Relating to the production, processing, distribution, and marketing of agricultural products, including by providing tax credits and making appropriations

DIVISION I —— BEGINNING FARMER TAX CREDIT PROGRAM. This bill amends the beginning farmer tax credit program which awards a tax credit to a taxpayer who transfers agricultural assets to a beginning farmer by an agricultural lease agreement. The transferred agricultural assets include agricultural land and improvements, as well as depreciable agricultural property. If the taxpayer and beginning farmer enter into an agreement on a fixed cash rent basis, the amount of the tax credit equals percent of the amount of the fixed cash rent payment for each year of years that the taxpayer is eligible to participate in the program. The bill provides that in the case of specialty crop acres, the amount equals percent of the amount of the fixed cash rent. The specialty crop acre is limited to the production of fruit, vegetables, tree nuts, dried fruits, or horticulture or nursery crops that may be consumed in an unprocessed state. DIVISION II —— RETIRED FARMER LEASE INCOME EXCLUSION. Commencing with tax years beginning on or after January 1, 2023, the bill excludes from the individual income tax a retired farmer’s total net income received pursuant to a farm tenancy agreement covering real property held by the retired farmer for or more years, if the farmer materially participated in a farming business for or more years. A retired farmer is not eligible for the lease income exclusion unless the farmer is at least years of age and no longer materially participating in farming.7(21), as amended by another division of the bill, or the beginning farmer tax credit. The net income from a farm tenancy agreement earned by an individual is not eligible for the exclusion unless the tenant-lessee is a person that meets the definition of a qualified beginning farmer and the tenant-lessee is growing specialty crops on the land comprising the farm tenancy agreement. DIVISION III —— RETIRED FARMER CAPITAL GAIN EXCLUSION. The bill modifies the individual income tax capital gain exclusion for the sale of real property used in a farming business which otherwise would have gone into effect in tax year 2023, which was enacted in 2018 Iowa Acts, chapter 1161, section 113, and later modified in 2019 Iowa Acts, chapter 162. The bill repeals both 2018 Iowa Acts, chapter 1161, section 113, and 2019 Iowa Acts, chapter 162, and creates a new capital gain exclusion provision based upon the 2019 Iowa Acts, chapter 162, provisions, effective for tax years beginning on or after January 1, 2023. Under the provisions in 2019 Iowa Acts, chapter 162, section 1, which otherwise would have gone into effect during the 2023 tax year, a taxpayer who materially participates in a farming business for at least years and held real property used in such a business for at least years, may make a single lifetime exclusion election from the individual income tax of the capital gain of the sale of such property.77 who grows specialty crops. The bill modifies the term “materially participated” in a farming business to include a retired farmer if the retired farmer materially participated in a farming business for years or more, in the aggregate, prior to making the election to exclude the capital gain of the sale of real property used in a farming business. Under the bill, a retired farmer is not eligible for the capital gain exclusion if the retired farmer claims the beginning farmer tax credit in the same tax year. A retired farmer electing the capital gain exclusion is not eligible to elect to exclude retired farmer lease income in the same tax year or any succeeding tax year. The division takes effect January 1, 2023, and applies to sales consummated on or after that date.7(21) shall govern. DIVISION IV —— IOWA-GROWN FOOD TAX CREDIT., a grocery store) equal to percent of the sales price of food sold. The tax credit may also be claimed by a wholesaler equal to percent of the sales price sold to a nonprofit corporation. DIVISION V —— SPECIALTY CROPS —— APPROPRIATIONS. The bill appropriates moneys from the Iowa coronavirus fiscal recovery fund to the economic development authority (authority) for fiscal years 2022-2023 and 2023-2024 for purposes of supporting persons engaged in community-based initiatives to expand the capacity of operations engaged in processing, distributing, and marketing a specialty crop. A specialty crop includes a plant or part of a plant having commercial value which is intended for human or livestock use but does not include corn, grain sorghum, oats, soybeans, or wheat. In awarding moneys to an applicant, the authority must provide a preference to a beginning farmer or rancher or socially disadvantaged farmer or rancher. The authority must also provide a preference to an applicant who has been awarded matching moneys from an entity other than a state agency receiving funding under the federal American Rescue Plan Act. In establishing criteria to award grants and in selecting applicants to receive grants, the authority must cooperate with the department of agriculture and land stewardship.