A bill for an act relating to the farm tenancy net income exclusion available against the individual income tax, and including effective date and retroactive applicability provisions.
Summary
Senate File 19 expands Iowa’s individual income tax farm tenancy net income exclusion so that qualifying income can still be excluded when it is earned, received, or reported through certain business entities rather than paid directly to the individual. The bill applies the exclusion to income passing through a disregarded entity, partnership, S corporation, trust, or estate, so long as the eligible individual receives or is entitled to receive the relevant portion of the income. It also treats income accruing to a grantor trust or disregarded entity as distributed to the sole owner when that owner can withdraw or compel distribution of the income.
The bill is intended to align the tax exclusion with common farm ownership and operating structures, particularly for retired farmers who lease farmland under a farm tenancy agreement. It takes effect immediately upon enactment and applies retroactively to tax years beginning on or after January 1, 2024, which means affected taxpayers could benefit for prior filing periods within that window.
Impact
SF 19 amends Iowa Code section 422.7, subsection 14, paragraph e, broadening eligibility for the farm tenancy net income exclusion under the individual income tax. The practical effect is to extend the exclusion to qualifying farm tenancy income routed through pass-through entities and certain trusts, rather than limiting it to income received directly by the individual. This change affects retired farmers, landowners, and family farm entities that hold or distribute farm lease income through entity structures, and it may require the Department of Revenue to recognize entity-level distributions as eligible for the exclusion under specified conditions.
Sentiment
The available context shows little recorded debate, no committee transcript, and no vote history, so there is no documented opposition or support in the provided materials. Based on the bill’s text and explanation, the measure appears to be a technical and taxpayer-relief adjustment designed to preserve an existing exclusion for taxpayers using common estate-planning and business-organization structures. The absence of recorded controversy suggests the bill was, at least at this stage, treated as a narrow clarification rather than a major policy change.
Contention
The main policy issue is whether the farm tenancy exclusion should apply when income is received through entities such as partnerships, S corporations, trusts, estates, or disregarded entities instead of being paid directly to the individual. Supporters would likely view the bill as preventing form-over-substance tax treatment and ensuring that eligible retired farmers are not penalized for using standard ownership structures. Any potential concern would center on the scope of the expansion and whether deeming income distributed to owners could broaden the exclusion beyond its original direct-payment framework, but no specific opposing arguments are included in the provided record.
A bill for an act relating to the farm tenancy net income exclusion available against the individual income tax, and including effective date and retroactive applicability provisions.(Formerly HF 56.)
A bill for an act relating to the farm tenancy net income exclusion available against the individual income tax, and including effective date and retroactive applicability provisions.
A bill for an act relating to the farm tenancy net income exclusion available against the individual income tax, and including effective date and retroactive applicability provisions.(See HF 624.)
A bill for an act creating a premarital counseling tax credit available against the individual income tax, and including retroactive applicability provisions.
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A bill for an act creating a radon mitigation system tax credit available against the individual and corporate income taxes, and including retroactive applicability provisions.(See HF 1027.)
A bill for an act establishing a solar installation tax credit available against the individual and corporate income taxes, the moneys and credits tax, and the franchise tax, and including effective date and retroactive applicability provisions.
A bill for an act relating to the adoption tax credit available against the individual income tax, and including effective date and retroactive applicability provisions.(See HF 1026.)