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2021 Legislative Session Comes to a Close

Archived Industry News:2021 Legislative Session Comes to a Close

Last Updated: 5/21/2021 1:45 PM

2021 Legislative Session Comes to a Close

The Iowa Legislature adjourned the 2021 session just before midnight on May 19 — nearly three weeks past the scheduled adjournment date. In a session marked by uncertainty due to the COVID-19 pandemic, the Legislature focused on a few key priorities and action was muted in many other policy areas.

  • Despite the limited scope of legislation advanced, the Iowa Bankers Association did pass or help pass meaningful legislative changes, made progress on several important policy priorities and stopped legislation harmful to the banking industry. One key piece of legislation that will impact the banking banking industry is SF 619, which deals with tax and economic growth policy, was the centerpiece legislation of this legislative session. The bill was spearheaded by Gov. Kim Reynolds and passed through the House and Senate in the closing hours of the session. It contains a number of issues supported by the IBA. The bill:
  • Eliminates the 2018 revenue growth triggers, which will ensure the full implementation of the 2018 tax legislation beginning in tax year 2023.
  • Couples Iowa with Section 168(k) federal bonus depreciation and ensures Iowa remains uncoupled from Section 163(j), which preserves expensing changes put into Iowa Code in 2020.
  • Establishes a Manufacturing 4.0 grant program. Eligible recipients would receive up to $75,000 in a matching grant to bring Manufacturing 4.0 technology investments to small manufacturing.
  • Exempts COVID-19 grants issued by certain state agencies from income tax.
  • Implements Paycheck Protection Program equity regarding income tax exemptions and deductions for all taxpayers who have a forgiven PPP loan regardless of when received.
  • Phases out and eliminates the inheritance tax over four years.
  • Expands the amount of money that can flow into the Housing Trust Fund each year from $3 million to $7 million.
  • Allows the Iowa Economic Development Authority to consider the creation of a child care facility as bonus criteria when a project is being considered under the High Quality Jobs program.
  • Increases income threshold from $45,000 to $90,000 for the early childhood and child and dependent care tax credits.
  • Lowers IEDA’s tax credit cap under the High Quality Jobs program to $70 million.
  • Increases the workforce housing tax credit program from $25 million to $40 million for fiscal year 2022 and $35 million thereafter. It also allocates $17.5 million to the small city set-aside portion of the program beginning in fiscal year 2023 to improve housing stock in more rural parts of Iowa.
  • Phases out and ends the commercial and industrial property tax backfill payments to local governments beginning in fiscal year 2023. Jurisdictions that have seen their tax base grow faster than the statewide average will see their backfill end over a four-year period. Jurisdictions that haven’t will have their backfill end over seven years.  
  • Imposes telehealth parity for mental health services.
  • Phases out the county mental health property tax levy, shifting funding responsibility for mental health services from counties to the state. This is an estimated $100 million property tax reduction.
  • Provides guidance for a Downtown Loan Guarantee Program. Under the program, IEDA would guarantee loans meeting the following eligibility requirements: the loan finances an existing downtown resources center, community catalyst building, remediation project or an existing Main Street Iowa challenge grant project; is used for rehab, acquisition or refinancing costs associated with the project; 25% of the project cost is for construction or renovation; includes a housing component; the loan is made by a federally insured financial institution; it does not reimburse the borrower for working capital or operations; and meets certain design reviews. The guarantee is up to 50% of a loan amount up to $500,000; for loans greater than $500,000, IEDA can guarantee up to $250,000. Money for the program will be applied for through the U.S. Treasury Department's State Small Business Credit Initiative.

Read a detailed summary on IBA priority legislation.

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