Bills › 89th General Assembly
Excluding from the state corporate income tax certain income of public utilities furnishing water to the public, or furnishing sanitary sewage or storm water drainage disposal to the public, and including effective date and applicability provisions
Topics:TaxesIncome taxes
Where it is now
- Done: IntroducedFebruary 8, 2021
- Done: SubcommitteeFebruary 9, 2021
- Done: House committeeFebruary 17, 2021
- Skipped: Passes the HouseContinued as HF 607
- Next: Senate committee
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Became HF 607 → Its progress continues under the new number. Go to HF 607 What’s a funnel?
What’s in it
This bill excludes from the state corporate income tax the income of a public utility regulated by the utilities board derived from the operation of a system that furnishes water by piped distribution system to the public for compensation, or furnishes sanitary sewage or storm water drainage disposal by piped collection system to the public for compensation. This provision of the bill takes effect January 1, 2023, and applies to tax years beginning on or after that date. The bill also requires the customers of a public utility to receive the full benefits of a utility’s reduced state corporate income tax that result from the bill.
House subcommittee
Named February 9, 2021. On February 16, 2021 it recommended passage. Vote Total: 3-0.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
Fiscal note
AI summary Senate File 297 exempts certain income earned by a public utility from the state corporate income tax if that income comes from operating water or sewage systems. This change is projected to reduce Iowa General Fund revenue by $0.9 million in fiscal year 2023 and fiscal year 2024, and by $0.5 million in fiscal year 2025 and succeeding fiscal years.2
Read the fiscal note
Description
Senate File 297 exempts certain income earned by a public utility from the State corporate income tax. The exemption includes income earned from the operation of piped systems that distribute water for public consumption and systems that dispose of sanitary sewage or storm water. The change applies to tax years beginning on or after January 1, 2023.
Background
There is currently one Iowa public utility, Iowa American Water Company, that provides water and/or wastewater disposal services in Iowa. Iowa American Water Company is a subsidiary of American Water.
Assumptions
According to an August 2020 rate increase filing by the company, Iowa American Water Company expects 2022 operating revenue to equal $46.2 million and projects State corporate income tax expenses for that year to equal $0.5 million. This includes $4.4 million from the requested rate increase. The rate increase filing also lists an expected deferred State corporate income tax amount of $0.6 million. The amounts supplied by the company to the Iowa Utilities Board indicate that annual Iowa corporate income tax liability represents 1.0% of company revenue and deferred State corporate income tax represents a potential additional one-time cost equal to 1.0% of annual company revenue.
The tax exemption will begin with the start of the company’s tax year that begins in calendar year 2023. The start of the company’s tax year is not known but is assumed for this estimate to be the calendar year. The company is assumed to make quarterly corporate income tax payments equal to 25.0% of projected liability for a tax year.
Fiscal Impact
The proposed corporate income exemption for public water/wastewater income is projected to reduce Iowa General Fund revenue by $0.9 million in FY 2023 and FY 2024 and $0.5 million in FY 2025 and succeeding fiscal years.
Source
- Iowa Utilities Board Rate Filings
- Public Water Utility Corporate Tax Exemption · March 24, 2021
- Public Water Utility Corporate Tax Exemption · February 23, 2021
Iowa Code it changes
Lobbying
2 for · 3 against · 11 undecided · Who →