What's New?

Instruction Year
2021

NEW FOR 2021:

For tax years beginning on or after January 1, 2020, Iowa has adopted rolling conformity, meaning the state will automatically conform with any changes made to the Internal Revenue Code (IRC), except as specified by Iowa law.

Economic impact payments (EIPs) whether in the form of a rebate or refundable tax credit will not be included in Iowa taxable income, or added back as part of your reportable federal income tax refund.

Paycheck Protection Program (PPP) loans that are forgiven and properly excluded from gross income for federal purposes will also qualify for exclusion from income for Iowa tax purposes.

New form in 2020: If you amend your IA income tax return on an IA 1040, the IA 102 must be attached. The IA 102 is not required if you are amending on an IA 1040X.

Step 5

Line 14

Iowa has conformed with federal bonus depreciation provisions for assets placed in service in tax year 2021 or later. The IRC section 179 limit applicable to individuals for Iowa for tax year 2021 is the same as the federal limit. See the IA 4562A/B for more information. Taxpayers who had to make adjustments for Iowa’s nonconformity to federal law in 2018 may need to complete form IA 101 in 2021 and later years. See the IA 101 Nonconformity Adjustments form for more information. Iowa has conformed with the federal repeal of like-kind exchanges of personal property for tax year 2019 and later. For tax year 2020 and later Iowa has not conformed with the business interest expense limitation in IRC section 163(j), see IA 163 for more information.

Step 6

Line 24

Use code “ee” to report eligible educator expenses. Starting in 2021, for Iowa tax purposes, eligible educators can deduct out-of-pocket teacher expenses of up to $250 in excess of the federal deduction limitation, not to exceed a total of $500 per eligible educator. Report your qualifying teacher expenses as allowed on federal 1040, Schedule 1, line 11, plus any other qualifying out-of-pocket teacher expenses in excess of the federal deduction limitation. However, your total deduction cannot exceed $500 per eligible educator.

Code “jj” is no longer valid. The charitable contributions deduction for non-itemizers is no longer allowed for Iowa income tax purposes. See line 37 instructions for the tax treatment of charitable contributions.

Use code “kk” to report the amount of a federal, state, or local grant provided to a communications service provider during the tax year, to the extent included on Schedule C, line 1, if the grant was used to install broadband infrastructure that facilitates broadband service in targeted service areas at or above the download and upload speeds.

Use code “ll” to report the amount of a qualifying COVID-19 grant excluded from income under Iowa Administrative Code rule 701—40.86, to the extent included as income on the Iowa return.

Step 7

Line 32

The qualified business income deduction has increased from 25% to 50% of the federal deduction.

Line 33

The DPAD 199A(g) deduction has increased from 25% to 50% of the federal deduction.

Step 8

Line 37

A number of adjustments and separate Iowa calculations may be necessary to determine the correct deductions on your Iowa Schedule A.

Step 9

Line 44

For tax years 2021 and later, the tuition and textbook tax credit has increased to 25% of the first $2,000 paid for tuition and textbooks for each qualifying dependent. Qualifying payments for tuition and textbooks include certain expenses incurred for dependents who are receiving private instruction.

Line 45

The maximum volunteer firefighter, EMS, or reserve peace officer tax credit has increased from $100 to $250 for tax years 2021 and later.

Line 52

The geothermal heat pump tax credit may be available for installations completed in 2021. Total geothermal credits awarded by the Department of Revenue cannot exceed $1,000,000 per year. Applications for 2021 installations are due May 2, 2022. Submit applications through taxcredit.iowa.gov.

Line 60

For tax years 2021 and later, the income eligibility threshold for claiming the child and dependent care credit or early childhood development credit is increased from $45,000 to $90,000.

Track Your Return: Use Where's My Refund to check the status of individual income tax returns and amended individual income tax returns you've filed within the last year or over the phone at 515-281-3114 or 800-367-3388.