Bill
Bill > HF624
IA HF624
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.)
summary
Introduced
02/27/2025
02/27/2025
In Committee
03/20/2025
03/20/2025
Crossed Over
03/19/2025
03/19/2025
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 farm income is received through various business entities, such as partnerships, S corporations, trusts, or estates. Currently, the tax exclusion only applies when a retired farmer receives farm tenancy income directly. The bill modifies the tax code to treat income received through these entities the same as income received directly, providing more flexibility for retired farmers. Specifically, the bill allows net income from a farm tenancy agreement to be eligible for the tax exclusion when it passes through a disregarded entity, partnership, S corporation, trust, or estate, as long as the eligible individual receives or is entitled to receive the income through distributions. Additionally, for grantor trusts or disregarded business entities, the net income will be considered distributed to the sole owner if they have the right to withdraw or compel distribution of the income. The bill takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2024, giving farmers broader options for managing their farm tenancy income for tax purposes.
Committee Categories
Budget and Finance
Sponsors (0)
No sponsors listed
Other Sponsors (1)
Ways and Means (H)
Last Action
Subcommittee: Dawson, Bisignano, and Driscoll. S.J. 654. (on 03/26/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=HF624 |
| Fiscal Note - Retired Farmer Lease Income Exclusion, Pass-Through Entities | https://www.legis.iowa.gov/docs/publications/FN/1523597.pdf |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/HF624.html |
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