In particular, amounts immediately deducted as bonus depreciation for federal income tax purposes will continue to not apply when computing net income for Iowa tax purposes.įor tax years beginning on or after January 1, 2021, Iowa highest corporate tax rate of 12%, which applies to taxable income of $250,000 or more, will be reduced to 9.8%.įor businesses such as S corporations and LLCs whose income passes through to their owners for Iowa tax purposes, Iowa’s top individual income tax rate will be decreased as of Janufrom 8.98% to 8.53%.įor tax years beginning on or after January 1, 2018, an individual taxpayer’s deduction under IRC section 179 for Iowa tax purposes is limited to $70,000. Accordingly, Iowa’s tax code will conform to the IRC as enacted at the time.ĭespite the increased conformity to the IRC, the Iowa tax code will continue to decouple from the treatment provided to selected items for federal tax purposes. ![]() It also results in certain advantageous federal tax provisions not being available for Iowa tax purposes, such as the five-year built-in gain recognition period for S corporations (the period for Iowa purposes in 2018 is 10 years).įor tax years beginning in 2019, the “Internal Revenue Code” for purposes of Iowa’s tax code is defined to be the IRC as of March 24, 2018, i.e., after the enactment of the TCJA.įor tax years beginning in 2020, Iowa will become a “rolling” conformity state. ![]() Examples include the domestic production activities deduction and the deferral of gain on like-kind exchanges involving property other than real property. In subsequent days, look for a second post summarizing key changes to Iowa’s sales and use tax code.įor tax years beginning on or before January 1, 2018, the “Internal Revenue Code” retains its definition for Iowa tax purposes as the IRC as enacted on January 1, 2015.Īs a result, certain tax benefits that were repealed by the Tax Cuts and Jobs Act of 2018 (TCJA) for federal tax purposes will continue to be available for Iowa tax purposes in 2018. This post will cover some of the significant changes to Iowa’s income tax laws impacting business entities. More information concerning all of the changes made by Senate File 2417 can be found in the Legislative Service Agency's fiscal note and the Iowa Department of Revenue’s tax reform page. The bill made changes to many of the taxes imposed and administered by the State, including individual income tax, corporate income tax, sales and use taxes, hotel/motel taxes, and motor vehicle excise taxes. The Legislature’s stated objective was to update and modernize Iowa’s tax system to better match the “new economy.” The Iowa Legislature made extensive changes to Iowa’s tax code with the passage of Senate File 2417 during its 2018 legislative session. Tax, Estate Planning & Employee Benefits.Life and Disability Insurance Litigation.Banks & Financial Institution Litigation.Administrative Hearings, Arbitrations & Alternative Dispute Resolution.Union Avoidance, Organizational Campaigns & Unfair Labor Practice/NLRB Proceedings.Collective Bargaining, Contract Administration & Labor Arbitration.Affirmative Action Compliance & Enforcement.Corporate Finance, Venture Capital & Securities.Alternative Energy, Renewable Fuels & Public Utilities.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |