Relating to the solar energy system tax credit available against the individual or corporate income tax, the franchise tax, and the moneys and credits tax, and including effective date and retroactive applicability provisions

This bill relates to the solar energy system tax credit available against individual and corporate income taxes, the franchise tax, and the moneys and credits tax. BACKGROUND. Currently, the solar energy system tax credit for residential installations has expired for installations completed after December 31, 2021. The solar energy system tax credit remains available for the construction of a commercial solar energy system commenced before calendar year 2022. Under existing law, the Iowa solar energy system tax credit available against the individual or corporate income tax, the franchise tax, or the moneys and credits tax equals the sum of percent of the federal residential energy efficient property credit, not to exceed $5,000, plus percent of the federal energy credit related to solar energy systems, not to exceed $20,000. CHANGES. The bill strikes provisions basing the Iowa solar energy system tax credit as a percentage of federal energy tax credits and creates a new Iowa solar energy system tax credit for installations completed on or after January 1, 2022. The bill creates a residential solar energy system tax credit equal to percent of the gross cost of the system, up to $5,000. The bill creates a separate commercial solar energy system tax credit not to exceed percent of the gross cost of the system, up to $20,000. The tax credit is available against the individual and corporate income taxes, the franchise tax, and the moneys and credits tax. The bill defines “residential solar energy system” to mean a solar energy project on residential property. The bill defines “commercial solar energy system” to mean a solar energy system on a multiresidential property or a nonresidential property. Any tax credit approved under the bill is not refundable but the excess for the tax year may be credited to the tax liability for the following years or until depleted, whichever is earlier. A taxpayer eligible to claim a credit under the bill is not eligible to claim a renewable energy tax credit under Code chapter 476C. The bill provides that a taxpayer may claim more than one tax credit, but may claim only one credit per separate and distinct solar energy system installation. The bill removes the $5 million maximum cumulative value of solar energy system tax credits annually available for installations completed on or after January 1, 2022. The bill also removes the $5 million maximum cumulative value of solar energy system tax credits available in a tax year for installations completed prior to January 1, 2022, for the following applicants: an applicant with a valid application who was on the wait list as of December 31, 2021, and who did not receive the credit; an applicant whose application went through the review process of the department of revenue and who otherwise had a valid application but was nevertheless sent a denial letter by the department of revenue for the 2021 award year regardless of whether or not the applicant appealed the denial letter; an applicant whose application was in the review process of the department of revenue but whose application expired due to the expiration of the credit, regardless of whether the applicant appealed the denial letter; and an applicant who has not submitted an application for an installation that was completed during the 2021 calendar year. The bill takes effect upon enactment and applies retroactively to January 1, 2022, for tax years ending on or after that date.