This bill amends Section 422.7 of the Iowa Code to expand the eligibility for the farm tenancy net income exclusion against the individual income tax. It allows net income from farm tenancy agreements earned by entities taxed as disregarded entities, partnerships, S corporations, trusts, or estates to qualify for the exclusion. The amendment specifies that eligible individuals can receive this income through distributions from these entities, similar to how they would if the income were received directly from the farm tenant. Additionally, it clarifies that net income accruing to a grantor trust or a disregarded entity is considered distributed to its sole owner if the owner has the right to withdraw or compel distribution of that income.

The bill takes effect immediately upon enactment and has retroactive applicability to tax years beginning on or after January 1, 2024. This change aims to provide more flexibility and inclusivity for individuals receiving income from farm tenancy agreements, thereby enhancing the benefits available to retired farmers and other eligible individuals.

Statutes affected:
Introduced: 422.7