2023 Legislative Session: Bills Impacting Agriculture

Tax

HF 352 – A Voluntary Pass-Through Entity Income Tax (PTE tax) to Get Around SALT Deduction Limit.

With this new law, Iowa joins the ranks of at least 32 other states with an optional entity-level tax on pass through income. Other bills are pending around the country. This option is a workaround for the $10,000 state and local tax (SALT) deduction limit implemented by the Tax Cuts and Jobs Act of 2017 (set to expire in 2026). Under this new provision, partnerships and S corporations can elect to be taxed at the entity level in Iowa. The state tax is calculated and paid at the entity level, which creates a federal deduction, not limited by the SALT deduction limit. This means that the federal business income passed through to the owners is reduced by the amount of Iowa tax paid. The law also creates a corresponding state tax credit that compensates the owners for the tax paid. This approach was blessed by IRS Notice 2020-75.

Passed 04/26/2023; signed by Governor 05/11/2023. Effective retroactively beginning 01/01/2022.

HF 718 – Property Tax Exemption for Homestead Amount Increased if Owner 65+ or Veteran.

In order to combat the rise in property tax assessment values that many homeowners saw this year, Iowans aged 65+ are eligible for a property tax exemption worth $3,250 for the assessment year beginning Jan. 1, 2023. In subsequent years, the exemption doubles to $6,500. The military service property tax exemption will increase from $1,852 to $4,000, starting with the assessment year beginning on Jan. 1, 2023. An exemption is a reduction in the taxable value of the property rather than a direct reduction in the amount of property tax you pay. The Iowa Department of Revenue has amended the Homestead Tax Credit Exemption (54-028) form to allow claimants to apply for the new exemption. Applications are due July 1 to the local assessor. If the exemption is granted, the exemption will be allowed for future years without future filing as long as the claimant continues to qualify.

Passed 05/02/2023; signed by Governor 05/04/2023. Effective for 2023 assessment year.

Estate Planning

HF 397 – Remote Notarization and Witness Signing of Wills and Codicils Allowed.

Iowa law requires that two witnesses observe the signing of a will. Prior to this law, the witnesses needed to be physically near the testator to observe the signing of the will. This law clarifies that remote technology, such as Zoom or Microsoft Teams, can allow a witness to be in the testator’s presence when the technology allows the witness to see and hear the testator in real time. Further, notaries using remote notarization will need to inform the Iowa Secretary of State and abide by any technology requirements imposed. The law also ensured that wills and codicils dated between April 2, 2020, and February 15, 2022, that were executed through remote signing are valid as long as procedure followed the protocols found within the Governor’s proclamation of disaster emergency dated March 22, 2020.

Passed 4/25/2023; signed by Governor 06/01/203. Effective 07/01/2023; Applicability date for COVID protocols 04/02/2020 – 02/15/2022.

HF 583 – Decedent Vehicle Transfer When No Probate Administration Clarified.

Federal law requires that there is an odometer disclosure statement completed when a vehicle is transferred. Prior to this law, it was unclear who was authorized to complete this statement when the owner was dead, and no personal representative was appointed because no probate case was opened. This law clarifies that the person entitled to receive the vehicle is the appropriate individual to complete the statement and is considered an agent of the deceased. The law requires this person to sign an affidavit stating that they are entitled to possession of the vehicle, that no probate case has been opened, and that they will personally indemnify creditors of the decedent up to the value of the motor vehicle.

Passed 05/01/2023; signed by Governor 06/01/2023. Effective retroactively beginning 07/01/2022.

HF 111 – No Transfer Tax on Real Estate Transfers to Trust Beneficiaries.

Iowa Code § 428A.1 imposes a tax on the conveyance of real estate. Certain transactions are exemption from this tax under Iowa Code § 428A.2. Prior to this year, conveyances that were accomplished because a decedent directed it in their will were exempt from transfer tax, but transfers from a trust were not. The law now extends the transfer tax exemption to deeds transferring distributions of real estate to beneficiaries of a trust when they are conveyed without beneficiary paying for the real estate.

Passed 05/01/2023; signed by Governor 06/01/2023. Effective 07/01/2023.

