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 59 expands Iowa’s individual income tax exclusion for net income from a farm tenancy agreement. Under current law, the exclusion is available to certain retired farmers who meet ownership and material-participation requirements, but the bill clarifies that income earned through pass-through or flow-through entities can also qualify. Specifically, it would allow farm tenancy net income received, earned, or reported by a disregarded entity, partnership, S corporation, trust, or estate to be treated the same as income received directly by the eligible individual, so long as the individual is entitled to the income through that entity structure.
The bill also provides a special rule for grantor trusts and disregarded entities, deeming income to be distributed to the sole owner when that owner has the right to withdraw or compel distribution. SF 59 takes effect immediately upon enactment and applies retroactively to tax years beginning on or after January 1, 2024, meaning affected taxpayers could benefit for prior filing periods within that window.
Impact
SF 59 would amend Iowa Code section 422.7(14)(e), broadening eligibility for the farm tenancy net income exclusion and reducing individual income tax liability for qualifying retired farmers and related entities. It would change how the Department of Revenue and taxpayers treat farm tenancy income routed through disregarded entities, partnerships, S corporations, trusts, and estates, aligning entity-based ownership structures with direct receipt of income for exclusion purposes. The retroactive applicability provision could require amended returns or adjustments for 2024 tax years.
Sentiment
The available record shows no committee transcript or recorded votes, so there is no documented debate or roll-call sentiment to assess. Based on the bill’s text, the measure appears targeted and technical rather than controversial, aimed at clarifying tax treatment for farm tenancy income passed through common agricultural ownership structures. The reassignment of subcommittee members suggests the bill remained in committee review rather than advancing through a visible floor vote.
Contention
The main policy issue is whether the farm tenancy income exclusion should extend beyond direct payments to income routed through entities such as trusts, estates, partnerships, S corporations, and disregarded entities. Supporters would likely view the bill as a fairness and administrative-clarity measure for family farm succession and estate planning, while any concerns would center on revenue loss, retroactive tax relief, and whether the expanded eligibility could broaden the exclusion beyond its original intent. No specific opposing arguments or named dissenters appear in the provided record.
Similar To
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.)
Similar To
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.(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.)
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