dustin-hite-2021

The House Ways and Means Committee this week passed Senate File 364 with an amendment according to District 79 Representative Dustin Hite. He says the bill provides three important pandemic related tax exemptions.

“Collecting tax on pandemic related payments to Iowa’s small businesses and families is not the right the thing to do and not the right thing for Iowa,” Hite said.

First— Hite says the legislation makes a fix for fiscal year filers related to the federal paycheck protection program.

“Current law, for the tax year 2020 and later, Iowa law fully conforms with the federal treatment of forgiven paycheck protection program loans and excludes such amounts from net income and allows certain deductions for business expenses paid using those loans,” Hite says. “For fiscal-year filers who received paycheck protection program loans during the 2019 tax year, current law excludes such amounts from net income, but does not allow certain deductions for business expenses paid using those loans. The bill fully conforms with federal law for those fiscal-year filers who previously were excluded from such conformity and allows such filers to take business expense deductions using federal paycheck protection program loan proceeds that were forgiven. This is crucial equity treatment for our Iowa businesses.”

Second—, he says the bill exempts from income tax any qualifying COVID-19 grant issued to an individual by the economic development authority, the Iowa finance authority, or the department of agriculture and land stewardship.

“A qualifying COVID-19 grant includes any grant identified by the department of revenue by rule that was issued under a grant program administered by the economic development authority, Iowa finance authority, or the department of agriculture and land stewardship to provide financial assistance to individuals or businesses economically impacted by the COVID-19 pandemic. Under current law, financial assistance grants provided to small businesses by the economic development authority under the Iowa small business COVID-19 relief grant program are already excluded from the calculation of Iowa individual and corporate income tax. This provision is extremely important to Iowa’s businesses and farmers,” Hite said.

The bill would also exempt the extra $600 of federal pandemic unemployment compensation received pursuant to the federal CARES ACT from income tax.