Bill > HSB588

Introduced Session

GENERAL. This bill amends a number of Code chapters relating to agriculture, including providing for the powers and duties of the department of agriculture and land stewardship (DALS). The bill provides for the promotion and regulation of commodities and regulation by DALS, including fees, and the transportation of agricultural items by the department of transportation (DOT). The bill provides for the use of agricultural land, including agricultural tourism. The bill also provides for taxation, including property taxes, the excise tax, the sales and use tax, and income tax. DIVISION I —— DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP —— PROMOTION —— RENEWABLE FUEL INFRASTRUCTURE —— BACKGROUND. Code chapter 159A, subchapter II, authorizes DALS to administer a renewable fuel infrastructure program for retail motor fuel sites (Code section 159.14) and a renewable fuel infrastructure program for biodiesel terminal facilities (Code section 159A.15). The purpose of the program is to finance the improvement of facilities used to store, blend, or dispense renewable fuels, commonly derived from corn or soybeans. The programs are supported by the renewable fuel infrastructure fund (Code section 159A.16), which is appropriated $5 million each fiscal year (Code section 159.17). DIVISION I —— DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP —— PROMOTION —— RENEWABLE FUEL INFRASTRUCTURE —— BILL’S PROVISIONS. This division increases the amount of moneys appropriated from the renewable fuel infrastructure fund each fiscal year for administrative costs incurred by DALS from $100,000 to $150,000. DIVISION II —— DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP —— PROMOTION —— BACKGROUND. Code chapter 189 authorizes DALS to administer a number of programs providing S.F. _____ H.F. _____ for the promotion of agriculture in this state. The Code chapter provides for the financing of the programs, including the creation of a choose Iowa fund (Code section 187.201). The Code chapter provides for a choose Iowa promotional program that supports the marketing of agricultural commodities and processed products originating from Iowa farms (Code section 187.301). The choose Iowa program allows a person to register as a seller of Iowa commodities and products and receives the right to use a legally protected logo under a paid license (Code sections 187.302 and 187.303). The Code chapter includes a choose Iowa food purchasing program that supports Iowa food banks and emergency feeding operations (Code section 187.311). A farm or business enrolled in the choose Iowa program is provided a preference to participate in the choose Iowa food purchasing program. Under Code chapter 190A, DALS also administers a farm-to-school program to support schools and school districts in purchasing food products derived from food commodities produced on Iowa farms (Code section 190A.6). A dairy innovation program authorizes DALS to provide financing to an eligible business in the form of a grant, low-interest loan, or forgivable loan in order to expand dairy processing capacity in Iowa (Code section 187.311). PART A —— GENERAL —— BILL’S PROVISIONS. This part creates an exception to a provision that restricts state agencies from engaging in an activity that competes with a private enterprise (Code section 23A.2). The part amends the choose Iowa program by providing for the enrollment of persons actively engaged in producing, processing, or marketing Iowa agricultural products. PART B —— CHOOSE IOWA PROMOTIONAL PROGRAMS —— BILL’S PROVISIONS. Under this part, DALS may adopt administrative rules providing for criteria for enrollment in the choose Iowa promotion program. The part establishes a choose Iowa school purchasing program based on the farm-to-school program, which is eliminated. Under the new program, an eligible participant is reimbursed on a matching basis with DALS contributing $1 for S.F. _____ H.F. _____ every $1 expended by the eligible participant. The division renames the choose Iowa food purchasing program to the choose Iowa food bank program. The part provides that to participate in the program, a farm or business must be enrolled as a member of the choose Iowa promotional program. The part eliminates a provision providing that not more than $200,000 may be used by DALS to reimburse Iowa food banks and Iowa emergency feeding organizations. The part eliminates a provision that terminates the program on July 1, 2030. Finally, the part transfers several Code sections including Code section 159.25, which establishes an Iowa seal for agricultural products. PART C —— INNOVATION AND REVITALIZATION PROGRAMS —— BILL’S PROVISIONS. This part provides priority to a beginning farmer applying to participate in the dairy innovation and revitalization program. The part creates a butchery innovation revitalization program, modeled on the dairy innovation and revitalization program, that promotes the development, modernization, and expansion of this state’s butchery industry. The part also eliminates a similar program administered by the economic development authority (Code section 15E.370). DIVISION III —— DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP REGULATION —— ANIMAL HEALTH —— BACKGROUND. Code chapter 163 authorizes DALS to regulate animal health and specifically control infectious or contagious diseases (disease) afflicting livestock populations (Code chapter 163). The term “control” refers to prevention, suppression, or eradication efforts (Code section 163.2). DIVISION III —— ANIMAL HEALTH —— BILL’S PROVISIONS. This division authorizes DALS to lease facilities in order to control an infectious or contagious disease or provide for a foreign animal disease preparedness and response effort (Code section 162.2A). The division also provides that notwithstanding Code chapter 22, information collected by DALS relating to such disease is confidential, if the information identifies the name, address, and contact information of a S.F. _____ H.F. _____ person owning or caring for an animal suspected of or being affected with a disease; or any location where an animal suspected of or being affected with the disease has been kept. DIVISION IV —— DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP REGULATION —— WEIGHTS AND MEASURES —— BACKGROUND. DALS is authorized to regulate standard weights and measures under a number of Code chapters, with many of its provisions first published in the 1851 Code (Code chapters 210, 213, 214, and 215). Generally, standards must comply with or be supplied by the federal government or approved as being in compliance with those established by a United States agency, the national institute of standards and technology (NIST). Many of Iowa’s Code provisions regulating standards provide for the inspection of commercial weighing and measuring devices that are used to establish size, quantity, area, or another quantitative measurement of a commodity when sold (Code section 215.1). DIVISION IV —— DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP —— REGULATION —— WEIGHTS AND MEASURES —— BILL’S PROVISIONS. This division provides that the secretary of agriculture may designate the bureau chief of the department’s weights and measures bureau to act as the state metrologist of weights and measures (Code section 213.1). The state metrologist is authorized to cooperate with NIST. A provision requiring all weights and measures sealed by the state metrologist to be impressed with the word “Iowa” is eliminated. The division provides that DALS is no longer required to inspect all commercial weighing and measuring devices unless it receives a complaint (Code section 215.1A). In lieu of an inspection, DALS may order the owner of the device or a service agency that installed, serviced, or repaired the device, to deliver to DALS one or more of the service agency’s most recent test reports documenting the device’s accuracy. Several exceptions apply that require the inspection of a device including a motor fuel pump (Code section 214.11), a moisture-measuring device (Code section 215A.2), and a charging S.F. _____ H.F. _____ station (Code section 452A.41). The division makes several changes to enhance the Code’s readability including updating or correcting references to Code chapter 215. The division eliminates a provision that requires DALS to conduct a test of a measuring device based on a request of any person (Code section 213.3) and a provision requiring a city to pay for expenses directly incurred in furnishing a city with standards (Code section 213.7). DIVISION V —— DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP REGULATION —— GRAIN MARKETING —— BACKGROUND. DALS regulates grain marketing transactions under three interrelated Code chapters. The first two Code chapters regulate grain marketers, including Code chapter 203 providing for the regulation of a grain dealer purchasing grain from a seller and Code chapter 203C providing for the regulation of a warehouse operator storing grain for a depositor. Code chapter 203D establishes the grain depositors and sellers indemnity fund (indemnity fund) created to indemnify a seller or depositor against a financial loss due to the management of the grain by grain dealer or warehouse operator. Under Code chapter 203, in a cash sale transaction, a grain dealer must pay the seller the purchase price for grain upon the grain’s delivery or upon demand for payment by the seller (Code section 203.8). Delivery occurs when title to and possession of the grain is transferred to the grain dealer or another person in accordance with the terms of the contract (Code section 203.8). One special type of sale is the use of a credit-sale contract in which a grain dealer enters a contract with a seller for the sale of grain and delivery of the grain has occurred but payment has not been made either because the price has not been agreed to (a deferred-pricing contract) or the price has been agreed to but payment is to be made more than 30 days later (a deferred-payment contract) (Code section 203.15). Under both Code chapters 203 and 203C, DALS regulates a grain dealer and warehouse operator by S.F. _____ H.F. _____ issuing a license and conducting inspections of their business operations. A grain dealer or warehouse operator must be issued either a class 1 or class 2 license based on the size of the business operation with a class 1 license requiring higher