IDR Releases Updated State Tax Guidance: GILTI & FDII

Monday - 07/20/2020

In 2018, the Iowa legislature enacted Senate File 2417, a state tax reform bill that included extensive changes to the state’s tax structure. The Department has released updated guidance to explain the following tax change:

  • Global Intangible Low Tax Income & Foreign Derived Intangible Income - Beginning in tax year 2019, Global Intangible Low-Taxed Income (GILTI) is included in individual and fiduciary (estates and trusts) income taxpayers' Iowa net income, but under recent legislation GILTI is excluded from income for Iowa corporate income and franchise tax purposes. Taxpayers are allowed the same deduction for Foreign Derived Intangible Income (FDII) for Iowa purposes that they are allowed for federal purposes. Corporate taxpayers that file consolidated federal returns may have to make certain adjustments to both GILTI and the FDII deduction in order to properly report their income for Iowa purposes. Partnerships and S-Corporations are not typically required to include GILTI on their Iowa returns or make any Iowa specific adjustments to amounts reported on K-1s, but individual and fiduciary income taxpayers are required to report GILTI received from a passthrough to the same extent included on their federal returns for Iowa purposes.

The Department maintains a tax reform page to provide taxpayers with guidance on tax reform topics. Additional guidance is added as it becomes available.

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