Tax credits reviewed during committee meeting

December 10, 2015

Members of the legislatively-appointed tax expenditure committee met Wednesday to review tax credits and exemptions. Items of interest to ABI members include an annual update on outstanding debt related to Tax Increment Financing (TIF), solar energy tax credits and the machinery and equipment sales and use tax exemptions as found in Iowa code.

Points of interest from the meetings:

  • Nine cities and one county make up 50 percent of the TIF debt in the state.
  • Some legislators are interested in tying jobs to TIF projects and increasing reporting.
  • Corporations are allowed to claim the school tuition organization (STO) tax credit if your company contributes to an STO.
  • Fifty-seven percent of solar energy system tax credits have been awarded for 2014-15. Individuals, businesses and banks can claim credit. Sen. Joe Bolkcom (D-Iowa City) made comment about decoupling from the federal credit.
  • Department of Revenue detailed the breakdown of taxable sales by business groups in flood mitigation districts. Manufacturing accounts for less than 3 percent of all taxable sales.
  • Machinery and Equipment exemption has a potential $7 million estimated impact on SAVE (education local option) in 2016 which is approximately 1 percent of the total $953.01 per pupil received.
  • Difference of opinion whether a law or rule change is acceptable as it relates to the machinery and equipment exemption.