IDR Releases Updated Tax Guidance: Qualifying COVID-19 Grants - Income & Franchise Tax Exclusion
On June 16, 2021, Governor Reynolds signed into law Senate File 619. The Department has released updated guidance to explain this tax change as it relates to the following:
- Qualifying COVID-19 Grants - Income and Franchise Tax Exclusion
Senate File 619 in part excludes from the Iowa income and franchise tax the receipt of certain qualifying COVID-19 grants issued by the Iowa Economic Development Authority, the Iowa Finance Authority, and the Iowa Department of Agriculture and Land Stewardship. This exclusion was previously only available for Iowa small business relief grants provided by the Iowa Economic Development Authority. The Department has updated guidance which describes this tax exclusion, identifies qualifying grants, and directs taxpayers on how to claim this exclusion on Iowa tax returns.
The Department has also adopted administrative rules to implement this new qualifying COVID-19 grant exclusion. These rules were adopted on an emergency basis and were effective July 13, 2021, however, the rules will also follow the normal rule-making process and will be published in the August 11, 2021 Iowa Administrative Bulletin under a Notice of Intended Action to allow for public comment. The Department will provide public notice when the rules are available for public comment.
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