On December 20, 2019, President Donald Trump signed Public Law 116-94, the Further Consolidated Appropriations Act of 2020. Division Q of that Act, entitled the “Taxpayer Certainty and Disaster Tax Relief Act of 2019” extends several federal tax provisions, many retroactively to tax years 2018 and 2019. Division O of the Act, entitled the “Setting Every Community up for Retirement Enhancement Act” (SECURE Act) also contains a number of provisions that may have tax effects for some taxpayers.
Generally, Iowa does not conform with these federal tax changes to the extent they apply to a tax year beginning prior to January 1, 2020. However, Iowa has conformed with certain provisions related to 529 plans. This guidance describes Iowa's general nonconformity with this federal law for tax years beginning in calendar year 2018 or 2019. Iowa generally conforms with these federal tax changes (with one exception), to the extent they affect Iowa income taxes, for tax years beginning on or after January 1, 2020.
For purposes of this guidance, any reference to “tax year 2018” means any tax year that begins during the 2018 calendar year, and any reference to “tax year 2019” means any tax year that begins during the 2019 calendar year. Any reference below to “the Act” refers to Division Q of the Taxpayer Certainty and Disaster Tax Relief Act of 2019. References to provisions of the SECURE Act are clearly labeled as such.
This page is intended to provide guidance on the provisions of the Act and of the SECURE Act that most commonly affect Iowa income taxes, not all provisions of either Act are covered by this document. Additionally, Iowa's conformity with some of these provisions may change as new legislation is enacted. This guidance will be updated accordingly.
- Exclusion from gross income of discharge of qualified principal residence indebtedness
- Deduction for mortgage insurance premiums as qualified residence interest
- Reduction in medical expense deduction floor
- Deduction for qualified tuition and related expenses
- Empowerment zone tax incentives
- Second generation biofuel producer credit (formerly known as the “cellulosic biofuel producer credit”)
- Qualified fuel cell motor vehicles
- Energy efficient commercial buildings deduction
- Special rule for sales or dispositions for qualified electric utilities
- Modification of income for purposes of determining tax-exempt status of certain mutual or cooperative telephone or electric companies
- Repeal of increase in unrelated business taxable income for certain fringe benefit expenses
- Qualified employer plans prohibited from making loans through credit cards and other similar arrangements
- Expansion of section 529 plans
Expensing and depreciation provisions under Sections 114-117, and 130 of the Act
Below are explanations of the various provisions of the Act that affect expensing and depreciation. The Act does also include a provision for increased section 179 expensing for certain empowerment zone property, that provision is described under the heading “Empowerment zone tax incentives,” above, rather than in this section. All of the following examples assume that the taxpayer has not elected to take increased expensing under section 168(k) for federal purposes. Increased expensing under IRC section 168(k) is not allowed for Iowa purposes. See IA 4562 A&B Iowa Depreciation Adjustment Schedule for instructions on how to make Iowa adjustments if you claimed this increased expensing for federal purposes.
- Race horses
- Motorsports entertainment complexes
- Indian reservation business property
- Qualified film, television, and theatrical productions
- Special allowance for second generation biofuel plant property
Disaster relief provisions under Sections 202, 204, and 205 of the Act
The Act provides special tax relief for taxpayers affected by certain natural disasters that were declared to be major disasters by the President of the United States between January 1, 2018 and February 18, 2020, if the disaster’s incident period—the time period designated by the Federal Emergency Management Agency as the period during which the disaster occurred—began on or before December 20, 2019. Iowa is not conformed with this special treatment for tax year 2018. Iowa is also not conformed with this special treatment for tax year 2019.
However, for tax year 2019, Iowa is conformed with similar provisions provided in previously-enacted federal legislation for other qualified disaster distributions related to federally-declared disaster areas in 2016 (P.L. 115-97), the Hurricanes Harvey, Irma, and Maria disaster areas in 2017 (P.L. 115-63), and the California wildfire disaster area in 2017 and 2018 (P.L. 115-123).
Special disaster-related rules for use of retirement funds
(a) Tax-favored withdrawals from retirement plans
(b) Recontributions of retirement account withdrawals for home purchases
(c) Loans from qualified plans
Other disaster-related tax relief provisions
(a) Temporary suspension on limitations on charitable contributions
(b) Special rules for qualified disaster-related personal casualty losses
(c) Special rule for determining earned income