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

• Domestic Production Activities Deduction - For tax year 2018, Iowa did not conform to the federal repeal of the domestic production activities deduction. This guidance has been updated to describe the calculation of the deduction in Iowa for taxpayers with a fiscal year that begins in calendar year 2018. It also describes the application of the deduction in Iowa for tax years beginning on or after January 1, 2019, including allowable deductions for owners, patrons, or beneficiaries of an S corporation, partnership, cooperative, or estate or trust with a fiscal tax year beginning in calendar year 2018.

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