Bill Text: IA HF695 | 2023-2024 | 90th General Assembly | Introduced

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Bill Title: A bill for an act relating to economic development including child care, grants and tax credits relating to child care, and state child care assistance, and including applicability provisions.

Spectrum: Partisan Bill (Democrat 31-0)

Status: (Introduced - Dead) 2023-04-10 - Introduced, referred to Economic Growth and Technology. H.J. 780. [HF695 Detail]

Download: Iowa-2023-HF695-Introduced.html

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House File 695 - Introduced
HOUSE FILE 695
BY KONFRST , FORBES ,
BAGNIEWSKI , CAHILL ,
CROKEN , WILSON , COOLING ,
BAETH , TUREK , LEVIN ,
STAED , SCHEETZ , KURTH ,
AMOS JR. , NIELSEN ,
BUCK , WESSEL-KROESCHELL ,
STECKMAN , MATSON , WILBURN ,
JAMES , GAINES , MADISON ,
JACOBY , KRESSIG , EHLERT ,
BROWN-POWERS , B. MEYER ,
SRINIVAS , OLSON , and
SCHOLTEN
A BILL FOR
An Act relating to economic development including child
care, grants and tax credits relating to child care, and
state child care assistance, and including applicability
provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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DIVISION I
CHILD AND DEPENDENT CARE TAX CREDIT
Section 1. Section 422.12C, subsection 1, Code 2023, is
amended by striking the subsection and inserting in lieu
thereof the following:
1. The taxes imposed under this subchapter, less the amounts
of nonrefundable credits allowed under this subchapter, shall
be reduced by a child and dependent care credit equal to the
following percentages of the federal child and dependent care
credit provided in section 21 of the Internal Revenue Code,
without regard to whether or not the federal credit was limited
by the taxpayer’s federal tax liability:
a. For a taxpayer with net income of forty-five thousand
dollars or less, one hundred percent.
b. For a taxpayer with net income exceeding forty-five
thousand dollars but not exceeding fifty thousand dollars,
eighty-eight percent.
c. For a taxpayer with net income exceeding fifty thousand
dollars but not exceeding sixty thousand dollars, seventy-five
percent.
d. For a taxpayer with net income exceeding sixty thousand
dollars but not exceeding seventy thousand dollars, sixty-three
percent.
e. For a taxpayer with net income exceeding seventy thousand
dollars but not exceeding eighty thousand dollars, fifty
percent.
f. For a taxpayer with net income exceeding eighty thousand
dollars but not exceeding ninety thousand dollars, thirty-eight
percent.
g. For a taxpayer with net income exceeding ninety thousand
dollars but not exceeding one hundred thousand dollars,
twenty-five percent.
h. For a taxpayer with net income exceeding one hundred
thousand dollars but not exceeding one hundred twenty-five
thousand dollars, thirteen percent.
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i. For a taxpayer with net income exceeding one hundred
twenty-five thousand dollars but not exceeding one hundred
fifty thousand dollars, ten percent.
j. For a taxpayer with net income exceeding one hundred
fifty thousand dollars but not exceeding one hundred
seventy-five thousand dollars, five percent.
k. For a taxpayer with net income exceeding one hundred
seventy-five thousand dollars but not exceeding two hundred
thousand dollars, three percent.
l. For a taxpayer with net income exceeding two hundred
thousand dollars but not exceeding two hundred fifty thousand
dollars, two percent.
m. For a taxpayer with net income exceeding two hundred
fifty thousand dollars, zero percent.
DIVISION II
CHILD CARE CENTER AND CHILD DEVELOPMENT HOME GRANTS
Sec. 2. NEW SECTION . 237D.1 Definitions.
As used in this chapter, unless the context otherwise
requires:
1. “Child” means the same as defined in section 237A.1.
2. “Child care” means the same as defined in section 237A.1.
3. “Child development home” means the same as defined in
section 237A.1.
4. “Department” means the department of health and human
services.
5. “Facility” means the same as defined in section 237A.1.
6. “Fund” means the child care center and child development
home grant fund.
7. “Home” means a child development home.
8. “Licensed child care center” or “center” means a facility
providing child care or preschool services for seven or more
children that has been issued a license by the department
pursuant to section 237A.2.
9. “Program” means the child care center and child
development home grant program.
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Sec. 3. NEW SECTION . 237D.2 Child care center and child
development home grant fund.
1. A child care center and child development home grant fund
is created and established as a separate and distinct fund in
the state treasury under the control of the department.
2. a. The fund may consist of any moneys appropriated by
the general assembly for purposes of this chapter and any other
moneys that are lawfully available to the department. Moneys
in the fund are appropriated to the department and shall be
used for the purposes of this chapter.
b. Notwithstanding section 8.33, moneys in the fund
that remain unencumbered or unobligated at the close of the
fiscal year shall not revert but shall remain available for
expenditure for the purposes of this section in succeeding
fiscal years. Notwithstanding section 12C.7, subsection 2,
interest earned on moneys in the fund shall be credited to the
fund.
Sec. 4. NEW SECTION . 237D.3 Child care center and child
development home grant program.
1. The department shall adopt rules to establish and
administer a child care center and child development home
grant program to provide for the allocation of money in the
fund in the form of grants, not to exceed fifty thousand
dollars per grant, to eligible persons for costs related to
the establishment of a new licensed child care center or
a new child development home, or for the expansion of an
existing licensed child care center or the expansion of an
existing child development home. For any one fiscal year, the
department shall not approve more than four million dollars
in grants. The rules adopted by the department shall specify
the eligibility requirements for applicants of the program and
the items eligible for a program grant. Items eligible for a
program grant must include the costs related to licensing or
registration, supplies, employee salaries, and infrastructure.
2. A new center or a new home must be licensed or registered
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H.F. 695
and fully operational within two years of the date of an
applicant’s receipt of a grant.
3. Of the children for whom a new or expanded center or a
new or expanded home provide child care, a minimum of twenty
percent of the children must be from a family that qualifies
for state child care assistance pursuant to section 237A.13.
4. A person that is awarded a grant shall enter into an
agreement with the department that specifies the requirements
that must be maintained throughout the period of the agreement
in order for the person to retain the grant. The agreement
must contain, at a minimum, provisions addressing all of the
following:
a. The legal name of the person receiving the grant.
b. The amount of the grant.
c. Annual certification by the person to the department of
compliance with the requirements of the agreement, the program,
and this chapter.
d. The repayment of the grant, or a portion of the grant,
if the person does not meet all of the requirements of the
agreement, the program, and this chapter.
e. If a new center or a new home for which the grant was
received goes out of business within two years of the date the
new center or new home becomes fully operational pursuant to
subsection 2, the grant shall be subject to repayment. If an
expanded center or an expanded home for which the grant was
received goes out of business within two years of the date on
which the grant was received, the grant shall be subject to
repayment.
DIVISION III
SMALL BUSINESS CHILD CARE TAX CREDIT
Sec. 5. NEW SECTION . 237A.32 Small business child care tax
credit.
1. As used in this section “small business” means any
enterprise which is located in this state, which is operated
for profit and under a single management, and which has either
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fewer than twenty employees or an annual gross income of less
than four million dollars computed as the average of the three
preceding fiscal years. This definition does not apply to any
program or activity for which a definition for small business
is provided for the program or activity by federal law or
regulation or other state law.
2. A small business may receive a child care tax credit
for providing child care employee benefits to employees of the
business. The credit may be applied against income tax imposed
under chapter 422, subchapter II or III, the franchise tax
imposed under chapter 422, subchapter V, the gross premiums
tax imposed under chapter 432, or the moneys and credits tax
imposed in section 533.329. The amount of the credit equals
the costs to provide the benefit up to three thousand dollars
per employee per year.
3. The aggregate amount of tax credits authorized pursuant
to this section shall not exceed a total of two million
dollars per fiscal year, and shall be awarded on a first-come,
first-served basis.
4. To be eligible for a small business child care tax
credit, the small business must provide child care employee
benefits to employees of the business through any of the
following:
a. Build a new structure or rehabilitate an existing
structure to be used as a child care center at or near the small
business where the children of the employees of the business
are provided child care. A small business may construct or
rehabilitate the structure in conjunction with another business
but only the actual cost of the business shall be considered in
determining the credit.
b. Operate or lease a child care center at or near the small
business where the children of the employees of the business
are provided child care.
5. A taxpayer who elects to claim the small business child
care tax credit shall not claim the employer child care tax
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credit under section 237A.31
6. Any credit in excess of the tax liability is not
refundable but the excess for the tax year may be credited
to the tax liability for the following five years or until
depleted, whichever is earlier. The director of revenue shall
adopt rules to implement this section.
