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 tax credits for the year 2025 is reduced from $20 million to $10 million, reflecting the mid-year repeal. Additionally, the bill includes a provision to repeal the entire Code section related to the STO tax credit on July 1, 2031.

The bill also makes several amendments to existing law, including the deletion of references to the tax credit in various sections of the Code. Notably, it removes the requirement for tax credits to be claimed based on contributions made during the tax year and establishes a new effective date for the repeal of the tax credit. The changes aim to streamline the tax code and eliminate the STO tax credit by 2031, while also addressing the carryforward capability of the tax credit.

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