On March 19, 2020, the Director of the Department of Revenue issued Order 2020-01 granting certain filing and payment extensions pursuant to Iowa Code section 421.17(30) following the Governor’s Proclamation of Disaster Emergency in response to the recent outbreak of the COVID-19 virus. Click to view News Releases, Iowa Small Business Relief Program, tax information, and Common Questions.

The Department of Revenue has received several questions regarding the applicability of the federal S corporation built-in gains tax for Iowa tax purposes. This guidance is not a detailed analysis of the calculation of this federal tax, but is instead intended to generally describe Iowa’s conformity with the federal built-in gains tax on S corporations, with a particular focus on Iowa’s conformity since the change to the recognition period enacted in federal Public Law 114-113, Division Q, section 127, Commonly referred to as the Protecting Americans from Tax Hikes Act.

Iowa’s conformity with the federal limitations on business interest expense deductions imposed by Internal Revenue Code (IRC) section 163(j) varies depending on the year. For tax years beginning on or after Jan 1, 2019, and before January 1, 2020, Iowa conformed with the federal limitation. At this time Iowa does not conform to the federal limitation for tax years beginning on or after January 1, 2020.

Iowa Governor Kim Reynolds signed Senate File 2417, an extensive state tax reform bill to improve the tax structure in Iowa. The 2018 Iowa Tax Reform Bill includes an updated federal conformity provision beginning with tax year 2018, which allows the same deductions for certain withdrawals from a College Savings Iowa and IAdvisor 529 Plan Accounts (529 Plans) and certain rollovers at the state level that are allowed at the federal level. 529 Plans, administered by the Iowa Treasurer of State, help Iowans save money to pay for certain educational expenses for a specific beneficiary.

The federal Tax Cuts and Jobs Act (TCJA), Public Law 115-97, added Section 965 to the federal Internal Revenue Code requiring U.S. shareholders to include in their federal income for the last tax year beginning before January 1, 2018, accumulated deferred foreign income. Iowa has not conformed to these TCJA changes for tax year 2017 meaning any accumulated deferred foreign income included in a taxpayer’s 2017 federal income tax return should not be included on the Iowa income tax return.

On December 22, 2017, President Donald Trump signed Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act, which included a repeal of the federal Domestic Production Activities Deduction (DPAD) for tax years beginning on or after January 1, 2018. Iowa, however, did not conform with this repeal for tax years beginning on or after January 1, 2018, but before January 1, 2019 (referred to herein as “tax year 2018”). As a result, the DPAD will be available as a deduction for Iowa tax purposes for tax year 2018, even though this deduction is not available at the federal level.

A general guide to estimated income tax payments including what income is subject, who must pay, exemptions, and penalty and interest.

For tax years beginning on or after January 1, 2019, and before January 1, 2020, Iowa conforms with the federal Internal Revenue Code (IRC) in effect on March 24, 2018. For tax years beginning on or after January 1, 2020, Iowa has adopted rolling conformity with the IRC. Iowa did not conform with many of these changes for tax year 2018.

On June 16, 2021, Governor Reynolds signed into law Senate File 619, which 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.