Tax Guidance

The guidance available here explains the general guides rather than detailed discussions of Iowa tax law. We make every attempt to keep guidance current, however, changes in law or policy may not be immediately reflected.

If you have tax questions, search our Frequently Asked Questions.

For information on how to request tax guidance, see the Department's Tax Guidance Request page.

Tax Guidance

Tax Type:
General

The state setoff program matches people and businesses who owe delinquent debts to public agencies with money that is owed to those people and businesses by public agencies. Sources of funds available for setoff include, but are not limited to, tax refunds, casino and sports wagering winnings, State-issued vendor payments, and Iowa Lottery winnings. To the extent allowed by law, when a match occurs, the Iowa Department of Revenue withholds or sets off money to apply toward the delinquent debt. State of Iowa Setoff Program requirements are outlined in Iowa Code section 421.65 as enacted by 2020 Iowa Acts, House File 2565, and Iowa Administrative Code rule 701—Chapter 26, which will be effective in November of 2023.

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Tax Type:
Income Tax, Other Taxes & Fees

House File 352 created a voluntary election for a partnership or S corporation to be subject to Iowa tax at the entity level. The legislation applies retroactively to tax years beginning on or after January 1, 2022. This guidance describes the new elective Pass-Through Entity Tax and certain filing procedures being developed to implement the tax.

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Tax Type:
Property Tax

Divisions 5 and 6 of House File 718, passed in the 2023 legislative session and signed by the Governor on May 4, 2023, establish a homestead tax exemption for claimants 65 years of age or older and increase the military service tax exemption. Both changes are retroactive and will apply to the assessment year starting January 1, 2023.

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Tax Type:
Other Taxes & Fees

The Department is responsible for administering the new electric fuel excise tax, which goes into effect July 1, 2023. Electric vehicle charging station owners can begin registering for licenses with the Department on April 3, 2023. This guidance explains who needs to register for a license and how to do so.

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Tax Type:
Income Tax, Withholding Tax

This tax guidance describes what retirement income is eligible for the exclusion, who is eligible for the exclusion, and the withholding requirements for Iowa purposes on retirement income. Additionally, on February 20, 2023, Governor Kim Reynolds signed Senate File 181. The guidance was updated to address withholding requirements for distributions of retirement income for tax years beginning on or after January 1, 2023. It describes what retirement income is subject to withholding and what plan administrators and taxpayers should do if Iowa income tax was erroneously withheld on their retirement income distributions.

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6050X Reporting Requirement
Tax Type:
General

Federal law (26 U.S.C. Section 6050X) now requires government entities receiving payments of $50,000 or more in certain suits or agreements, to file a specific information return with the IRS, as well as furnish a statement to each person who is a party to the suit or agreement.

For Federal tax purposes, the IRS generally does not allow taxpayers to claim deductions for amounts paid for certain violations of law. Beginning in 2023 (for orders in tax appeals issued in 2022 or later or settlements entered in 2022 and later), IDR must file an annual report with the IRS each year. The report must include certain amounts taxpayers must pay to IDR as a result of an order or final determination in a tax appeal or a settlement agreement. IDR must also issue Form 1098-Fs to a taxpayer by January 31 of the year after the taxpayer was ordered in a tax appeal to pay IDR or by January 31 of the year after the taxpayer entered a settlement agreement to pay IDR.

In completing this reporting obligation, IDR takes no position on whether the IRS will allow, or whether the taxpayer is entitled to, any deduction by the taxpayer of any amounts paid.

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Tax Type:
Other Taxes & Fees

The 2022 Iowa General Assembly enacted and Governor Reynolds signed Senate File 2378, a bill that made changes to Iowa’s beverage container deposit and redemption law, commonly known as the “bottle bill.” SF 2378 creates a new reimbursement for beer distributors which pay handling fees for empty beer containers to entities that collect those containers. This new reimbursement to beer distributors will be administered by the Iowa Department of Revenue.

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Tax Type:
Other Taxes & Fees

Beginning in 2023, certain business entities will be required to file their 2022 and later Iowa income tax returns electronically. Similar requirements will take effect for 2023 Iowa Fiduciary income tax returns.

Additionally, on February 17, 2023, the Director of the Iowa Department of Revenue, Kraig Paulsen, issued Order 2023-01, offering limited relief from the requirement that certain business entities file their returns in an electronic format. The order provides electronic filing relief for “qualified filers”, which are taxpayers who meet all of the criteria specified in the order.

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Tax Type:
Income Tax, Inheritance Tax, Other Taxes & Fees

Order 2022-02 grants an extension to certain pass-through entities with a short tax year to file their 2022 Iowa Composite Return under Iowa Code section 422.16B. Pass-through entities with a short tax year beginning and ending in calendar year 2022 will have until May 1, 2023, to file their Iowa Composite Return under Iowa Code section 422.16B without incurring a late filing penalty. The Order does not extend the deadline for paying any short-year composite return tax due under Iowa Code section 422.16B, nor does it extend the filing or payment deadline for a pass-through entity’s short-year income tax return (IA 1065, IA 1120S, or IA 1041). This guidance includes further information regarding the filing extension and explains the composite return requirements for fiscal year pass-through entities for tax year 2021.

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Tax Type:
Sales & Use Tax, Other Taxes & Fees

Following Governor Reynolds signature of House File 2128 on May 17, 2022, the Iowa Department of Revenue has released new guidance to explain this tax change, effective July 1, 2022, as it relates to the Iowa Fuel Tax Deduction for Blended Fuel Sales. This new deduction, added to Iowa Code section 452A.8, is intended to promote the use of biofuels by allowing a lower tax rate to be charged when the fuel is withdrawn from the terminal when it is known that the fuel is going to be blended into a biofuel with the lower tax rate after it has been withdrawn. The deduction is for gasoline or diesel fuel withdrawn from a terminal by a licensee to be blended with a biofuel after it is withdrawn from the terminal when the tax rate on the gasoline or diesel fuel exceeds the tax rate which would be due on the biofuel-blended fuel. This tax change is effective July 1, 2022.

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