House File 2624 - Introduced
HOUSE FILE 2624
BY JONES
A BILL FOR
1 An Act creating the railroad reconstruction or replacement tax
2 credit available against the individual and corporate income
3 taxes, the franchise tax, the insurance premiums tax, and
4 the moneys and credits tax, and including effective date and
5 retroactive applicability provisions.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 Section 1. NEW SECTION. 327I.1 Railroad reconstruction or
2 replacement tax credit.
3 1. As used in this section:
4 a. “Department” means the department of revenue.
5 b. “Qualified expenditures” means gross expenditures in the
6 taxable year for maintenance, reconstruction, or replacement
7 of railroad infrastructure, including track, roadbed, bridges,
8 industrial leads and sidings, and track-related structures
9 owned or leased by a class II or class III railroad in this
10 state as of January 1, 2021. “Qualified expenditures” also
11 includes new construction of industrial leads, switches, spurs,
12 and sidings and extensions of existing sidings in this state by
13 a class II or class III railroad.
14 c. “Taxpayer” means any railroad that is classified by
15 the surface transportation board as a class II or class III
16 railroad.
17 2. A railroad reconstruction or replacement tax credit
18 shall be allowed against the taxes imposed in chapter 422,
19 subchapters II, III, and V, and in chapter 432, and against
20 the moneys and credits tax imposed in section 533.329, for
21 qualified expenditures.
22 3. A taxpayer who is an individual may claim a tax credit
23 under this subsection of a partnership, limited liability
24 company, S corporation, estate, or trust electing to have
25 income taxed directly to the individual. The amount claimed
26 by the individual shall be based upon the pro rata share of the
27 individual’s earnings from the partnership, limited liability
28 company, S corporation, estate, or trust.
29 4. Any credit in excess of the tax liability is not
30 refundable but the excess for the tax year may be credited
31 to the tax liability for the following five years or until
32 depleted, whichever is earlier.
33 5. For tax years beginning on or after January 1, 2024,
34 but before January 1, 2032, a tax credit may be claimed that
35 shall equal fifty percent of qualified expenditures made by
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1 the taxpayer, not to exceed three thousand dollars per mile,
2 multiplied by the number of miles of railroad track owned or
3 leased within the state by the taxpayer for which the taxpayer
4 made qualified expenditures upon during the applicable tax
5 year.
6 6. a. To claim a tax credit, a taxpayer shall include one
7 or more tax credit certificates with the taxpayer’s return.
8 b. The tax credit certificate shall contain the taxpayer’s
9 name, address, tax identification number, the amount of the
10 credit, any other information required by the department,
11 and a place for the name and tax identification number of a
12 transferee and the amount of the tax credit being transferred.
13 7. a. Tax credit certificates issued under this section may
14 be transferred to any person. Within ninety days of transfer,
15 the transferee shall submit the transferred tax credit
16 certificate to the department of revenue along with a statement
17 containing the transferee’s name, tax identification number,
18 address, the denomination that each replacement tax credit
19 certificate is to carry, and any other information required by
20 the department of revenue. However, tax credit certificate
21 amounts of less than the minimum amount established by rule by
22 the department of revenue shall not be transferable.
23 b. Within thirty days of receiving the transferred tax
24 credit certificate and the transferee’s statement, the
25 department of revenue shall issue one or more replacement tax
26 credit certificates to the transferee. Each replacement tax
27 credit certificate must contain the information required for
28 the original tax credit certificate and must have the same
29 expiration date that appeared on the transferred tax credit
30 certificate.
31 c. A tax credit shall not be claimed by a transferee
32 under this section until a replacement tax credit certificate
33 identifying the transferee as the proper holder has been
34 issued. The transferee may use the amount of the tax credit
35 transferred against the taxes imposed in chapter 422,
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1 subchapters II, III, and V, and in chapter 432, and against the
2 moneys and credits tax imposed in section 533.329 for any tax
3 year the original transferor could have claimed the tax credit.