Transportation

HF 335 – Restricted Commercial Driver’s License Available to Those in A Farm-Related Service Industry.

Iowa law did not take full advantage of the available restricted Commercial Driver’s License (CDL) allowable at the federal level. As a result, certain federally eligible individuals such as custom harvesters, farm retail outlets, and suppliers were not eligible for restricted CDLs in Iowa. This law will allow more individuals in the agricultural community to be eligible for a restricted CDL. A CDL knowledge and skills test is not required to obtain a restricted CDL. It is anticipated that more individuals will obtain the restricted CDL, and this will benefit the agricultural industry during peak planting and harvest season.

Passed 04/19/2023; signed by Governor 04/25/2023. Effective 07/01/2023.

SF 228 – Commercial Motor Vehicle Damages Capped and Employer Liability Limited.

Sometimes when vehicle accidents occur, lawsuits happen. The cost and probability of lawsuits directly impact how much insurance costs. The Iowa Legislature is attempting to keep business vehicle insurance premiums lower by passing this law. This law caps noneconomic damages, such as emotional distress or pain, to $5 million per person. There are exceptions to the cap when the operator of the commercial vehicle is committing a felony, drunk, or otherwise acting recklessly. This law also prevents plaintiffs from suing an employer of an employee operating a commercial vehicle based on negligent hiring when the employer admits the employee was acting in the scope of their employment when the accident occurred. This provision is meant to expedite the litigation process.

Passed 04/17/2023 signed by Governor 05/12/2023. Effective 07/01/2023.

HF 666 – New Definition for Renewable Diesel

This bill is the omnibus bill for the Iowa Department of Agriculture and Land Stewardship. Division III addresses motor fuel standards and applications. The law now differentiates between biodiesel and renewable diesel. Further, the department is now responsible for inspection of electric charging stations. Previously, the Iowa Department of Revenue was responsible.

          Passed 05/03/2023; signed by Governor 06/01/2023. Effective 07/01/2023.

Dairy

SF 315 – Sale of Raw Milk Legalized.

This law authorizes the sale of unpasteurized milk to the public. Prior to the passage of this law, the sale of raw milk was not allowed in Iowa. Instead, only Grade “A” pasteurized milk and milk products could be sold to the final consumer. However, now dairies that follow this law can sell raw milk to consumers under Iowa Code Chapter 195. Safety limits placed in the bill require that milk must be sold within seven days after production, routine veterinary visits must occur, and records of coliform count and standard plate count of dairy animals must be kept and made available to consumers. Milk cannot be resold, sold, or offered at a food establishment, farmers market, or by a home food processing establishment.

Passed 04/17/2023; signed by Governor 05/11/2023. Effective 07/01/2023.

HF 700 – Dairy Innovation Fund Established for Milk Processing.

The number of Iowa dairies have declined over the past few years. In order to revitalize smaller dairy operations and increase craft industries and local food availability, the law creates a dairy innovation fund. The Iowa Department of Agriculture and Land Stewardship will establish a program that makes funds available to expand, refurbish, or establish a milk plant, mobile dairy processing units, dairy refrigeration facilities or dairy freezer facilities to Iowa dairies.

Passed 05/02/2023; signed by Governor 05/26/2023. Effective 07/01/2023.

Livestock

HF 185 – Butchery Innovation and Revitalization Program Expanded.

Two years ago, the Iowa Legislature established the Butchery Innovation and Revitalization Program with the goal of helping meat lockers in small towns. This year, the law changed and allows meat locker owners to have fewer than 75 full-time nonseasonal employees. Prior to this, the program was only available to those meat lockers that had employed fewer than 50 full-time, nonseasonal employees.

Passed 05/05/2023; signed by Governor 05/18/2023. Effective 07/01/2023.

HF 670 – Veterinary Scope of Practice Changes Made.

