Current law allows a county to enact an ordinance to impose sales and use taxes
at the rate of 0.5 percent of the sales price or purchase price on tangible personal
property and taxable services. The county must use the revenue from the taxes for
property tax relief. The bill allows a county to impose, by ordinance, an additional
sales and use tax at the rate of 0.5 percent of the sales price or purchase price on
tangible personal property and taxable services. However, the ordinance does not
take effect unless approved by the majority of the voters of the county at a
referendum. The revenue from those taxes may be used for any purpose designated
by the county board or specified in the ordinance or in the referendum approving the
ordinance.
The bill also allows a municipality with a 2020 population exceeding 30,000 to
enact an ordinance to impose sales and use taxes at the rate of 0.5 percent of the sales
price or purchase price on tangible personal property and taxable services. The
ordinance does not take effect unless approved by the majority of the voters of the
municipality at a referendum. The revenue from those taxes may be used for any
purpose designated by the governing body of the municipality or specified in the
ordinance or in the referendum approving the ordinance.
Sales tax exemption for energy systems
Current law provides a sales and use tax exemption for a product that has as
its power source wind energy, direct radiant energy received from the sun, or gas
generated from anaerobic digestion of animal manure and other agricultural waste,
if the product produces at least 200 watts of alternating current or 600 British
thermal units per day. The sale of electricity or energy produced by the product is
also exempt.
The bill modifies current law so that the exemption applies to solar power
systems and wind energy systems that produce electrical or heat energy directly
from the sun or wind and are capable of continuously producing at least 200 watts
of alternating current or 600 British thermal units. In addition, the exemption
applies to a waste energy system that produces electrical or heat energy directly from
gas generated from anaerobic digestion of animal manure and other agricultural
waste and are capable of continuously producing at least 200 watts of alternating
current or 600 British thermal units. A system for which the exemption applies
includes tangible personal property sold with the system that is used primarily to
store or facilitate the storage of the electrical or heat energy produced by the system.

Vapor products
Current law imposes a tax on vapor products, which are any noncombustible
products that produce vapor or aerosol for inhalation from the application of a
heating element to a liquid or other substance that is depleted as the product is used,
regardless of whether the liquid or other substance contains nicotine. The tax is
imposed at the rate of 5 cents per milliliter of the liquid or other substance based on
the volume as listed by the manufacturer.
The bill taxes vapor products at the rate of 71 percent of the manufacturer's list
price and modifies the definition of “vapor product.” Under the bill, “vapor product”
means a noncombustible product that employs a heating element, power source,
electronic circuit, or other electronic, chemical, or mechanical means that can be used
to produce vapor from a solution or other substance, regardless of whether the
product contains nicotine. A “vapor product” is defined to include an electronic
cigarette, electronic cigar, electronic cigarillo, electronic pipe, or similar product or
device, as well as any container of a solution or other substance that is intended to
be used with these items. The bill specifies that any product regulated by the federal
Food and Drug Administration as a drug or device is not a vapor product.
Little cigars
The bill taxes little cigars at the same rate as the excise tax imposed on
cigarettes. Under current law, all cigars are taxed at the rate of 71 percent of the
manufacturer's established list price, limited to 50 cents per cigar. Under the bill,
little cigars are taxed at the rate of 126 mills per little cigar, regardless of weight.
The bill defines “little cigar” to mean a cigar that has an integrated cellulose acetate
filter and is wrapped in any substance containing tobacco.
Definition of “manufacturer's list price”
Current law imposes a tax on tobacco products based on the “manufacturer's
established list price,” without defining the term. The bill removes the word
“established” and defines “manufacturer's list price” to mean the total price of
tobacco products charged by the manufacturer or other seller to an unrelated
distributor. The bill specifies that the total price must include all charges by the
manufacturer or other seller that are necessary to complete the sale, without
reduction for any cost or expense incurred by the manufacturer or other seller or for
the value or cost of discounts or free promotional or sample products. The bill
provides that a manufacturer or other seller is related to a distributor if they have
significant common purposes and either substantial common membership or
substantial common direction or control.
Sales tax exemption for diapers
The bill creates a sales and use tax exemption for the sale of diapers, not
including adult undergarments for incontinence.
Prairie and wetland counseling services
Under current law, the sale of landscaping and lawn maintenance services is
subject to the sales tax. The bill excludes from taxable landscaping services the
planning and counseling services for the restoration, reclamation, or revitalization

of prairie, savanna, or wetlands if such services are provided for a separate and
optional fee distinct from other services.
Repeal of sales tax exemption for farm-raised deer
The bill repeals the sales and use tax exemption that applies to the sale of
farm-raised deer to a person operating a hunting preserve or game farm in this state.
Repeal of sales tax exemption for game birds and clay pigeons
The bill repeals the sales and use tax exemption that applies to the sale of live
game birds and clay pigeons to qualifying bird hunting preserves and shooting
facilities.
Sales and use tax on candy
Current law imposes the sales and use tax on the sale of candy. For purposes
of the sales and use tax, “candy” is defined, generally, as a preparation of sugar, honey
or other sweetener combined with chocolate, fruit, nuts or other ingredients or
flavorings. “Candy” does not include a preparation that contains flour or that
requires refrigeration. Under the bill, for purposes of the sales and use tax, “candy”
also does not include a preparation that has as its predominant ingredient dried or
partially dried fruit, not including a preparation that has a confectionary coating or
glazing on the dried or partially dried fruit.
Providing notices for public utility taxes
Under current law, public utility companies, including railroads and air
carriers, are exempt from local property taxes and are instead subject to special state
taxes. Current law requires DOR to send certain notices regarding these taxes by
certified mail. Under the bill, DOR must still provide the notices but is no longer
required to send them by certified mail.
shared revenue
Increase in county and municipal aid
The bill increases the amount that each county and municipality annually
receives as a county and municipal aid payment. Currently, a county or municipality
receives a payment equal to the payment it received in 2012. The bill increases that
amount by 2 percent in 2021 and an additional 2 percent beginning in 2022.
Expenditure restraint program
Under current law, generally, a municipality is eligible to receive an
expenditure restraint payment if its property tax levy is greater than five mills and
if the annual increase in its municipal budget is less than the sum of factors based
on inflation and the increased value of property in the municipality as a result of new
construction. Current law excludes certain payments and expenditures from the
municipal budget for purposes of determining eligibility for an expenditure restraint
payment. For example, principal and interest on long-term debt, recycling fee
payments, and unreimbursed expenses related to a declared state of emergency are
excluded from the determination.