Fiscal Note
Fiscal Services Division
HF 563 – Fire/EMS/Reserve Peace Officer Tax Credit (LSB2050HV)
Staff Contact: Jeff Robinson (515.281.4614) jeff.robinson@legis.iowa.gov
Fiscal Note Version – New
Description
House File 563 increases the Volunteer Fire Fighter and Volunteer Emergency Medical
Services Personnel Member Credit and the Reserve Peace Officer Credit from $100 to $200.
The change is effective beginning tax year 2021.
Background
The Volunteer Fire Fighter and Volunteer Emergency Medical Services Personnel Member
Credit and the Reserve Peace Officer Credit are established in Iowa Code section 422.12.
Each credit has a maximum of $100 per taxpayer per year. If a taxpayer is a qualified volunteer
for more than one position, the tax credit may only be earned for one position. If the taxpayer is
not a qualified volunteer for the full tax year, the $100 credit is prorated. The credit is not
refundable or transferable, and unused credits may not be carried forward to a future tax year.
The Iowa Department of Revenue Tax Credits Contingent Liabilities Report lists the total tax
credit redemptions under the two tax credits as $1.3 million per year. This equates to 13,000 to
14,000 taxpayers claiming the credits per year.
Assumptions
Since the $100 income tax credit is not refundable, a small percentage of the claimants are not
able to benefit from the full $100 annual tax credit as they do not have $100 in Iowa income tax
liability for that tax year. Raising the annual tax credit to $200 will increase the percentage of
claimants who cannot fully benefit. Therefore, doubling the maximum credit will not result in a
doubling of the $1.3 million current annual tax reduction associated with the two tax credits.
As a nonrefundable tax credit, the State income tax reduction will also reduce the statewide
amount of revenue raised through any local option income surtax by approximately 3.0% of the
State income tax revenue reduction.
Fiscal Impact
Increasing the Volunteer Fire Fighter and Volunteer Emergency Medical Services Personnel
Member Credit and the Reserve Peace Officer Credit from $100 to $200 is projected to reduce
net General Fund revenue by $1.2 million per fiscal year, beginning with FY 2022.
The tax credit increase will also reduce annual revenue raised by local option income surtaxes
by approximately $35,000 annually.
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Source
Iowa Department of Revenue
/s/ Holly M. Lyons
February 18, 2021
Doc ID 12131903190
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 422.12