House File 323 - Introduced
HOUSE FILE 323
BY STAED
A BILL FOR
1 An Act relating to the solar energy system tax credit available
2 against the individual and corporate income tax, the
3 franchise tax, the moneys and credits tax, and including
4 effective date and retroactive applicability provisions.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 Section 1. Section 422.11L, Code 2021, is amended by
2 striking the section and inserting in lieu thereof the
3 following:
4 422.11L Solar energy system tax credits.
5 1. As used in this section:
6 a. “Commercial solar energy system” means a solar energy
7 system on property that is not residential or multiresidential.
8 b. “Residential solar energy system” means a solar energy
9 system on residential property or multiresidential property.
10 c. “Solar energy system” means a system of equipment capable
11 of collecting and converting incident solar radiation into
12 thermal, mechanical, or electrical energy and transporting the
13 energy by a separate apparatus to storage or to a point of use.
14 2. Beginning with installations completed on or after
15 January 1, 2021, the taxes imposed under this subchapter, less
16 the credits allowed under section 422.12, shall be reduced by a
17 solar energy system tax credit equal to an amount calculated
18 using only one of the following methods:
19 a. Fifteen percent of the gross cost of the solar energy
20 system, not to exceed the following amounts:
21 (1) For a residential solar energy system, five thousand
22 dollars.
23 (2) For a commercial solar energy system, twenty thousand
24 dollars.
25 b. The sum of the following:
26 (1) Fifty percent of the federal residential energy
27 efficient property credit related to solar energy provided in
28 section 25D(a)(1) and section 25D(a)(2) of the Internal Revenue
29 Code, not to exceed five thousand dollars.
30 (2) Fifty percent of the federal energy credit related to
31 solar energy systems provided in section 48(a)(2)(A)(i)(II) and
32 section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not
33 to exceed twenty thousand dollars.
34 3. Any credit in excess of the tax liability is not
35 refundable but the excess for the tax year may be credited
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1 to the tax liability for the following ten years or until
2 depleted, whichever is earlier.
3 4. a. An individual may claim the tax credit allowed a
4 partnership, limited liability company, S corporation, estate,
5 or trust electing to have the income taxed directly to the
6 individual. The amount claimed by the individual shall be
7 based upon the pro rata share of the individual’s earnings of
8 the partnership, limited liability company, S corporation,
9 estate, or trust.
10 b. A taxpayer who is eligible to claim a credit under this
11 section shall not be eligible to claim a renewable energy tax
12 credit under chapter 476C.
13 c. A taxpayer may claim more than one credit under this
14 section, but may claim only one credit per separate and
15 distinct solar energy system installation. The department
16 shall establish criteria, by rule, for determining what
17 constitutes a separate and distinct installation.
18 d. (1) A taxpayer must submit an application to the
19 department for each separate and distinct solar energy
20 system installation. The application must be approved by the
21 department in order to claim the tax credit. The application
22 must be filed by May 1 following the year of the installation
23 of the solar energy system.
24 (2) The department shall accept and approve applications
25 on a first-come, first-served basis until the maximum amount
26 of tax credits that may be claimed pursuant to subsection 5
27 is reached. If for a tax year the aggregate amount of tax
28 credits applied for exceeds the amount specified in subsection
29 5, the department shall establish a wait list for tax credits.
30 Valid applications filed by the taxpayer by May 1 following the
31 year of the installation but not approved by the department
32 shall be placed on a wait list in the order the applications
33 were received and those applicants shall be given priority
34 for having their applications approved in succeeding years.
35 Placement on a wait list pursuant to this subparagraph shall
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1 not constitute a promise binding the state. The availability
2 of a tax credit and approval of a tax credit application
3 pursuant to this section in a future year is contingent upon
4 the availability of tax credits in that particular year.
5 5. a. The cumulative value of tax credits claimed annually
6 by applicants pursuant to this section shall not exceed ten
7 million dollars.
8 b. If an amount of tax credits available for a tax year
9 pursuant to paragraph “a” goes unclaimed, the amount of the
10 unclaimed tax credits shall be made available for the following
11 tax year in addition to, and cumulated with, the amount
12 available pursuant to paragraph “a” for the following tax year.
13 6. On or before January 1, annually, the department shall
14 submit a written report to the governor and the general
15 assembly regarding the number and value of tax credits claimed
16 under this section, and any other information the department
17 may deem relevant and appropriate.
18 7. The director shall adopt rules pursuant to chapter 17A to
19 administer this section.
20 Sec. 2. Section 422.33, subsection 29, paragraph a, Code
21 2021, is amended to read as follows:
22 a. The Beginning with installations completed on or after
23 January 1, 2021, the taxes imposed under this subchapter shall
24 be reduced by a solar energy system tax credit equal to sixty
25 percent of the federal energy credit related to solar energy
26 systems provided in section 48(a)(2)(A)(i)(II) and section
27 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not to exceed
28 twenty thousand dollars. For installations occurring on or
29 after January 1, 2016, the applicable percentage of the federal
30 energy credit related to solar energy systems shall be fifty
31 percent allowed under section 422.11L.
