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Federal Non-Conformity Issues

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Many of you have heard that Iowa will "not couple" with federal law for Tax Year 2017, as in 2016 also. To say Iowa will not couple is somewhat misleading. Iowa law will still conform or be “coupled” with the Internal Revenue Code (IRC) going forward. However, without action by the Legislature, Iowa law will be coupled with the IRC as it existed on January 1, 2015. Iowa law will not conform with any changes made by the United States Congress after January 1, 2015, with certain limited exceptions specified in the Iowa Code.

The result is that when Iowa taxpayers calculate their Iowa net income, they will determine their federal adjusted gross income (AGI) as if Congress had not passed the “Protecting Americans from Tax Hikes (PATH) Act” in December of 2015, or the Tax Cuts and Jobs Act in December of 2017.

For the most part, the calculation of Iowa net income is still the same as the calculation for federal AGI. However, the calculation of Iowa net income will be different from the federal AGI calculation when it comes to certain items, such as section 179 expensing, that were amended by the PATH Act.

Disclaimer: Please be advised that this is an informational document.  It should not be relied upon or otherwise cited as precedent.  This information is subject to change at any time.  If a member of the public wishes to request a binding decision, he or she must file a Petition for Declaratory Order pursuant to 701 IAC 7.24.