net worth requirements (Code sections 203.3 and 203C.6). However, a class 1 license is required for a grain dealer who enters into a credit-sale contract regardless of the size of the grain dealer’s operation. A class 1 or class 2 licensee must annually submit to DALS a financial statement accompanied by an unqualified opinion based upon an audit performed by a certified public accountant (CPA) licensed in this state. In 2025, the general assembly enacted 2025 Iowa Acts, chapter 105 (2025 Act), which eliminated provisions that allowed a licensed grain dealer or licensed grain warehouse operator to submit a financial statement accompanied by a report of a state-licensed CPA based upon a review in lieu of an unqualified opinion. The 2025 Act allowed the indemnity fund to cover a loss arising from a deferred-payment contract (Code sections 203D.6 and 203D.6A). The 2025 Act also provided a separate process for a seller to be indemnified for a loss resulting from the seller having received from the grain dealer an amount from the purchased grain that the seller was required to later pay back to the grain dealer’s bankruptcy estate (Code section 203D.6A). DIVISION V —— DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP —— REGULATION —— GRAIN MARKETING —— BILL’S PROVISIONS. Parts A and B of this division amend Code sections 203.3 and 203C.6A by allowing a grain dealer (except a grain dealer entering into a credit-sale contract) or a warehouse operator to again submit a financial statement accompanied by a report of a state-licensed CPA based upon a review in lieu of an unqualified opinion. Parts A and B of the division amend Code section 203.8 by providing that unless title to grain was previously transferred pursuant to an ordinary cash sale contract, title to grain sold by credit-sale contract is deemed to have transferred to the grain dealer upon two conditions: (1) the credit-sale contract S.F. _____ H.F. _____ is signed by both the grain dealer and the seller and (2) the grain dealer has possession of the grain in accordance with the terms of the credit-sale contract. Part C of the division amends Code section 203D.6 by providing for the indemnification of a seller for grain purchased by a grain dealer that the seller was required to pay back later in bankruptcy. The claim may proceed upon a determination that an eligible repayment claim was filed with DALS by the seller as required by statute. Finally, part C of the division amends Code section 203D.6A by providing for the timeliness of a repayment claim in the case of a bankruptcy court’s default judgment. In that case, the seller must file a claim not later than 60 days after the court’s judgment or a settlement agreement is approved, whichever is later. DIVISION VI —— DEPARTMENT OF TRANSPORTATION REGULATION —— MOTOR VEHICLES. This division provides for the regulation of persons moving agricultural items on state highways and roads. PART A —— MILK HAULERS —— BACKGROUND. Under Code chapter 321E, the department of transportation (DOT) and local authorities regulate the weight of motor vehicles traveling on a street, road, or highway, including by issuing permits (Code section 321E.2). DOT is authorized to issue annual permits for the operation of vehicles or combinations of vehicles transporting fluid milk products to or from a milk plant, receiving station, or transfer station. The weight limitation is 96,000 pounds on primary roads and primary road extensions in cities. A person who violates the weight provisions is subject to a fine according to a schedule based on the number of pounds of overload beginning at $12. PART A —— MILK HAULERS —— BILL’S PROVISIONS. This part increases the weight limit to 136,000 pounds. DOT is required to adopt rules governing minimum distances for axle configurations. The part takes effect January 1, 2027. PART B —— IMPLEMENTS OF HUSBANDRY —— BACKGROUND. Code section 321.457 regulates the maximum length of a motor S.F. _____ H.F. _____ vehicle or combination of vehicles operated on the highways of this state. A trailer or semitrailer cannot have an overall length in excess of 53 feet when operating in a truck tractor-semitrailer combination. However, a lowboy semitrailer that is designed and exclusively used for the transportation of construction equipment may have an overall length not in excess of 57 feet. A person who violates the length requirement is subject to a scheduled fine of $260 (Code section 805.8A). PART B —— IMPLEMENTS OF HUSBANDRY —— BILL’S PROVISIONS. This part provides that an implement of husbandry (a vehicle or equipment used in agricultural production) has the same feet requirement as construction equipment. DIVISION VII —— AGRICULTURAL TOURISM —— BACKGROUND. Code chapter 673A, referred to as the “Iowa Agricultural Tourism Promotion Act” (Code section 673A.1), limits the liability of certain persons involved in agricultural tourism on a farm (agricultural tourism farm) when a cause of action by a visitor to the farm (agricultural tourist) alleges an injury, loss, or death due to any of the following: (1) an inherent risk of farming associated with a farming activity, (2) the failure of the agricultural tourist to comply with an instruction while visiting