Senate Study Bill 1247 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON DAWSON) A BILL FOR An Act relating to pandemic relief by excluding certain 1 COVID-19 related grants from the individual and corporate 2 income taxes, and including effective date and retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2786XC (4) 89 jm/jh

S.F. _____ Section 1. Section 422.7, subsection 62, Code 2021, is 1 amended to read as follows: 2 62. a. Subtract, to the extent included, the amount of 3 any financial assistance qualifying COVID-19 grant provided to 4 an eligible small issued to an individual or business by the 5 economic development authority under the Iowa small business 6 relief grant program created during calendar year 2020 to 7 provide financial assistance to eligible small businesses 8 economically impacted by the COVID-19 pandemic , the Iowa 9 finance authority, or the department of agriculture and land 10 stewardship . 11 b. For purposes of this subsection, “qualifying COVID-19 12 grant” includes any grant identified by the department by rule 13 that was issued under a grant program administered by the 14 economic development authority, Iowa finance authority, or 15 the department of agriculture and land stewardship to provide 16 financial assistance to individuals and businesses economically 17 impacted by the COVID-19 pandemic. 18 c. The economic development authority, Iowa finance 19 authority, or the department of agriculture and land 20 stewardship shall notify the department of any COVID-19 grant 21 program that may qualify under this subsection in the manner 22 and form prescribed by the department. 23 d. This subsection is repealed January 1, 2024, and does not 24 apply to tax years beginning on or after that date. 25 Sec. 2. Section 422.35, subsection 30, Code 2021, is amended 26 to read as follows: 27 30. a. Subtract, to the extent included, the amount of 28 any financial assistance qualifying COVID-19 grant provided 29 to an eligible small issued to a business by the economic 30 development authority under the Iowa small business relief 31 grant program created during calendar year 2020 to provide 32 financial assistance to eligible small businesses economically 33 impacted by the COVID-19 pandemic , the Iowa finance authority, 34 or the department of agriculture and land stewardship . 35 -1- LSB 2786XC (4) 89 jm/jh 1/ 3

S.F. _____ b. For purposes of this subsection, “qualifying COVID-19 1 grant” includes any grant identified by the department by rule 2 that was issued under a grant program administered by the 3 economic development authority, Iowa finance authority, or 4 the department of agriculture and land stewardship to provide 5 financial assistance to businesses economically impacted by the 6 COVID-19 pandemic. 7 c. The economic development authority, Iowa finance 8 authority, or the department of agriculture and land 9 stewardship shall notify the department of any COVID-19 grant 10 program that may qualify under this subsection in the manner 11 and form prescribed by the department. 12 d. This subsection is repealed January 1, 2024, and does not 13 apply to tax years beginning on or after that date. 14 Sec. 3. EFFECTIVE DATE. This Act, being deemed of immediate 15 importance, takes effect upon enactment. 16 Sec. 4. RETROACTIVE APPLICABILITY. This Act applies 17 retroactively to March 23, 2020 for tax years ending on or 18 after that date. 19 EXPLANATION 20 The inclusion of this explanation does not constitute agreement with 21 the explanation’s substance by the members of the general assembly. 22 This bill relates to pandemic relief by excluding certain 23 COVID-19 related grants from the individual and corporate 24 income taxes. 25 The bill excludes from the calculation of Iowa individual 26 and corporate income tax any qualifying COVID-19 grant issued 27 to an individual or business by the economic development 28 authority, the Iowa finance authority, or the department of 29 agriculture and land stewardship. 30 Under the bill, a “qualifying COVID-19 grant” includes 31 any grant identified by the department of revenue by rule 32 that was issued under a grant program administered by the 33 economic development authority, Iowa finance authority, or 34 the department of agriculture and land stewardship to provide 35 -2- LSB 2786XC (4) 89 jm/jh 2/ 3

S.F. _____ financial assistance to individuals and businesses economically 1 impacted by the COVID-19 pandemic. 2 Under current law, financial assistance grants provided to 3 small businesses by the economic development authority under 4 the Iowa small business COVID-19 relief grant program are 5 excluded from the calculation of Iowa individual and corporate 6 income tax. 7 The COVID-19 grant income tax exclusion provided in the bill 8 is repealed on January 1, 2024, and does not apply to tax years 9 beginning on or after that date. 10 The bill takes effect upon enactment and applies 11 retroactively to March 23, 2020, for tax years ending on or 12 after that date. 13 -3- LSB 2786XC (4) 89 jm/jh 3/ 3