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Iowa Research Activities Credit for Tax Year 2016

The Iowa Research Activities Credit (Iowa Code section 422.10 for individual income tax and 422.33(5) for corporation income tax) and the Supplemental Research Activities Credit (Iowa Code section 15.335) (collectively referred to as the “Iowa RACs”) cross-reference certain definitions from Internal Revenue Code (IRC) section 41, the Federal Credit for Increasing Research Activities.
 
For tax years beginning on or after January 1, 2016, the Iowa RACs cross-reference the version of the IRC in effect on January 1, 2015. The version of the IRC in effect on January 1, 2015 included section 41(h), which terminated the Federal Credit for Increasing Research Activities for amounts paid or incurred after December 31, 2014.1 However, the federal definitions that are relevant to the Iowa RACs remained in the IRC in effect on January 1, 2015.
 
Despite the fact that the Iowa RACs reference the January 1, 2015 version of IRC section 41, which included a termination provision, the federal termination provision does not eliminate the Iowa RACs. The Iowa RACs are available for 2016 and incorporate the relevant federal definitions in effect on January 1, 2015.
 
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.