Iowa Lawmakers Pass Pro-Small Business Bills to Keep Iowa’s Economy Strong
Below is a short summary of the 2021 victories enjoyed by small business owners.
SF 619 – Tax Omnibus Bill (Tax Reform)
The legislation is a massive win for Iowa small business. Coined the “Tax Omnibus bill,” this piece of legislation will save $1 billion for taxpayers, including small business owners, over the next 8 years.
Below are a few of the key tax highlights for this bill for small business.
Gov. Reynolds to sign bill into law Soon.
a. (Division 1) – Income Tax Reform
This section eliminates the 2018 revenue growth triggers which ensures the full implementation of the 2018 tax legislation beginning in tax year 2023. The top rate in Iowa will be reduced from 8.53% to 6.5%.
b. (Division 4) – PPP Conformity
This section Implements Paycheck Protection Program (PPP) equity regarding income tax exemptions and deductions for all taxpayers who have a forgiven PPP loan regardless of when they received it.
c. (Division 5) – Inheritance Tax Reform
This section proportionally reduces over a four-year period the rates of tax applicable to the state inheritance tax, beginning for estates of decedents dying on or after January 1, 2021.
For property passing from the estate of a decedent dying on or after January 1, 2021, but before January 1, 2022, there shall be imposed a rate of tax equal to the applicable tax rate in present statue, reduced by twenty percent, and rounded to the nearest one-hundredth of one percent. On or after January 1, 2024-2025 will be reduced by 80%. The bill then repeals the state inheritance tax and the state qualified use inheritance tax effective January 1, 2025.
d. (Division 17) – Bonus Depreciation
This section allows businesses to expense up to 100% of the cost of the qualifying asset in the purchasing year if they so choose. The Tax Cut and Jobs Act established the full expensing beginning for Tax Year (TY) 2018. SF 619 conforms to that code section retrospective to January 1, 2021.
Businesses can claim this deduction for TY 2021 & 2022, then the federal government phase out begins in TY 2023. For TY 2023 expensing of up to 80% is allowed, TY 2024 60%, TY 2025 40%, and TY 2026 20%.
Beginning in TY 2027 the “bonus” ends, and businesses will follow regular depreciation schedule.
e. (Division 25) – Property Tax Reform
This section phases out the mental health levy off of county property taxes and eliminates the levy completely in 2023. The elimination of the mental health levy will result in over $100 million dollars in property tax savings for all property owners. Mental health services will now be funded through the state’s budget.
HF 309 – Donor Privacy (Privacy Reform)
This bipartisan piece of legislation helps protect a small business owners’ freedom of speech from an overzealous government entity trying to infringe on those important first amendment rights. This legislation protects a small business owners’ personal information from being obtained without any relevant law enforcement-related necessity from a nonprofit or any other group a small business owner supports or has made a financial contribution. This legislation will ensure private information disclosed to government entities will not end up in the wrong hands, which can often times lead to harassment or economic retribution by those with opposing views.
Gov. Reynolds signed the bill into law on May 20, 2021.
HF 283 – Synthetic Urine (Workplace Safety)
This bipartisan legislation creates criminal penalties for those who would manufacture, market, distribute, sell, use or possess synthetic urine for the purposes of defrauding a drug or alcohol test. The penalties, a simple misdemeanor for a first offense and a serious misdemeanor for each subsequent offense, would also apply to those who expel their urine beforehand or use another person’s urine for the purposes of defrauding a drug or alcohol test. The legislation acts as a deterrent to cheating on tests and will increase the safety of workplaces.
Gov. Reynolds signed the bill into law on March 8, 2021.
