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Economic Growth – week of March 2, 2015

SF 344 – Apprenticeship Training Tax Credit

SF 350 — Renewable Chemical Tax Credit

 

COMMITTEE ACTION:

SF 344, as amended in committee, creates a tax credit for employers who employ an apprentice working in the construction trade at Iowa worksites. The tax credit is available against individual and corporate income taxes. The amount of the tax credit is equal to $2 per hour multiplied by the total number of hours that an apprentice worked during the tax year. The bill limits the amount of the tax credit in any year received by a taxpayer for each apprentice to a maximum of $2,000 or 50 percent of the wages the apprentice earned, whichever is less. The apprentice must be an Iowa resident and in an apprenticeship program registered with the U.S. Department of Labor. The bill applies to tax years beginning on or after January 1, 2016, and for apprentices hired on or after July 1, 2015. [2/26: short form (Bowman, Chapman, Chelgren excused)]

 

SF 350 establishes a new tax credit for the production of renewable chemicals from biomass feedstock, makes changes to the Angel Investor Tax Credits, and makes changes to the Entrepreneur Investor Awards program.

The new Renewable Chemical Tax Credit will incentivize the production of high-value “building block” chemicals, from biomass feedstocks. They are not available for the production of ethanol, biodiesel or animal feed. The credit is $0.05 per pound. The credit will be placed under Iowa Economic Development Authority’s (IEDA) $170 million cap. The annual award amounts will be limited to $1 million for startups and $500,000 for established businesses. The credit is refundable but not transferrable. The credit will only be available to a company for five years.

Currently, there is $2 million allocated to Angel Tax Credits under IEDA’s $170 million cap. The tax credits are for investments in qualifying businesses and community based seed funds. To date, this program has seen only half the authorized amount issued in any year, so IEDA is trying to make the credits more effective, better utilized and competitive with other states. The bill changes the percentage of the tax credit from 20 percent to 25 percent of the taxpayer’s equity investment. The credits will be refundable but not transferrable. The bill eliminates the community based seed fund feature. The carryforward period is reduced from five years to three years.

The Entrepreneur Investment Awards Program was created in 2012 and provides grants for technical and financial assistance to entrepreneurs seeking to create, locate or expand a business in the state. The changes in the bill try to broaden the eligibility of the program and make it more competitive.

An amendment was adopted in committee that added a sunset to the new renewable chemical tax credit program. It also allows banks, credit unions, c-corps and insurance companies to be eligible for the Angel Tax Credit. The refundability is only available to an actual person. The cap for a qualifying business shall not exceed $500,000 per tax year. Finally, the amendment allows a more reasonable time for notification to the Department of Revenue for developers to get the sales tax refund under the Workforce Housing Tax Program and allows IEDA to extend project completion date for a project under Enterprise Zone program, Brownfields/Grayfields, that suffered a catastrophic fire. [2/26: short form (Bowman, Chapman, Chelgren excused)]


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