To help ease the effect of the veterinary shortage in rural areas, certain animal-care tasks and treatments can be delegated by licensed veterinarians to newly-defined “veterinary auxiliary personnel,” including veterinary assistants, registered veterinary technicians, veterinary students, veterinary technician students, or graduates of a foreign college of veterinary medicine who does not have a veterinary license or temporary permit. The licensed veterinarian must supervise auxiliary personnel and cannot delegate diagnostic, prescription, or surgery tasks to any veterinary assistant, veterinary technician student, or registered veterinary technician. In conjunction with this change, the law creates requirements and a certificate of registration for registered veterinary technicians. Board of Veterinary Medicine rules will clarify when a licensed veterinarian must exercise immediate supervision, direct supervision, or indirect supervision for different auxiliary personnel. The new law also expands the definition of veterinary medicine to include acupuncture, acupressure, and chiropractic care for animals. This expanded definition does not include animal massage. The law makes it a fraudulent practice, subject to fines and penalties, to practice veterinary medicine without a license or temporary permit.

Passed 04/24/2023; signed by Governor 06/01/2024. Definition changes effective 07/01/2023; oversight provision effective 07/01/2024.

SF 473 – Livestock Health Advisory Council Will Now Include One Turkey Producer.

The livestock health advisory council was established by law in 1977. Various livestock associations appoint members to the council who work with ISU’s veterinary school to ensure research is being done on timely livestock diseases. The Legislature updated this law to specify that members of the council cannot receive compensation for the appointment to the council. Further, funds appropriated from the state to the council must go to research for diseases affecting livestock. Finally, for the first time, the Iowa Turkey Federation will appoint a member.

Passed 04/04/2023; signed by Governor 04/28/2023. Effective 07/01/2023.

Warehouse

HF 666 – Grain Warehouse Changes 

This bill is the omnibus bill for the Iowa Department of Agriculture and Land Stewardship. Division II of this bill addresses changes applicable to grain warehouses and their patrons. The bill increases the allowable duration of a credit-sale contract to 15 months from the date the contract is executed. Previously, these contracts could only be for 12 months. Another change is that a warehouse does not need to issue a warehouse receipt within one year of delivery of grain, instead the person depositing the grain must request a warehouse reciept be issued. Finally, the fiscal year of the Grain Indemnity Fund will begin on September 1 of each year. Previously, the fiscal year for the fund began July 1. The start dates of each quarter are therefore September 1, December 1, March 1, and June 1 for assessment purposes. The threshold for when the fees will no longer be collected remains at the $8 million benchmark. 

          Passed 05/03/2023; signed by Governor 06/01/2023. Effective 06/01/2023 (Division II only).

Real Estate

HF 634 – Only DNR Certified Individuals Can Inspect Private Sewage Disposal for Required Time-of-Transfer Reports.

Iowa law requires that a sewage disposal system serving a building where a person resides, congregates, or is employed must be inspected prior to any transfer of ownership. This law clarifies the inspection must be performed by someone certified by the Department of Natural Resources. Any fraudulently filed reports are subject to a $5,000 civil penalty and one year suspension of certification.

Passed 05/01/2023; signed by Governor 06/01/2023. Effective 07/01/2023.

HF 317 – Agricultural Property Outside City Limits Does Not Need Natural Resource Commission Permission to Kill Specific Nuisance Animals.

Iowa racoon populations have exploded in recent years due to decreased demand for their fur. Recognizing that this increase in population has increased farmers’ and rural landowners’ headaches, the Legislature has passed a law that allows raccoons, opossums, or skunks that are on agricultural zoned property to be trapped or shot without prior Natural Resource Commission permission. Any traps used must be dog-proof. One can dispose of the carcass on the property or relinquish it to a representative of NRC. Endangered subspecies, such as the spotted skunk, are protected and cannot be caught or killed. Under Iowa Code § 481A.87 any other fur-bearing animal cannot be hunted outside of a designated season or without prior NRC permission.

Passed 04/17/2023, signed by Governor 04/28/2023. Effective 07/01/2023.

SF 197 – Qualifications to Become Land Surveyor Revised.

This law relaxes the qualifications to become a land surveyor. With this law, a land surveyor must have two years of college with math and basic science, four years of practical experience, and pass written examinations. Written examinations can be taken before the four years of practical experience have been completed. Prior to this law, the land surveyor needed to have completed six years of practical experience, not taken the written examination until the six years were completed, and more narrow education requirements.

Passed 04/03/2023; signed by Governor 04/28/2023. Effective 07/01/2023.