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 deduction for a charitable distribution from an individual retirement account by certain taxpayers at the state level that is allowed at the federal level.

On December 22, 2017, President Donald Trump signed Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act (TCJA). This law repealed the deferral of gain or loss from exchanges of like-kind personal property held for productive use in a business or for investment under Internal Revenue Code (IRC) section 1031. 

On March 23, 2018, President Trump signed into law the Consolidated Appropriations Act, 2018 (P.L. 115-141). Among other changes to the Internal Revenue Code (IRC), this bill included a fix to the so called “grain glitch,” which occurred when IRC section 199 was repealed under Tax Cuts and Jobs Act (TCJA) in 2018. This guidance is for Specified Agricultural and Horticultural Cooperatives claiming the IRC section 199A(g) deduction (New DPAD).

On March 27, 2020, President Donald Trump signed Public Law 116-136, the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. The CARES Act includes a number of federal tax changes, and several are retroactive to tax years 2018 and 2019. Iowa has not conformed with any of these federal tax changes to the extent they apply to a tax year beginning prior to January 1, 2020. Iowa generally conforms with these federal tax changes to the extent they affect Iowa income taxes for tax years beginning on or after January 1, 2020.

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.

This guidance was updated on 05/03/2021 to describe required adjustments and reporting procedures in tax years beginning on or after January 1, 2019 and before January 1, 2020, for partnerships and their partners that had business interest expense that was disallowed as a deduction for federal purposes under section 163(j) of the Internal Revenue Code in tax year 2018, but that was allowed as a deduction for Iowa purposes in tax year 2018 because of nonconformity.

On March 15, 2019, Governor Reynolds signed Senate File 220, which made the same ($70,000) section 179 deduction limitation applicable to all taxpayers for 2018. Earlier legislation only applied this limit to individuals and entities taxed as partnerships. Under that prior law Corporations subject to the income tax, entities that file as S-Corporations for income tax purposes, and financial institutions subject to the franchise tax were subject to a lower ($25,000) section 179 deduction limit for 2018.

This guidance is intended as a general guide and is often considered a primary resource for contractors taxability. For additional details reference Iowa Administrative Rules Chapter 701-219.

The Information in this Publication Applies Only to Medical Clinics and Similar Businesses, Not to Nonprofit Hospitals or Hospices. It includes details regarding hospice and nonprofit Hospital exemptions, exempt sales/purchases, and taxable sales/purchases

This guidance provides an overall summary of information including details specific if you are an Employee, Independent Contractor (Self Employed), or Employer. Additionally there are details regarding returns/schedules to be filed, reporting income from tips, and what is subject to sales tax and Local Option Sales Tax.