Sec. 6. NEW SECTION . 422.12P Small business child care tax
credit.
1. The taxes imposed under this subchapter, less the credits
allowed under section 422.12, shall be reduced by a small
business child care tax credit received pursuant to section
237A.32.
2. An individual may claim the tax credit allowed a
partnership, S corporation, limited liability company, estate,
or trust electing to have the income taxed directly to the
individual. The amount claimed by the individual shall be
based upon the pro rata share of the individual’s earnings of a
partnership, S corporation, limited liability company, estate,
or trust.
Sec. 7. Section 422.33, Code 2023, is amended by adding the
following new subsection:
NEW SUBSECTION . 33. The taxes imposed under this subchapter
shall be reduced by a small business child care tax credit
received pursuant to section 237A.32.
Sec. 8. Section 422.60, Code 2022, is amended by adding the
following new subsection:
NEW SUBSECTION . 16. The taxes imposed under this subchapter
shall be reduced by a small business child care tax credit
received pursuant to section 237A.32.
Sec. 9. NEW SECTION . 432.12P Small business child care tax
credit.
The taxes imposed under this chapter shall be reduced by
a small business child care tax credit received pursuant to
section 237A.32.
Sec. 10. Section 533.329, subsection 2, Code 2022, is
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amended by adding the following new paragraph:
NEW PARAGRAPH . n. The moneys and credits tax imposed under
this section shall be reduced by a small business child care
tax credit received pursuant to section 237A.32.
Sec. 11. APPLICABILITY. This division of this Act applies
to tax years beginning on or after January 1, 2023.
DIVISION IV
STATE CHILD CARE ASSISTANCE
Sec. 12. Section 237A.13, subsection 8, paragraph c, Code
2023, is amended to read as follows:
c. Families with an income of more than one hundred
percent but not more than one two hundred forty-five percent
of the federal poverty level whose members, for at least
twenty-eight hours per week in the aggregate, are employed
or are participating at a satisfactory level in an approved
training program or educational program.
Sec. 13. DIRECTIVE TO DEPARTMENT OF HEALTH AND HUMAN
SERVICES —— CHILD CARE ASSISTANCE.
1. The department of health and human services shall amend
its administrative rules pursuant to chapter 17A to do all of
the following:
a. Provide income eligibility for state child care
assistance, according to family size for children needing basic
care, to families whose nonexempt gross monthly income does not
exceed two hundred percent of the federal poverty level.
b. Adjust the state child care assistance copayment
schedule in incrementally increased amounts for families whose
nonexempt gross monthly income does not exceed two hundred
percent of the federal poverty level.
2. The rules adopted pursuant to this section shall take
effect January 1, 2024.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to economic development including child
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care, grants and tax credits relating to child care, and state
child care assistance.
DIVISION I —— CHILD AND DEPENDENT CARE TAX CREDIT. The
bill adjusts the percentage of the federal child and dependent
care tax credit by which a taxpayer may reduce the taxpayer’s
individual state income taxes. A taxpayer with net income of
$45,000 or less receives 100 percent of the credit; a taxpayer
with net income exceeding $45,000 but not exceeding $50,000
receives 88 percent of the credit; a taxpayer with net income
exceeding $50,000 but not exceeding $60,000 receives 75 percent
of the credit; a taxpayer with net income exceeding $60,000
but not exceeding $70,000 receives 63 percent of the credit; a
taxpayer with net income exceeding $70,000 but not exceeding
$80,000 receives 50 percent of the credit; a taxpayer with net
income exceeding $80,000 but not exceeding $90,000 receives 38
percent of the credit; a taxpayer with net income exceeding
$90,000 but not exceeding $100,000 receives 25 percent of the
credit; a taxpayer with net income exceeding $100,000 but
not exceeding $125,000 receives 13 percent of the credit; a
taxpayer with net income exceeding $125,000 but not exceeding
$150,000 receives 10 percent of the credit; a taxpayer with net
income exceeding $150,000 but not exceeding $175,000 receives
5 percent of the credit; a taxpayer with net income exceeding
$175,000 but not exceeding $200,000 receives 3 percent of the
credit; a taxpayer with net income exceeding $200,000 but not
exceeding $250,000 receives 2 percent of the credit; and a
taxpayer with net income exceeding $250,000 receives 0 percent
of the credit.