the agricultural tourism farm, or (3) the injury, loss, or death occurred at a place a reasonable person would not enter, which may be based on a posted notice (Code section 673A.4). DIVISION VII —— AGRICULTURAL TOURISM —— BILL’S PROVISIONS. This division expands the scope of the liability protection provided to persons engaged in agricultural tourism by amending definitions in Code section 673A.3. The division provides that a farm includes a tree farm, and that a farm crop includes a plant used for energy or decoration. The division also provides that a farm crop described as edible or ornamental produce includes maple syrup, mushrooms, and Christmas trees. Finally, a farm crop includes lumber, pulpwood, and cordwood. DIVISION VIII —— LAND USE —— BACKGROUND. Code chapter 335 S.F. _____ H.F. _____ provides for county zoning. Code section 335.27 provides that a county zoning ordinance does not apply to land, a farm house, farm barn, farm outbuilding, or other building or structure that is primarily adapted for an agricultural purpose. Code chapter 335.28 provides that a county cannot require a conditional use permit, special use permit, special exception, or variance for agricultural experiences on property primarily used for agricultural production. An agricultural experience is defined to include an agriculture-related activity, as a secondary use in conjunction with agricultural production, on a farm, which activity is open to the public. DIVISION VIII —— LAND USE —— BILL’S PROVISIONS. This division amends Code section 335.2 by providing that an agricultural purpose includes an agricultural tourism activity or event, value-added agricultural processing, direct-to-consumer marketing, or other farm-based enterprise that supports the economic viability of a farm. The division amends Code section 335.28 by providing that an agricultural experience includes tourism activities and events, such as recreational, entertainment, dining, celebratory, and overnight lodging opportunities offered on a working farm, so long as the farm’s primary use remains agricultural production. The division takes effect upon enactment. DIVISION IX —— PROPERTY TAX EXEMPTION —— QUALIFIED ABOVEGROUND STORAGE TANKS —— BACKGROUND. Generally, real property subject to property tax is assessed locally by either a county or city assessor (Code section 441.1). Code section 427A.2 provides that personal property is not subject to property tax and Code section 427A.1 provides a descriptive list of property that is subject to assessment and taxation as real property (buildings, structures, or improvement attached to the land, or placed upon a foundation whether or not attached to the foundation). The Code section also provides a description of real property that is not subject to assessment and taxation as real property. S.F. _____ H.F. _____ DIVISION IX —— PROPERTY TAX EXEMPTION —— QUALIFIED ABOVEGROUND STORAGE TANKS —— BILL’S PROVISIONS. This division provides another exemption applicable to a qualified aboveground storage tank that would otherwise be subject to assessment and taxation as real property. The aboveground storage tank must have a capacity of 91,000 gallons or less, regardless of its use. The division makes inapplicable a provision in the “State Mandates Act” (Code chapter 25B) that governs the funding of a property tax credit or exemption (credit or exemption). Specifically, Code section 25B.7 provides that if a state enacts legislation creating a credit or exemption, a political subdivision (county, city, or school district) is required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by a state appropriation. The division takes effect upon enactment and applies retroactively to assessment years beginning on or after January 1, 2025. DIVISION X —— EXCISE TAX ELIMINATION —— GRAIN HANDLING —— BACKGROUND. Code section 428.35 relates to the grain handling excise tax of one-fourth mill per bushel upon all grain handled (1/40 of 1 cent per bushel). For purposes of the excise tax, “handling or handled” means the receiving of grain at or in each elevator, warehouse, mill, processing plant, or other facility in this state in which it is received for storage, accumulation, sale, processing, or any other purpose. Generally, real property subject to property tax is assessed locally by either a county or city assessor (Code section 441.1). The amount of excise tax is calculated on the basis of a statement prepared by the department of revenue and filed by the person handling the grain and is due 60 days after the start of the calendar year. The statement records the total number of bushels handled by the person during the prior calendar year. The excise tax is entered on the tax list of the taxing district and revenue collected from the excise tax is distributed to the various taxing authorities within the taxing S.F. _____ H.F. _____ district in the same manner as general property taxes. DIVISION X —— EXCISE TAX ELIMINATION —— GRAIN HANDLING —— BILL’S PROVISIONS. This division eliminates the special excise tax provision on the handling of grain on January 1, 2027, and the excise tax is no longer assessable for grain handled on or after that date. The division makes inapplicable a provision in