Legislative changes are incorporated in the information below.
For tax year 2018, Iowa has not adopted most federal Internal Revenue Code changes regarding the determination of income or deductions from income that occurred after January 1, 2015. This page may be updated pending future legislation. For more information, see our Iowa Tax Reform page.
SPECIFIC LINE INFORMATION
Line 8 For tax year 2018 taxpayers who are 70 ½ years old or older who made qualifying IRA distributions to certain charities that were tax-free for federal purposes do not need to include those distributions in their Iowa income.. The tax-free IRA distributions to charities are not eligible as an itemized deduction on IA 1040, Schedule A.
Line 14 Beginning in 2018, Iowa taxpayers may open first-time homebuyer savings accounts, and deduct certain contributions to that account. However, only certain qualifying withdrawals from these accounts receive preferential Iowa tax treatment. If funds are withdrawn for non-qualifying purposes the taxpayer must add back the amount withdrawn to the extent the funds were previously deducted, plus a 10% penalty.
Beginning in 2018, qualifying withdrawals from a College Savings Iowa or Iowa Advisor 529 Plan may include up to $10,000 per beneficiary per year for tuition expenses of attending an accredited elementary or secondary (K-12) school in Iowa. The $10,000 per-beneficiary cap applies even if the beneficiary receives money from multiple accounts. The $10,000 annual cap does not apply to withdrawals used to pay qualified education expenses related to higher education.
Bonus Depreciation / Section 179/Other Depreciation – Iowa has not conformed with the federal bonus depreciation provisions for assets acquired in 2018. Iowa also has not conformed with several other cost recovery changes made in the federal Tax Cuts and Jobs Act. The section 179 limit for individuals for Iowa for tax year 2018 is $70,000. The phase-out threshold is $280,000. A special election may be available for certain taxpayers who are allocated section 179 amounts from pass-through entities in excess of the Iowa limitation. Different Iowa section 179 limitations apply to S-Corporations, C-Corporations, and other entities subject to Iowa Corporate Income and Franchise Taxes for 2018. For more information, see IA 4562A & B.
Other nonconformity adjustments – Because of Iowa’s general nonconformity with changes to the Internal Revenue Code since January 1, 2015, several adjustments to Iowa net income may be required on line 14. These include adjustments related to the limitation on business losses, employer-provided transportation expenses, like-kind exchanges of personal property, student loan debt discharged due to death or permanent disability, personal casualty or theft gains, moving expense deduction, business interest expense limitation, business entertainment and qualified fringe benefit expenses, employee business expenses, and several other nonconformity adjustments. For more information, see line 14 instructions and the Iowa nonconformity adjustments worksheet.
Line 22 - Iowa has not conformed to the federal limitations on moving expense deductions. See IA 3903 for more information.
Line 23 Iowa Capital Gain Deduction – If any deduction is reported on this line, the applicable Capital Gain Deduction form (IA 100A – IA 100F) must be completed and included with the return. Each eligibility category has a separate form.
Line 24 Adjustments
Iowa ABLE (Achieving a Better Life Experience) Savings Plan Trust: Contributions to a qualified ABLE savings plan trust, on behalf of a designated beneficiary, are deductible from Iowa individual income tax up to a maximum amount, $3,319.
First-Time Homebuyers Savings Account information and forms can be found here. Beginning in 2018, taxpayers may deduct their total contributions to all accounts Iowa First-time Homebuyer Savings Accounts, up to the annual cap ($4,000 for married filing jointly, $2,000 for all others).
Iowa has not conformed to the federal repeal of the Domestic Production Activities Deduction (DPAD), so the DPAD will remain available for Iowa purposes for 2018. Taxpayers must independently calculate their Iowa DPAD for 2018 using federal form 8903 as a worksheet, with certain required Iowa nonconformity adjustments. For more information see line 24 instructions or the Department’s DPAD guidance.
The teacher expense deduction is available for Iowa purposes in 2018.
Line 33 Additional Federal Tax Paid in 2018
If a taxpayer has elected to pay federal section 965 net tax liability in installments for federal purposes, that taxpayer may only include the actual amount of the federal installment payment paid in 2018 in calculating the Iowa deduction for 2018. See Iowa Tax Reform Guidance: Deemed Repatriation of Deferred Foreign Income.
