This bill repeals the school tuition organization (STO) tax credit that is currently available against individual and corporate income taxes in Iowa. It specifies that contributions made to an STO on or after July 1, 2025, will no longer qualify for tax credits, and STOs will be prohibited from issuing tax credit certificates for contributions made after this date. The total amount of approved STO tax credits for the calendar year 2025 is reduced from $20 million to $10 million, reflecting the mid-year repeal. Additionally, the bill includes a provision that the STO tax credit will officially be repealed on July 1, 2031.

The bill also makes several amendments to existing law, including the deletion of references to the STO tax credit in various sections of the Code. Notably, it strikes the subparagraph related to the STO tax credit from Code section 2.48 and removes a paragraph from section 22A.6, as well as a subsection from section 422.33. The effective date for these changes is set for July 1, 2031, aligning with the repeal of the STO tax credit.

Statutes affected:
Introduced: 422.11S, 422.12, 2.48, 22A.6, 422.33