HF2225: New Graduate Nonresident Tuition Tax Credit

Creates a nonrefundable individual income tax credit for recent graduates of Iowa Board of Regents institutions who paid nonresident tuition and are now Iowa residents employed as healthcare professionals, teachers, licensed veterinarians, or professional engineers. The credit equals the difference between nonresident and resident tuition rates for the years attended. Excess credit can be carried forward up to five years but cannot benefit those who become nonresidents. The Board of Regents is required to publish tuition data for transparency. The bill applies retroactively to tax years beginning on or after January 1, 2026.

Key Points & Impacts:

• Establishes a nonresident tuition tax credit for individuals who graduated from an Iowa Board of Regents institution within the past three years and are now employed in Iowa as a healthcare professional, teacher, licensed veterinarian, or professional engineer.

• The tax credit amount is 100% of the difference between nonresident and resident tuition paid by the graduate for each year of attendance.

• Credit is nonrefundable, but unused amounts may be carried forward for up to five years or until exhausted, whichever comes first.

• If the taxpayer becomes a nonresident, remaining credit cannot be applied to future tax liability.

• Married taxpayers filing separately must allocate the credit proportionally to earned income.

• Board of Regents must publish a decade's worth of tuition data for both resident and nonresident students at each institution.

• Applies retroactively to tax years beginning on or after January 1, 2026.

• Targets high-need professions (healthcare, teaching, veterinary, engineering) to encourage retention of graduates in Iowa.