Income Tax

The federal Tax Cuts and Jobs Act (TCJA), Public Law 115-97, added Section 965 to the federal Internal Revenue Code requiring U.S. shareholders to include in their federal income for the last tax year beginning before January 1, 2018, accumulated deferred foreign income. Iowa has not conformed to these TCJA changes for tax year 2017 meaning any accumulated deferred foreign income included in a taxpayer’s 2017 federal income tax return should not be included on the Iowa income tax return.

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.

A general guide to estimated income tax payments including what income is subject, who must pay, exemptions, and penalty and interest.

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.

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.

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.