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Bill Number: SF619
Title: Omnibus Tax Bill - Tax Cuts, Mental Health Funding, Backfill Repeal
Description:

Divisions

1.       Trigger Repeal– Removes the benchmark requirements to allow the income tax cuts passed in 2018 to tax effect next year.

2.       Child Dependent and Development Tax Credits– Increase income threshold from $45,000 to $90,000. Retroactive to 1/1/21

3.       COVID-19 Grants– Excludes such grants (from IEDA, IFA or IDALS) from Iowa income taxes.  Retroactive to 3/23/20.

4.       Federal PPP Fixto allow FY2019 filers the same business expense deductions granted to FY2020 filers.

5.       Estate Tax Repeal– Eliminates over a 2+year period the State’s Inheritance Tax by both reducing the rate and increasing the exemption and then repeals it altogether effective 01/01/2025.

6.       State Housing Trust Fund- Raises the State Housing Trust Fund cap from $3 million to $7 million.

7.       High Quality Jobs Eligibility– Allows IEDA to consider as an eligibility factor whether or not a proposed project will include a licensed child care center for employees.

8.       Telehealth– Requires health insurance plans to pay equally for services delivered to a person with a mental health condition, whether it is done in-person or via telehealth.  This only applies to state-regulated health plans, not Medicaid and very large self-insured plans that are regulated by the Federal government.

9.       High Quality Jobs and Renewable Chemical Production Cap– Lowers the annual aggregate cap for High Quality Jobs Tax Credit programs from $105 million to $70 million. Lowers the cap on the Renewable Chemical Production Tax Credit program from $10 million to $5 million.

10.   High Quality Jobs Eligibility– Prevents companies from qualifying for High Quality Job Program assistance for a project while they are simultaneously reducing operations at another site.

11.   Manufacturing 4.0- Creates a Manufacturing 4.0 investment fund for eligible manufacturers.

12.   Energy Infrastructure Revolving Loan Fund - Prohibits the Iowa energy center from initiating any new loans after June 30, 2021 and requires that all loan payments received after that date be transferred to the new energy infrastructure revolving loan fund. 

13.   Workforce Housing Tax Credit– Raises the program cap for one year from $25 million to $40 million, and raises the small city portion from $10 million to $12 million. After that year, the cap would move to $35 million with $17.5 million allowed for small cities. The one year surge in the overall program is designed to clear the backlog of larger city projects, similar to what was done with the rural setaside a couple years ago.

14.   Brownfield/Grayfield Program– Extends the program by 10 years (to 6/30/2031) and raises the cap on the program from $10 million to $15 million.

15.   Downtown Loan Guarantee Programcreated to encourage downtown businesses and banks to reinvest and reopen following the COVID-19 pandemic.

16.   Disaster Recovery Housing Assistance Program and Fund– Creates and funds the Disaster Recovery Housing Assistance program for the State.  Includes directives for departments on putting the program together for homeowners and renters and requires a report back to the Legislature.

17.   Bonus Depreciation - Conforms with the federal government’s allowance for businesses to declare a bonus depreciation on equipment and capital assets in the first year.

18.   Business Interest Deduction – Makes changes to allow the bonus depreciation in Division 17 to not negatively affect a business’s federal interest deduction limitation.

19.   Beginning Farmer Tax Credit Expansion– Makes a number of changes to the program.

20.   Promotional Play – Clarifies a gaming establishment’s taxes owed on receipts that come from wagering that is the result of promotions as opposed to normal wagering.

21.   Targeted Jobs- Extends the Targeted Jobs Withholding Credit Program by 3 years (to June 30, 2024).

22.   Food Banks– Provides a sales tax exemption to nonprofit food banks.

23.   Volunteer Income Tax Credit- Raises the annual income tax credit from $100 to $250 for Reserve Peace Officers and Volunteer Firefighters and Emergency Medical Services personnel.

24.   Income Tax Checkoffs– Makes changes to the income tax checkoffs on the paper tax form.

25.   Mental health funding – Changes the way the regional mental health and disability services (MHDS) system is funded, from a system based on county property taxes to a 100.0% state-funded system, effective upon enactment.  The current MHDS system is a regional system managed by the counties, with State oversight. Counties finance a portion of the system with a county property tax levy that is capped at a per capita dollar amount for each of the 14 MHDS Regions, totaling $116.8 million for FY 2021.  The bill eliminates the MHDS property tax levy over a two-year period, with all county levies reduced to no more than $21.14 per capita for FY 2022 and reduced to $0 beginning in FY 2023. A new MHDS Regional Services Fund is created to replace these funds through performance-based contracts with the Department of Human Services.  The total per capita for FY 2022 is $37 ($15.86 state, $21.14 county property taxes). In FY 2023 and beyond, the state funds the entire per capita amounts: $38 per capita (FY 2023), $40 per capita (FY 2024), $42 per capita (FY 2025), and beginning in FY 2026 and beyond, the previous year’s appropriation multiplied by a growth factor (based on sales tax growth) up to 1.5%.  The bill creates an incentive fund using $3 million for FY 2022, and any per capita funds returned to state because a region has reserves in excess of the allowed balances (regional fund balances are not to exceed 40% in FY 2022, 20% in FY 2023, and 5% FY 2024 and beyond).  Regions would have quarterly per capita payments withheld in an amount that they exceed their reserve allowance (that amount is deposited in Incentive Fund).  Regions can apply for incentive funds if their per capita fund is not sufficient to pay for budgeted services. Polk County is allowed to transfer both funds and in-kind services from Broadlawns Hospital for fiscal years 2021-2024.  This bill reduces the $116.8 million in levies to $66.7 million in FY 2022 and $0 beyond.  Requires regions report back to DHS and Legislature on transition and requires a study of the efficiency of each region in meeting core services.  Another bill (HHS Budget) allows Polk County to transfer funding from other sources to support these services if state funds are not sufficient, but it is only for one year (FY 2022).

26.   Backfill Phaseout- Repeals the property tax backfill to local governments. The bill would cap it as of FY2022 and then repeal it as of July 1, 2029.

27.   School Property Tax- Raises the school foundation percentage from 87.5% up to 88.4%. This would lower property taxes since the part of school funding that would need to come from local property taxes would fall from 12.5% to 11.6%.

28.   Elderly Property Tax Credit- Modifies the Elderly Property Tax Credit eligibility to make the credit available to applicants over 70 years of age who have a household income of less than 250 percent of the federal poverty rate.

LSA Summary - https://www.legis.iowa.gov/docs/publications/FN/1221012.pdf

Takes effect 7/1/21.

Status: Signed
Recent Action: 6/16 - Signed by Governor
Position
Monitor/Undecided


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Last Modified: 06/16/2021