DIVISION II —— CHILD CARE CENTER AND CHILD DEVELOPMENT HOME
GRANTS —— FUND. The bill creates a new Code chapter relating
to child care center and child care development home grants.
The bill creates definitions for “child”, “child care”,
“child development home”, “department”, “facility”, “fund”,
“home”, “licensed child care center”, and “program”.
The bill creates a child care center and child development
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home grant fund (fund) in the state treasury under the control
of the department of health and human services (HHS). The fund
may consist of any moneys appropriated by the general assembly
for purposes of the fund and any other moneys that are lawfully
available to HHS. Moneys in the fund do not revert to the
general fund of the state, and interest earned on the fund is
credited to the fund.
The bill requires HHS to adopt rules to establish and
administer a child care center and child development home
program (program) to provide for the allocation of moneys
in the fund in the form of grants, not to exceed $50,000
per grant, to eligible persons for costs related to the
establishment of a new licensed child care center or a new
child development home, or for the expansion of an existing
child care center or child development home. For any one
fiscal year, HHS may not approve more than $4 million in
grants. Rules adopted by HHS must specify the eligibility
requirements for applicants of the program grant and the items
eligible for a program grant. Items eligible for a program
grant must include costs related to licensing or registration,
supplies, employee salaries, and infrastructure.
The bill requires a program grant recipient to build and
make a new child care center or child development home fully
operational within two years of receiving a program grant.
The bill requires that a new or expanded facility that
receives a program grant must have a minimum of 20 percent of
its children from families that qualify for state child care
assistance.
The bill requires a person who receives a program grant
to enter into an agreement with HHS that specifies the
requirements that must be maintained throughout the period of
the agreement in order for the person to retain the grant, as
detailed in the bill.
DIVISION III —— SMALL BUSINESS CHILD CARE TAX CREDIT. The
bill creates a small business child care tax credit.
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The bill defines “small business” as any enterprise located
in this state, which is operated for profit under a single
management and which has either fewer than 20 employees or an
annual gross income of less than $4 million computed as the
average of the three preceding fiscal years.
The bill allows a small business to receive a tax credit
for providing child care employee benefits to employees of the
business. The amount of the credit equals the costs to provide
the benefit up to $3,000 per employee per year. The aggregate
amount of tax credits cannot exceed a total of $2 million per
fiscal year and are awarded on a first-come, first-served
basis. The bill requires a small business to provide child
care employee benefits to employees through certain methods
in order to be eligible for the small business child care tax
credit.
The small business child care tax credit applies toward
reducing personal net income taxes, the taxes on corporations,
the taxes on financial institutions, and the taxes on insurance
companies. The tax reduction applies to tax years beginning on
or after January 1, 2023.
DIVISION IV —— STATE CHILD CARE ASSISTANCE. The state
offers child care assistance (CCA) to persons who meet certain
eligibility requirements. CCA is only open to a certain number
of participants at one time. If CCA is currently unavailable
to new participants, families applying for CCA will be placed
on a waiting list. The priority of families on the waiting
list are, in descending order of prioritization, families with
an income at or below 100 percent of the federal poverty level
(FPL) whose members, for at least 28 hours per week in the
aggregate, are employed or are participating at a satisfactory
level in an approved training program or educational program,
and parents with a family income at or below 100 percent of
the FPL who are under 21 years of age and are participating
in an educational program leading to a high school diploma
or the equivalent; parents with a family income at or below
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100 percent of the FPL who are under 21 years of age and are
participating, at a satisfactory level, in an approved training
program or in an educational program; families with an income
of more than 100 percent but not more than 145 percent of
the FPL whose members, for at least 28 hours per week in the
aggregate, are employed or are participating at a satisfactory
level in an approved training program or educational program;
and families with an income at or below 200 percent of the
FPL whose members are employed at least 28 hours per week
with a special needs child as a member of the family. The
bill changes the maximum income to be eligible for the third
category of prioritization for purposes of the waiting list
from 145 percent to 200 percent.
The bill directs HHS to amend its administrative rules
to provide income eligibility for state CCA, according to
family size for children needing basic care, to families whose
nonexempt gross monthly income does not exceed 200 percent
of the FPL and to adjust the state CCA copayment schedule in
incrementally increased amounts for families whose nonexempt
gross monthly income does not exceed 200 percent of the FPL.
The bill makes such adopted rules effective January 1, 2024.
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