Notable Tax Provisions In Effect Beginning July 1st

SENATE FILE 480 – FILM, TELEVISION AND VIDEO PROMOTION TAX CREDITS

The Department of Economic Development administers a film, television and video project promotion program to encourage the production of films, television shows, and videos in Iowa. The program provides tax credits for specific qualified expenditures on eligible projects and allows project vendors to exclude project income from income taxes in the year it is earned.

SF 480 adds the salary expenditures for directors, producers and principal cast members to the list of qualified expenditures eligible for tax credits.

SENATE FILE 481 – STATE HISTORICAL TAX CREDITS PROGRAM EXPANSION

SF 481 provides tax credits to developers who rehabilitate historical buildings. Current law provides $20 million for these tax credits, the bill increases the annual credit maximum to $50 million. Recipients are eligible for 25% of the cost to rehabilitate the property. The bill also changes the percentage allotment between subcategories of recipients.

SENATE FILE 478 – TAX INCENTIVES FOR DATA PROCESSING CENTERS

This bill provides incentives for data businesses, similar to existing incentives for web-search portals and Information Technology facilities. The bill creates a five-tiered graduated scale based on the size of the investment a business commits to the state.

The top four investment levels require the facilities physical location be a minimum 5,000 square feet and all projects are required to meet sustainable design standards established by the state building code commissioner. Outlined below are the investment categories and the corresponding incentives:

$200 million or more: 100% sales, use and property tax exemption on computers, equipment, backup fuel and electricity. Incentives are good for the life of the business.

$136 million – less than $200 million: 50% sales and use tax refund on computers, equipment, backup fuel and electricity. Incentives are good for 7 years.

$73 million – $136 million: 50% sales and use tax refund on computers, equipment, backup fuel and electricity. Incentives are good for 10 years.

$5 million – $73 million rehabilitated building / $10 million – $73 million new building: 50% sales and use tax refund on computers, equipment, backup fuel and electricity. Incentives are good for 15 years.

$1 million – $5 million rehabilitated building / $1 million – $10 million new building: 50% sales and use tax refund on fuel and electricity. Incentives good for 5 years.

SENATE FILE 483 – LIMITATION OF TAX CREDITS

SF 483 places a limitation on the aggregate amount of tax credits to a maximum of $185 million each year for 5 tax credit programs. The following tax credit programs will be limited if this bill is enacted:

  • The High Quality Job Creation Program.
  • The Film, Television and Video Promotion Program.
  • The extra research credit under the quality jobs enterprise zones program.
  • The Enterprise Zone program.
  • The Assistive Device Tax Credit Program.

The bill also places a $6 million cap on how much the Agricultural Development Authority can issue for a program that encouraged farmers to transfer their assets to a beginning farmer.

Beginning with Tax Year 2009, the bill eliminates the ability for corporations to carry back net operating losses back to previous tax years when the company was profitable.

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