32 Sec. 3. Section 422.60, subsection 12, paragraph a, Code
33 2021, is amended to read as follows:
34 a. The Beginning with the installations completed on or
35 after January 1, 2021, the taxes imposed under this subchapter
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1 shall be reduced by a solar energy system tax credit equal to
2 sixty percent of the federal energy credit related to solar
3 energy systems provided in section 48(a)(2)(A)(i)(II) and
4 section 48(a)(2)(A)(i)(III) of the Internal Revenue Code, not
5 to exceed twenty thousand dollars. For installations occurring
6 on or after January 1, 2016, the applicable percentage of the
7 federal energy credit related to solar energy systems shall be
8 fifty percent allowed under section 422.11L.
9 Sec. 4. Section 533.329, subsection 2, paragraph k, Code
10 2021, is amended to read as follows:
11 k. The Beginning with the installations completed on or
12 after January 1, 2021, the moneys and credits tax imposed under
13 this section shall be reduced by a solar energy system tax
14 credit allowed under section 422.11L.
15 Sec. 5. CUMULATIVE VALUE OF SOLAR ENERGY SYSTEM TAX CREDIT
16 FOR YEAR 2021 —— WAIT LIST. Notwithstanding section 422.11L,
17 subsection 5, as enacted by this Act, there shall be no maximum
18 cumulative value of tax credits that may be claimed during the
19 2021 calendar year until such time as the wait list pursuant to
20 section 422.11L, subsection 3, Code 2021, has been eliminated.
21 If the wait list has been eliminated during the 2021 calendar
22 year, the maximum cumulative value of tax credits during
23 calendar year 2021 shall not exceed the maximum cumulative
24 value of tax credits specified in section 422.11L, subsection
25 5, as enacted by this Act.
26 Sec. 6. EFFECTIVE DATE. This Act, being deemed of immediate
27 importance, takes effect upon enactment.
28 Sec. 7. RETROACTIVE APPLICABILITY. This Act applies
29 retroactively to January 1, 2021, for tax years ending on or
30 after that date.
31 EXPLANATION
32 The inclusion of this explanation does not constitute agreement with
33 the explanation’s substance by the members of the general assembly.
34 This bill relates to the solar energy system tax credit.
35 Under existing law, the Iowa solar energy system tax credit
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1 available against the individual or corporate income tax, the
2 franchise tax, or the moneys and credits tax equals the sum of
3 50 percent of the federal residential energy efficient property
4 credit, not to exceed $5,000, plus 50 percent of the federal
5 energy credit related to solar energy systems, not to exceed
6 $20,000.
7 The bill maintains the existing framework of the solar
8 energy system tax credit as a percentage of the federal energy
9 credit but creates a new Iowa solar energy system tax credit
10 for installations completed on or after January 1, 2021. For
11 solar energy systems completed on or after January 1, 2021, the
12 bill allows a taxpayer to calculate the solar energy system tax
13 credit amount as a percentage of the federal energy credit or
14 calculate the solar energy system tax credit amount pursuant
15 to the new Iowa solar energy system tax credit created in the
16 bill. The bill creates a residential solar energy system tax
17 credit equal to 15 percent of the gross cost of the system, up
18 to $5,000. The bill creates a separate commercial solar energy
19 system tax credit not to exceed 15 percent of the gross cost of
20 the system, up to $20,000. The bill defines “residential solar
21 energy system” to mean a solar energy project on residential
22 property or multiresidential property. The bill defines
23 “commercial solar energy system” to mean a solar energy system
24 on a property that is not residential or multiresidential.
25 Any tax credit approved under the bill is not refundable
26 but the excess for the tax year may be credited to the tax
27 liability for the following 10 years or until depleted,
28 whichever is earlier.
29 The tax credit is available against the individual and
30 corporate income taxes, the franchise tax, and the moneys and
31 credits tax.
32 A taxpayer eligible to claim a credit under the bill is not
33 eligible to claim a renewable energy tax credit under Code
34 chapter 476C.
35 The bill provides that a taxpayer may claim more than one tax
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1 credit, but may claim only one credit per separate and distinct
2 solar energy system installation.
3 The bill permanently increases the maximum cumulative value
4 of tax credits that may be claimed during the year from $4
5 million to $10 million.
6 The bill eliminates the wait list for the tax credit by
7 removing the maximum cumulative value of tax credits that may
8 be claimed in a year for calendar year 2021 until the wait list
9 is eliminated. If the wait list is eliminated during calendar
10 year 2021, the maximum cumulative value of tax credits that
11 may be claimed during calendar year 2021 shall not exceed the
12 maximum cumulative value established in the bill, $10 million.
13 The bill takes effect upon enactment and applies
14 retroactively to January 1, 2021, for tax years ending on or
15 after that date.
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Statutes affected:
Introduced: 422.11L, 422.12, 422.60, 533.329