Note: This guidance previously described the income and franchise tax exclusion for certain Iowa small business relief grant program amounts. This guidance was updated on July 20, 2021, to reflect legislative changes to the exclusion enacted in 2021 Iowa Acts, Senate File 619. It was updated again on August 30, 2021 to clarify that business expense deductions attributable to qualifying COVID-19 grants are allowed for Iowa purposes.
On June 16, 2021, Governor Kim Reynolds signed 2021 Iowa Acts, Senate File 619. Sections 5-8 of that legislation exclude from Iowa income and franchise tax the following:
“[T]he amount of any qualifying COVID-19 grant issued to an individual or business by the economic development authority, the Iowa finance authority, or the department of agriculture and land stewardship.”
The exclusion applies only to the extent the qualifying COVID-19 grant was included in a taxpayer's federal income in a tax year beginning before January 1, 2024, and only for eligible grants issued between March 17, 2020, and December 31, 2021.