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, 2026, 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 2026 is reduced from $20 million to $10 million, reflecting the mid-year repeal. Additionally, the bill includes a provision to repeal the entire section related to the STO tax credit on July 1, 2032.

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 amends the total approved tax credits for specific calendar years and establishes that the STO tax credit will be completely repealed by 2032. The effective date for these changes is set for July 1, 2032, ensuring a clear timeline for the transition away from the STO tax credit system.

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