered into, the qualified business may have its certification as a qualified business revoked or be required to repay any tax credit the authority issued to the 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 in the tax year immediately following the tax year the expenditures 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 prohibits a qualified business from receiving the supplemental research activities credit under Code section 15.335 that is approved prior to January 1, 2026, from claiming the new research and development tax credit created in the bill. 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. The division takes effect upon enactment. DIVISION XV —— 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 the portion of a liquid fuel meeting the requirements of ASTM D7566 or the Fischer Tropsch provisions of ASTM D1655, Annex A1, derived from feedstock not including palm fatty acid distillates and that achieves at least a 50 percent life cycle greenhouse gas emissions reduction as 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 cooking oil, and algae. 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 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 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. If an eligible business fails to fulfill any requirement of the program, any tax credit is subject to reduction, termination, rescission, or recapture by the authority. 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 XVI —— MAJOR ECONOMIC GROWTH ATTRACTION PROGRAM. If an eligible business fails to comply with a requirement of the major economic growth attraction program, as determined by the authority, the eligible business may be required to repay any tax incentive issued to the eligible business, including any property taxes that were previously exempted. 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. DIVISION XVII —— MASS LAYOFFS AND BUSINESS CLOSURES. If an entity is awarded a tax incentive, the bill allows the authority to reduce or eliminate any tax incentive award if the entity awarded the tax incentive experiences a closure or mass layoff. DIVISION XVIII —— CONFORMING CHANGES. The bill makes conforming changes relating to Senate File 619 as enacted during this session of the general assembly and to House File 975 if enacted during this session of the general assembly.

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Withdrawn. H.J. 1198. (on 05/14/2025)

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