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.

Tax Guidance

Tax Type:
Income Tax, Iowa Tax Reform

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. See the 2018 Iowa Nonconformity Adjustments Worksheet for information about how to make the necessary adjustments for Global Intangible Low Tax Income (GILTI), Foreign Derived Intangible Income (FDII), and other Tax Cuts and Jobs Act (TCJA) items for tax year 2018.

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Tax Type:
Income Tax, Iowa Tax Reform

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Revenue Code (IRC), this bill included a fix to the so called “grain glitch,” which occurred when IRC section 199 was repealed under Tax Cuts and Jobs Act (TCJA) in 2018.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). For tax years 2019 and later, qualifying co-ops will generally be allowed to claim 100% of the federal 199A(g) deduction and will be required to take 100% of any reduction to the cooperative’s IRC section 1382 deduction resulting from the new DPAD allocated to patrons for Iowa purposes.

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Tax Type:
Income Tax, Iowa Tax Reform

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.

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Tax Type:
Income Tax, Iowa Tax Reform

Beginning in 2018, the deduction for business interest expenses is limited for federal purposes under section 163(j) of the Internal Revenue Code. Iowa has not conformed to this new federal limitation on the business interest expense deduction for tax year 2018. Taxpayers whose business interest expense deduction was limited for federal purposes need to make certain adjustments to claim the larger Iowa deduction for 2018. This means that in the future, the Iowa interest expense deduction will generally be the same as the federal deduction for a given year, except that taxpayers who were allowed to deduct the full amount of interest expense in 2018 may have to make adjustments to any federal 2018 carryforward amounts claimed in future years. Certain special adjustments may be needed in the case of partnerships, S-Corporations, and their partners or shareholders.

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Tax Type:
Income Tax, Iowa Tax Reform

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. The deduction will not be available for Iowa purposes for tax years beginning on or after January 1, 2019, except under certain circumstances described below.

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Tax Type:
Sales & Use Tax, Iowa Tax Reform

In 2018, the Iowa legislature enacted Senate File 2417, a state tax reform bill that includes extensive changes to the state’s tax structure. Beginning January 1, 2019, digital goods or service may be subject to sales tax, applicable local option sales tax, and use tax, depending on various factors. This guidance explains what is subject to tax including computer software, specified digital products including webinars, the sale of storage services, and information services. Additionally, this guidance provides further information regarding exemptions to taxation.

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Tax Type:
Sales & Use Tax, Iowa Tax Reform

In 2018, the Iowa legislature enacted Senate File 2417, a state tax reform bill that includes extensive changes to the state’s tax structure. Effective January 1, 2019, Iowa law began requiring marketplace facilitators to collect and remit Iowa sales tax and applicable local option sales tax for sales made or facilitated on the business’s marketplace. Generally, a marketplace facilitator is a business that provides infrastructure or support for retail sales to occur and collects the sales price, processes payments, or receives compensation from the retail sale. One type of business that may qualify as a marketplace facilitator is a food delivery service company. If a business allows customers to order food and handles the payment for the customer, the business likely qualifies as a marketplace facilitator. This new guidance discusses this new aspect of the law and provides examples for a handful of situations.

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Tax Type:
Sales & Use Tax, Iowa Tax Reform

On May 30, 2018, Iowa Governor Kim Reynolds signed Senate File 2417 (SF 2417), an extensive state tax reform bill to improve the tax structure in Iowa. This law modernizes and expands the types of businesses required to collect Iowa sales tax and local option sales tax. Specifically, marketplace facilitators and remote sellers that exceed a certain amount of revenue or transactions must charge Iowa sales tax and applicable local option sales tax the same as retailers with a physical presence in Iowa.

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Tax Type:
Sales & Use Tax, Iowa Tax Reform

On May 30, 2018, Iowa Governor Kim Reynolds signed Senate File 2417 (SF 2417), an extensive state tax reform bill to improve the tax structure in Iowa. This law modernizes and expands the types of businesses required to collect Iowa sales tax and local option sales tax. The 2019 legislature modified those new requirements.

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Tax Type:
Sales & Use Tax, Iowa Tax Reform

On May 30, 2018, Iowa Governor Kim Reynolds signed Senate File 2417 (SF 2417), an extensive state tax reform bill to improve the tax structure in Iowa. This law modernizes and expands the types of businesses required to collect Iowa sales tax and local option sales tax. Specifically, marketplace facilitators and remote sellers that exceed a certain amount of revenue or transactions must charge Iowa sales tax and applicable local option sales tax the same as retailers with a physical presence in Iowa. The 2019 legislature modified those new requirements.

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