Bill
Bill > SF59
IA SF59
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
Introduced
01/16/2025
01/16/2025
In Committee
01/16/2025
01/16/2025
Crossed Over
Passed
Dead
Introduced Session
91st General Assembly
Bill Summary
Current law excludes from the individual income tax a retired farmer’s total net income received pursuant to a farm tenancy agreement covering real property held by the retired farmer for 10 or more years, if the farmer materially participated in a farming business for 10 or more years. Under current law, net income from a farm tenancy agreement earned by an entity taxed as a partnership for federal tax purposes, an S corporation, or a trust or estate is not eligible for the farm tenancy lease income exclusion. This bill allows the net income from a farm tenancy agreement earned, received, or reported by an entity taxed as a disregarded entity, partnership for federal tax purposes, an S corporation, a trust, or estate to be eligible for the farm tenancy lease income exclusion in the same manner as if the net income received pursuant to a farm tenancy passes directly from the farm tenant to the eligible individual rather than passing to the eligible individual through an entity taxed as a disregarded entity, a partnership, an S corporation, a trust, or an estate. The bill allows net income accruing to a grantor trust or to a business entity that is a disregarded entity to be deemed to have been distributed to its sole owner to the extent the sole owner of such disregarded entity or trust has the right to withdraw or compel distribution of such net income. The bill takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2024.
AI Summary
This bill expands the existing farm tenancy net income tax exclusion to allow retired farmers to claim the tax benefit when income is received through various business entities such as partnerships, S corporations, trusts, and estates. Currently, the tax exclusion only applied when a retired farmer received income directly from a farm tenancy agreement. The bill clarifies that if a retired farmer owns or has a right to withdraw income from a disregarded entity (a business entity treated as part of its owner for tax purposes) or a grantor trust, they can still claim the tax exclusion as if they received the income directly. Specifically, the bill allows net income from farm tenancy agreements to be eligible for the tax exclusion when it passes through these business entities, treating the income as if it were received directly by the eligible individual. The bill takes effect immediately upon enactment and applies retroactively to tax years beginning on or after January 1, 2024, which means farmers can apply this new interpretation of the tax exclusion to their 2024 tax filings.
Committee Categories
Budget and Finance
Sponsors (1)
Last Action
Subcommittee reassigned: Dawson, Bisignano, and Driscoll. S.J. 392. (on 03/03/2025)
Official Document
bill text
bill summary
Loading...
bill summary
Loading...
bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=SF59 |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/SF59.html |
Loading...