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SF 59

Registered agents-release of records.

2025 Regular Session

Expands the farm-tenancy income subtraction to include net income via pass-through entities when distributed to the individual; retroactive to 2024.

H:Died in Committee Returned Bill Pursuant to HR 5-4
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Bill Summary · SF 59

Summary — SF 59 (Introduced Jan 16, 2025)

Overview / Purpose

SF 59 amends the tax code provision in Section 422.7, subsection 14, paragraph e to clarify and broaden eligibility for an existing individual income tax subtraction/deduction for net income from a farm tenancy agreement. The bill treats net farm‑tenancy income that is earned by or flows through certain pass‑through entities (disregarded entities, partnerships, S corporations, trusts, estates) as eligible for the subtraction/deduction when an eligible individual receives or is entitled to receive that income through distributions. The bill takes effect upon enactment and applies retroactively to January 1, 2024, for tax years beginning on or after that date.

Note: the bill’s published title and subject (concerning county boundary procedures) appear inconsistent with the text, which addresses individual income tax treatment of farm‑tenancy income.

Key provisions

  • Replaces existing paragraph e of Section 422.7(14) with language that:

    • Allows net income from a farm tenancy agreement that is earned, received, or reported by an entity taxed as a disregarded entity, a partnership (for federal tax purposes), an S corporation, a trust, or an estate to qualify for the individual income tax election/deduction permitted under subsection 14.
    • Conditions eligibility on the eligible individual receiving or being entitled to receive the portion of net income through distributions from the entity (i.e., the individual must get the income through distributions to claim the subtraction/deduction), to the same extent as if the income were received directly from the farm tenant.
    • Treats net income accruing to a grantor trust or to a business entity that is a disregarded entity as having been distributed to its sole owner to the extent that the sole owner has the right to withdraw or compel distribution of such net income.

  • Effective date: immediate upon enactment.

  • Retroactivity: applies retroactively to January 1, 2024, for tax years beginning on or after that date.

Who is affected

  • Retired farmers (or other eligible individuals) who receive farm‑tenancy income that flows through:
    • Disregarded entities (e.g., single‑owner LLCs taxed as disregarded entities),
    • Partnerships,
    • S corporations,
    • Trusts (including grantor trusts) and estates.
  • State tax administration (to implement the rule and process retroactive claims/returns).
  • Potentially state general fund revenues (see Fiscal Impact below).

Potential impact

  • Tax treatment: Enables taxpayers to claim the farm‑tenancy income subtraction/deduction even when the income passes through entities, reducing taxable income for eligible individuals who receive such distributed income.
  • Retroactivity: May allow amended returns or credits for tax years beginning on/after Jan 1, 2024, producing tax reductions or refunds for eligible taxpayers.
  • Fiscal: Likely reduces individual income tax revenue to the extent eligible taxpayers claim the deduction; the bill text does not include an explicit fiscal note or dollar estimate.

Legislative status & timeline

  • Introduced: January 16, 2025 (referred to Ways and Means; also listed as referred to State and Local Government).
  • Committee actions: Subcommittee assignments (Driscoll, Bisignano, Dawson); 2025-01-30 — Committee report: “To pass as amended and re‑refer to Judiciary and Public Safety.”
  • Current status (as provided): Comm report: To pass as amended and re‑refer to Judiciary and Public Safety.
  • Sponsor: Representative/Senator Salmon (primary).
  • Companion bill: HF 531.

Observations / Notes

  • The bill text focuses on clarifying application of an individual tax subtraction for farm‑tenancy income passing through entities; the formal title and classification supplied with the request (counties/boundary changes) do not match the content and may reflect a clerical error in bill metadata.

Compiled from official sources — confirm details with the bill’s official record.

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