4 Any consideration received for the transfer of the tax credit
5 shall not be included as income under chapter 422, subchapters
6 II, III, and V. Any consideration paid for the transfer of the
7 tax credit shall not be deducted from income under chapter 422,
8 subchapters II, III, and V.
9 8. This section is repealed January 1, 2037.
10 Sec. 2. NEW SECTION. 422.10C Railroad reconstruction or
11 replacement tax credit.
12 1. The taxes imposed under this subchapter, less the credits
13 allowed under section 422.12, shall be reduced by a railroad
14 reconstruction or replacement tax credit allowed pursuant to
15 section 327I.1.
16 2. This section is repealed January 1, 2037.
17 Sec. 3. Section 422.33, Code 2024, is amended by adding the
18 following new subsection:
19 NEW SUBSECTION. 11. a. The taxes imposed under this
20 subchapter shall be reduced by a railroad reconstruction or
21 replacement tax credit allowed pursuant to section 327I.1.
22 b. This subsection is repealed January 1, 2037.
23 Sec. 4. Section 422.60, Code 2024, is amended by adding the
24 following new subsection:
25 NEW SUBSECTION. 16. a. The taxes imposed under this
26 subchapter shall be reduced by a railroad reconstruction or
27 replacement tax credit allowed pursuant to section 327I.1.
28 b. This subsection is repealed January 1, 2037.
29 Sec. 5. NEW SECTION. 432.12P Railroad reconstruction or
30 replacement tax credit.
31 1. The taxes imposed under this chapter shall be reduced
32 by a railroad reconstruction or replacement tax credit allowed
33 pursuant to section 327I.1.
34 2. This section is repealed January 1, 2037.
35 Sec. 6. Section 533.329, subsection 2, Code 2024, is amended
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1 by adding the following new paragraph:
2 NEW PARAGRAPH. n. (1) The moneys and credits tax
3 imposed under this section shall be reduced by a railroad
4 reconstruction or replacement tax credit allowed pursuant to
5 section 327I.1.
6 (2) This paragraph is repealed January 1, 2037.
7 Sec. 7. EFFECTIVE DATE. This Act, being deemed of immediate
8 importance, takes effect upon enactment.
9 Sec. 8. RETROACTIVE APPLICABILITY. This Act applies
10 retroactively to January 1, 2024, for tax years beginning on
11 or after that date.
12 EXPLANATION
13 The inclusion of this explanation does not constitute agreement with
14 the explanation’s substance by the members of the general assembly.
15 This bill creates the railroad reconstruction or replacement
16 tax credit available against the individual and corporate
17 income taxes, the franchise tax, the insurance premiums tax,
18 and the moneys and credits tax.
19 Under the bill, for tax years beginning on or after January
20 1, 2024, but before January 1, 2032, a tax credit may be
21 claimed equaling 50 percent of qualified expenditures made by
22 a railroad classified as class I or class II, not to exceed
23 $3,000 per mile, multiplied by the number of miles of railroad
24 track owned or leased within the state by the taxpayer for
25 which the taxpayer made qualified expenditures upon during the
26 applicable tax year.
27 The bill defines “qualified expenditures” to mean the
28 maintenance, reconstruction, or replacement of railroad
29 infrastructure, including track, roadbed, bridges, and
30 industrial leads and sidings, owned or leased by a class II
31 or class III railroad in this state as of January 1, 2021.
32 “Qualified expenditures” also includes new construction of
33 industrial leads, switches, spurs, and sidings and extensions
34 of existing sidings.
35 Any credit in excess of the tax liability is not refundable
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1 under the bill, but the excess may be credited to the tax
2 liability for up to the next five tax years.
3 The bill repeals the tax credit from the Code on January 1,
4 2037, to account for a taxpayer crediting excess tax liability
5 for up to five additional tax years or until depleted,
6 whichever is earlier.
7 The bill takes effect upon enactment and applies
8 retroactively to tax years beginning on or after January 1,
9 2024.
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Statutes affected:
Introduced: 533.329, 422.12, 422.33, 422.60