FICA Amount - FICA payments for tax year 2018 in excess of $7,961.00 for Social Security tax for each person can be deducted as a federal tax payment.
Line 37 Itemized deductions were eliminated or significantly changed for federal purposes, but Iowa has not conformed with many of these changes for 2018. A number of adjustments and separate Iowa calculations are necessary to determine the correct deduction. The itemized deduction for state sales and use taxes is available for Iowa purposes for taxpayers who also took that deduction for federal purposes. For additional information refer to Line 37.
Standard Deduction for tax year 2018:
- Filing Status 1: $2,030
- Filing Status 3 & 4: $2,030 for each spouse
- Filing Status 2, 5 or 6: $5,000
Iowa continues to limit the amount of itemized deductions that can be claimed for certain high-income taxpayers. The calculation is done on the Iowa Itemized Deductions Worksheet, form IA 104.
Qualified Business Income (QBI) deduction
Iowa has not conformed with the federal deduction for Qualified Business Income for tax year 2018. Do not include any amount from federal 1040, line 9, as an adjustment to Iowa income.
Line 44 Tuition expenses paid with 529 account distributions may qualify for the tuition and textbook credit.
Line 52 Other Nonrefundable Iowa Credits – The Geothermal Heat Pump Tax Credit is not available for installations occurring in 2018. However, installations may be eligible for the Geothermal Tax Credit; complete the IA 140.
Line 57 Reminder - Checkoffs
Fish & Wildlife Fund
Iowa State Fair Foundation
Combined: Veterans Trust Fund / Volunteer Firefighter Preparedness Fund
Child Abuse Prevention Program Fund
Line 62 Other Refundable Credits – There have been significant changes made to the eligibility for Research Activities Credits for tax years 2017 and later. For further information refer to our tax reform guidance.
The Taxpayer's Trust Fund Tax Credit has been repealed.
Line 75 Interest Rate 2019
7% per year; 0.6% per month
DUE DATE: April 30, 2019
Farmers and fishers due date: If at least 2/3 of income is from farming or commercial fishing, penalty for underpayment of estimated tax may be avoided in one of the following ways: (1) Pay the estimated tax in one payment on or before January 15, 2019, and file the Iowa income tax return by April 30, 2019, or (2) File the Iowa income tax return and pay the tax due in full on or before April 30, 2019, extended from March 1, 2019. (NOTE: On February 28, 2019, the IRS issued notice 2019-17 which provides an extension through April 15, for farmers and fishermen to make estimated payments before being subject to estimated tax penalties. The Director of Revenue found that this extension and waiver by the IRS was an unusual circumstance warranting a similar extension and waiver for Iowa income tax purposes.)
Several payment options are offered through EasyPay Iowa.
Check / money order: Send with IA 1040V payment voucher.
The Iowa Department of Revenue strongly encourages individuals who wish to appoint a power of attorney to complete and submit Form IA 2848. The Department will, however, accept any document authorizing a power of attorney that conforms to the requirements of Iowa Administrative Code Rule 701—7.34(9), including a Federal Power of Attorney Form 2848 or a Military Power of Attorney form. If using one of these other forms, references to other agencies, such as the IRS, must be crossed out and “Iowa Department of Revenue” must be inserted in its place. All forms must contain the name, address, PTIN, SSN or FEIN of the representative, the tax type(s) at issue, and the tax period(s) at issue, and must conform to the requirements of Rule 7.34. Failure to complete any power of attorney form as required by Rule 7.34 may result in delays in processing or rejection of the form.
Iowa allows married taxpayers to file one Iowa Power of Attorney form on behalf of both spouses. The IRS requires separate Power of Attorney forms for each spouse. If married taxpayers are using a Federal Power of Attorney Form 2848 for Iowa purposes, each spouse must submit a separate federal form to the Department.
Many of the online forms on the Department website are fillable. If using Adobe Reader Version 11, the form can now be saved after it is filled out.
Include all necessary supporting information, but do not staple to the return.
Place documents in the following order
1. Check or Money Order
2. Payment Voucher (IA 1040V)
3. W-2s / 1099s
4. IA 1040
5. Iowa schedules, forms, and supporting documentation
6. Copy of complete federal return