Income Tax

This guidance was updated on 05/03/2021 to describe required adjustments and reporting procedures in tax years beginning on or after January 1, 2019 and before January 1, 2020, for partnerships and their partners that had business interest expense that was disallowed as a deduction for federal purposes under section 163(j) of the Internal Revenue Code in tax year 2018, but that was allowed as a deduction for Iowa purposes in tax year 2018 because of nonconformity.

On March 15, 2019, Governor Reynolds signed Senate File 220, which made the same ($70,000) section 179 deduction limitation applicable to all taxpayers for 2018. Earlier legislation only applied this limit to individuals and entities taxed as partnerships. Under that prior law Corporations subject to the income tax, entities that file as S-Corporations for income tax purposes, and financial institutions subject to the franchise tax were subject to a lower ($25,000) section 179 deduction limit for 2018.

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 for tax year 2018, which allows the same Earned Income Tax Credit (EITC) calculation at the state level that is allowed at the federal level.

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 modifications of the Research Activities Credit for individual and corporate income tax. The two modifications include: (1) a clarification of how the credit is calculated and (2) limitations on who may claim the credit.