September 26, 2023
Iowa certifies corporate income tax rate reductions for tax years beginning on or after January 1, 2024
On September 22, 2023, the Director of the Iowa Department of Revenue issued Order 2023-02, certifying that the top corporate income tax rates will decrease to 7.1% in 2024 from 8.4%.
House File 2317, which was enacted in 2022, amended Iowa Code Section 422.33 to reduce the corporate income tax rate beginning in 2023 if certain revenue triggers were satisfied. (See Tax Alert 2022-0351.) Iowa Code Section 422.33(1)(b) requires both the Iowa Department of Revenue (DOR) and the Iowa Department of Management (DOM) to determine by November 1st of each year whether net corporate income tax receipts in the prior fiscal year exceeded $700 million. If the revenue triggers are satisfied, then the top two Iowa corporate income tax rate brackets will be adjusted to generate $700 million in net corporate income tax receipts. The new rates will apply to tax years beginning on or after January 1st of the year following the determination date. This reduction process will continue until all corporate income tax rates are 5.5%.
Corporate income tax rates for 2024
On September 20, 2023, the DOM concluded that the net corporate income receipts exceeded $700 million for the prior fiscal year. The DOR next determined that the top corporate income tax rates should be reduced and announced the following corporate income tax rate schedule for tax years beginning on or after January 1, 2024:
Corporate taxpayers should consider the application of these rate changes.
Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor