On May 30, 2018, Iowa Governor Kim Reynolds signed into law a tax reform bill (SF 2417) that makes a number of changes affecting Iowa's corporate, individual and sales/use taxes. Key changes in the bill include:

— Updating Iowa's IRC conformity to March 24, 2018 for 2019

— Changing Iowa's IRC conformity from fixed to rolling starting in 2020

— Continuing to decouple from federal bonus depreciation

— Reducing in 2021 the top corporate income tax to 9.8% on income over $250,000

— Eliminating, for corporate income tax purposes, Iowa's Alternative Minimum Tax and the ability to deduct federal income taxes, starting in 2021

— Modifying the Iowa Research Activities Tax Credit

— Lowering the top individual income tax rate in 2019 and providing for future contingent reductions

— Coupling to changes to IRC §§179 and 1031

— Providing a deduction for income from pass-through entities consistent with IRC §199A

— Extending Iowa's sales and use tax to ride-sharing services, streaming video, video-on-demand and pay-per-view services, photography, information services, video game services and tournaments, online travel services, and software-as-a-service

— Expanding Iowa's sales and use tax nexus provisions by adopting economic nexus and marketplace provider provisions

For an in-depth discussion of these changes, see Tax Alert 2018-0987.

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