Tax Reforms to Provide Over $100 Million in Property Tax Relief, Income Tax Reductions, and Additional Opportunities for Young and Beginning Farmers
With the conclusion of the 2021 legislative session, the Iowa Farm Bureau Federation (IFBF), Iowa’s largest grassroots farm organization, applauds passage of several important bills, including historic tax reform that will benefit Iowa’s farm families and all Iowans.
The Iowa legislature passed Farm Bureau-supported tax legislation removing the burden of funding mental health services from the backs of Iowa property taxpayers. The legislation transitions mental health costs to an equitable funding source with the state assuming the full cost of the mental health system. The reform will result in dollar-for-dollar property tax relief for Iowans who have seen property taxes more than double in the past 18 years and aligns Iowa’s funding source with nearly every other state.
“This monumental shift moving the funding of mental health services from property taxpayers to the state’s general fund has long been a priority issue for Farm Bureau members as part of the organization’s ongoing efforts to protect property taxpayers,” said Craig Hill, president of the Iowa Farm Bureau. “We appreciate the hard work by the Iowa Legislature and the leadership of Gov. Reynolds to provide this needed relief to property taxpayers, which creates a more equitable funding system for mental health services in our rural communities.”
Iowa lawmakers also approved several other Farm Bureau-supported changes to state income tax policy that will benefit Iowans. The changes remove earlier-imposed triggers from the 2018 income tax reform bill, making it effective Jan. 1, 2023. The comprehensive tax revision will phase out the state’s inheritance tax over the next four years, with a complete phase out in 2025, and couples Iowa’s tax code to the federal tax code for bonus depreciation.
The tax policy revision also include improvements and expansions to the state’s Beginning Farmer Tax Credit Program, an effort that has been championed by IFBF for several years. The changes increase the number of years a landowner can rent to a beginning farmer participating in the program and allows a landowner to rent to multiple beginning farmers.
“We have worked to develop and grow opportunities for beginning farmers for many years to help alleviate the barriers to entry for Iowans looking to start their own farming operation,” said Hill. “Our members worked tirelessly two years ago to double the Beginning Farmer Tax Credit, and these new reforms are a welcome addition to that effort and will provide expanded opportunities for young and beginning farmers.”
The 2021 Legislature extended the sunset of Senate File 512, which provides long-term dedicated funding to farmers’ water quality efforts through Iowa’s Nutrient Reduction Strategy, a statewide strategy based on proven methods to enhance water quality. The measure extends the dedicated funding through 2039, laying the groundwork for Iowa farmers to expand proven practices improving water quality and soil health. The additional funding of more than $320 million dollars creates additional opportunities for farmers, landowners, and public and private partners to continue to advance the implementation of conservation practices that improve soil heath and water quality.
“Farmers are taking on the challenge of improving Iowa’s water quality, which is a long-term effort. We’ve seen growing enthusiasm and conservation efforts on farms across the state, which will be amplified with this extended commitment from the state,” said Hill. “We know the conservation efforts outlined in the Nutrient Reduction Strategy are yielding results, and this extended assurance of dedicated funding will allow us to continue making big strides.”
Legislators also approved a Farm Bureau-supported measure to allow driving privileges for youth working on a farm. The farm driving provision will provide important efficiencies for Iowa farm families by allowing young people who are 14-and-a-half and older and have already obtained their school permit to drive a passenger vehicle for farm work.
“Farm Bureau’s success during the 2021 legislative session shows the value of actively engaged members working with their locally-elected representatives to implement our priority issues,” Hill said. “It’s yet another example of the strength and effectiveness of our engaged grassroots process as we work to make a positive impact for Iowa agriculture, farm families, and our communities.”