Bills › 91st General Assembly
Where it is now
- Done: IntroducedFebruary 20, 2025
- Done: SubcommitteeFebruary 20, 2025
- Done: House committeeApril 23, 2025
- Skipped: Passes the HouseContinued as HF 1033
- Next: Senate committee
- Next: Passes the Senate
- Next: To the Governor
- Next: Signed into law
Became HF 1033 → Its progress continues under the new number. Go to HF 1033 What’s a funnel?
What’s in it
AI summary Nonprofit rural water districts would be able to get refunds on sales tax paid for building materials, supplies, and equipment. This change also makes construction services provided to these districts exempt from sales tax. The bill replaces the old tax rules to make sure there aren't two different ways to claim these exemptions at the same time.1
Read the official explanation
This bill makes a nonprofit rural water district organized under Code chapter 504 as provided in Code chapter 357A a designated exempt entity, which allows the nonprofit rural water district to apply to the department of revenue for the refund of the sales and use tax upon sales of building materials, supplies, and equipment, or from services furnished by a contractor in the performance of a written contract with the rural water district, if certain circumstances relating to the contract are met. By designating a rural water district a designated exempt entity under the bill, construction services provided to the water district also become exempt from the sales tax which is different than the sales tax exemption under current law.3(38).3(38) so two separate and distinct sales tax exemptions do not exist at the same time relating to building materials, supplies, or equipment sold to a rural water district.
House subcommittee
Named February 20, 2025. On March 13, 2025 it recommended passage.
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 This bill expands the sales and use tax exemption for rural water districts to include construction services. It is estimated to decrease annual revenues to the state's General Fund, the SAVE Fund, and the LOST by $877,000, $175,000, and $170,000 respectively in fiscal year 2026. These decreases are projected to grow slightly each year through fiscal year 2030.3
Read the fiscal note
Description
House File 1033 establishes rural water districts as designated exempt entities. This expands the current sales and use tax exemption for rural water districts by including construction services provided to the rural water district.
Background
Under current law, rural water districts are exempt from the sales and use tax on building materials, supplies, or equipment sold to a rural water district and used for the construction of facilities.
Designated exempt entities can apply to the Iowa Department of Revenue for a refund of the sales and use tax paid for building materials, supplies, equipment, and services furnished by a contractor in the performance of a written contract.
Assumptions
- The Bill is effective July 1, 2025 (FY 2026).
- There are 12 rural water districts impacted by the Bill.
- An average of $1.4 million in FY 2025 taxable sales per rural water district are made exempt under the Bill.
- The price of building materials, supplies, equipment, and services furnished to rural water districts increases by 2.0% annually.
- Secure an Advanced Vision for Education (SAVE) refunds are 1.0% of taxable expenditures. Local Option Sales Tax (LOST) distributions are estimated to be 0.97% of taxable expenditures.
Fiscal Impact
House File 1033 is estimated to decrease annual revenues to the General Fund, the SAVE Fund, and the LOST by the amounts in Figure 1.
Figure 1 — Fiscal Impact of HF 1033General Fund SAVE LOST FY 2026 -877,000$ -175,000$ -170,000$ FY 2027 -894,000 -179,000 -173,000 FY 2028 -912,000 -182,000 -177,000 FY 2029 -930,000 -186,000 -180,000 FY 2030 -949,000 -190,000 -184,000
Sources
- Iowa Department of Revenue
- Iowa Rural Water Association
- Sales Tax Exemption, Rural Water Districts · May 5, 2025
Iowa Code it changes
Lobbying
1 for · 0 against · 4 undecided · Who →
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91st General Assembly