Important Information on State Tax Changes
Jun 28, 2018
While the legislature adjourned for the year in early May, July 1 marks the day most new state laws go into effect. The Economic Alliance saw success in a variety of our pro-growth and pro-business priorities including Future Ready Iowa, which addresses the state’s skills gap and skilled worker shortages by creating opportunities for more Iowans to have careers in high-demand fields and reach the goal of 70 percent of our workforce having education or training beyond high school by the year 2025. We also saw success in the funding economic development priorities including funding for the High-Quality Jobs incentives program for business recruitment and expansion work and the Iowa Flood Center, which works to predict and prevent community flooding.Our top priority for the session was to achieve comprehensive state tax reform, and at the end of May the governor signed the first reform on taxes Iowa has seen in several generations. Those reforms have significant implications for businesses including:
- Eliminating federal deductibility, restructuring and lowering tax rate brackets
- Phases in the deduction for Qualified Business Income (QBI), increase the cap on Section 179 expensing, eliminate the Alternative Minimum Tax (AMT)
- Eventually automatically couple to the federal code
- Keeps innovation, workforce and redevelopment tax incentive programs intact
- Expands sales tax to include “new economy” services such as Netflix, Uber, and on-line and digital buying. Further enforced by the U.S. Supreme Court recent decision regarding online sales, Iowa will collect taxes on remote sales outside of Iowa.
*IMPORTANT NOTE: Most of the tax changes, including the on-line taxes do not take effect until Jan. 1, 2019, and in some cases in later years. See below for more guidance.
Useful Information on State Tax Changes
- List of effective dates via the Iowa Department of Revenue
- How the Supreme Court decision (South Dakota vs. Wayfair) affects Iowa via the Iowa Department of Revenue
- A summary on the new law via the Tax Foundation
- For specific guidance on how the new law effects your business, contact the Iowa Department of Revenue.