the “State Mandates Act” that governs the funding of a property tax credit or exemption. DIVISION XI —— SALES AND USE TAX EXEMPTION —— HONEYBEES —— BACKGROUND. Code chapter 423 provides for Iowa’s streamlined sales and use tax provisions. The state sales tax is imposed on the sales price of all sales of tangible personal property and from the furnishing of enumerated services sold at retail to the ultimate consumer or user of the property or services (Code section 423.2). As a complement to the sales tax, the use tax is imposed on the purchase price of all tangible personal property or enumerated services purchased for use in Iowa and used in Iowa. There are a number of exemptions to the sales tax and, with a few exceptions, the same exemptions apply to the use tax (Code section 423.5). DIVISION XI —— SALES AND USE TAX EXEMPTION —— HONEYBEES —— BILL’S PROVISIONS. This division provides a new sales and use tax exemption for the sale of honeybees. DIVISION XII —— INCOME TAX EXEMPTION —— BACKGROUND. Code chapter 422 provides for an Iowa income tax imposed on taxable income of individuals who are residents and nonresidents of this state (Code section 422.5). The Iowa individual income tax is calculated based on the taxpayer’s federal adjusted gross income, with designated adjustments including subtractions, that determine net income in order to compute state tax liability (Code section 422.7). PART A —— INCOME TAX EXEMPTION —— FARM TENANCIES —— BACKGROUND. A retired farmer leasing real property under a farm tenancy agreement may qualify as an eligible individual electing to subtract (exclude) rent payments from the S.F. _____ H.F. _____ computation of net income (Code section 422.7). In order to make this election, the retired farmer must either be disabled or at least 55 years old. In addition, the retired farmer must have materially participated in a farming business for 10 years in the aggregate, and held the leased property for 10 years (Code section 422.17). A farm tenancy agreement is a writing that creates a leasehold in which the owner-lessor transfers that property to a tenant-lessee for farming including the production of a crop or livestock (Code chapter 562) in exchange for receiving a rent payment, including on a cash or commodity share basis. The eligible individual is prohibited from claiming a duplicative tax adjustment under (1) the capital gains exemption for the sale of real property used in a farming business (Code section 422.7(13)), or (2) the beginning farmer tax credit for the lease of agricultural assets (Code chapter 16, subchapter VIII, part 5, subpart B). PART A —— INCOME TAX EXEMPTION —— FARM TENANCIES —— BILL’S PROVISIONS. This part allows a retired farmer to exclude net income because a specific legal entity rather than the retired farmer is the holder of the farm tenancy (leased property). An individual who organizes and operates a business under one of several types of recognized legal or equitable entities may shield personal assets from creditors while income received by such entity is attributed (passes through) to the individual. Specifically, the amended provision applies to net income received by a partnership (general or limited), an S corporation, or a trust or estate (presumably subject to the restrictions of Code chapters 9 and 9I). In addition, the part expressly recognizes another pass-through entity referred to as a “disregarded entity” (DRE). Such an entity must be recognized under state law (e.g., a limited liability company or “LLC”). The equity interest (e.g., a membership interest in an LLC) must be owned by a single individual or a spousal couple. Income received by the DRE passes through the entity to the individual or spousal couple. The part provides that S.F. _____ H.F. _____ in the case of a DRE or grantor trust, the net income is deemed to be distributed to the sole owner. The part takes effect January 1, 2027, and applies to tax years beginning on and after that date. PART B —— VETERINARY PRACTICE —— BACKGROUND. Code section 256.226 establishes a rural veterinarian loan repayment program administered by the college student aid commission. The purpose of the program is to provide for the repayment of a student loan to an individual who agrees to practice for four years as a licensed veterinarian in a rural area referred to as a rural service commitment area or a veterinary shortage area pursuant to a loan repayment agreement. The amount of repayment cannot exceed $15,000 annually or a total of $60,000 or the amount of the outstanding eligible loan. PART B —— VETERINARY PRACTICE —— BILL’S PROVISIONS. This part allows a licensed veterinarian participating in the rural veterinarian loan repayment program to exclude net income attributable to loan payments received under the program, subject to the restrictions provided in the program. The amount subject to the exclusion cannot exceed $15,000 per tax year, and an aggregate of $60,000 for all tax years. However, in any case, the excluded amount cannot exceed the amount of the outstanding eligible loan.

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Other Sponsors (1)

Committee report approving bill, renumbered as HF 2340. (on 02/06/2026)

Official Document