Iowa House Bill HF2503

Iowa 2023-2024 Regular Session

• Introduced: 2/14/24
• Refer: 2/14/24

Caption

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 2666.)

Impact

The passage of HF2503 is expected to provide significant tax relief for retired farmers participating in farm tenancy agreements who previously may not have benefitted from similar exclusions if their income was passed through entities rather than received directly. This retroactive application to income earned from January 1, 2023, means that those affected may receive adjustments in their tax responsibilities for the previous year, potentially alleviating financial burdens for those in the agricultural community.

Summary

House File 2503 seeks to amend regulations concerning the farm tenancy net income exclusion available against individual income tax in Iowa. The main goal of the bill is to broaden the eligibility of income earned from farm tenancy agreements for various types of entities, which includes partnerships, S corporations, trusts, and disregarded entities. The legislation allows such income to be treated as if it were passed directly to eligible individuals, thereby granting them the same tax benefits available to direct income recipients from farm tenancy agreements.

Contention

Notably, while the bill is anticipated to support retired farmers, discussions surrounding it may highlight varying opinions on tax equity and fairness among different groups. Concerns could arise over whether such exclusions disproportionately favor certain entities over others, and whether the state tax base will be affected by these modifications. There may also be particular interest from advocacy groups focused on agriculture, taxation, and economic development, as they gauge the implications for business operations within the state.