Tax Guidance

Following Governor Reynolds’s signature of Senate File 2367, the Department released updated guidance as it relates to Sales and Use Tax Permit, Return Filing, and Payment Changes. Changes to sales and use tax permit registration, return filing, and tax payment take effect July 1, 2022. These changes include:

• Taxpayers will report sales and use tax on the same return and will only need one permit for both sales and use tax.
• Taxpayers will either file and pay monthly or annually, depending on the amount of tax collected.
• Monthly returns must be filed and tax must be paid electronically.
• Semimonthly deposit payments are no longer required.

Division X of Senate File 2367, signed by Governor Reynolds on June 17, 2022, modifies the Iowa Solar Energy System Tax Credit to allow the Department to review certain residential installations that were previously denied due to the expiration of the credit. The legislation also re-opens and extends to June 30, 2022, the application deadline for residential installations completed during the 2021 calendar year for those who have not already applied.

The exempt status of the purchase of food is not solely determined by whether the food is eligible for purchase with Food Stamps. Many products are exempt from Iowa sales tax whether or not they are purchased with Food Stamps.

House File 2317, signed into law by Governor Kim Reynolds on March 1, 2022, creates or modifies the following individual income tax provisions. It provides one irrevocable election to exclude from state income tax the net  capital gain from the sale of stock. Excludes certain farm lease payments, certain capital gains of retired farmers, and retirement income for individuals 55 years of  age or older or disabled.The rate reduces over a three-year period then converts to a flat tax rate. The provisions apply to tax years beginning on or after January 1, 2023, and some of the changes are phased in over a number of years. This means that HF 2317 does not impact your tax returns due on May 2, 2022.

Several significant changes to Iowa’s corporate income tax take effect in 2021 as a result of the Iowa tax reform bill. These changes include reductions to corporate income tax rates and the elimination of both federal deductibility and the Iowa corporate income Alternative Minimum Tax. In addition, under Senate File 619, bonus depreciation will be allowed for Iowa purposes for property placed in service in tax years beginning on or after January 1, 2021.

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. The Department has updated guidance which describes this tax exclusion, identifies qualifying grants, and directs taxpayers on how to claim this exclusion on Iowa tax returns.

This requires any net operating loss incurred by an individual engaged in a small business or farming business in Iowa after January 20, 2020 to be carried back 3 years, unless an election was made to waive the carryback period or to use the 5-year carryback period for farmers.

This guidance is intended as a general guide. For additional details reference Iowa Administrative Code Chapter 701: Agricultural Rules. This is generally considered the primary resource for Farmers taxes.

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.

A general guide but not an all-inclusive discussion of Iowa sales and use tax law. Generally considered the primary guidance resource for sales & use tax.

See Iowa Tax Issues for Nonprofit Entities for nonprofit entities that qualify for exemption.