Capital Clicks

Iowa House passes bipartisan COVID-19 tax relief bill

By: - March 3, 2021 4:41 pm

(Image by Anton Petrus/Getty Images)

The Iowa House unanimously passed a bill Wednesday to exclude some COVID-19 grants from taxable income.

The initial bill, Senate File 364, would allow businesses to exclude any Paycheck Protection Program loans from their net income. The House expanded the proposal Wednesday to also include federal pandemic unemployment assistance and state COVID-19 grants from the Iowa Economic Development Authority, the Iowa Finance Authority or the Department of Agriculture and Land Stewardship. Individuals or businesses who received any of these funds may subtract them from net income when filing state income taxes for 2020.

State unemployment payments will still be taxable, Rep. Brian Lohse, R-Bondurant, clarified in a floor debate on the bill. Iowa Workforce Development will be issuing new forms for Iowans affected by the change.

“We realize there’s probably never a way that we’re going to make them completely whole, either businesses or individuals,” Lohse said.

All told, the bill will represent $128 million of tax relief over the next two years, according to a report from the nonpartisan Legislative Services Agency. About $103 million will come from the taxpayer relief fund. The rest will come from the general fund.

The House unanimously passed the amended bill. Democrat Rep. Dave Jacoby, Coralville, said a COVID-19 relief bill should have come earlier in the session, especially as many Iowans have already completed their taxes.

“From my point of view, this should have been the first bill we did in January,” he said.

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Katie Akin
Katie Akin

Katie Akin is a former Iowa Capital Dispatch reporter. Katie began her career as an intern at PolitiFact, debunking viral fake news and fact-checking state and national politicians. She moved to Iowa in 2019 for a politics internship at the Des Moines Register, where she assisted with Iowa Caucus coverage, multimedia projects and the Register’s Iowa Poll. She became the Register’s retail reporter in early 2020, chronicling the impact of the COVID-19 pandemic on Central Iowa’s restaurants and retailers.