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Senate File 2372 - ReprintedA Bill ForAn Act 1 relating to state taxation and administration by
2modifying sales and use taxes, individual and corporate
3income taxes, the franchise tax, and the insurance premiums
4tax, and including effective date, applicability, and
5retroactive applicability provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2SALES AND USE TAX ON SERVICES AND EXEMPTIONS
3 Section 1. Section 423.2, subsection 6, paragraph bu, Code
42022, is amended to read as follows:
5bu. Software as a service Cloud computing.
6 Sec. 2. Section 423.2, subsection 6, Code 2022, is amended
7by adding the following new paragraphs:
8 NEW PARAGRAPH. bv. Web hosting.
9 NEW PARAGRAPH. bw. Digital automated services.
10 NEW PARAGRAPH. bx. Scooter rentals.
11 Sec. 3. Section 423.2, Code 2022, is amended by adding the
12following new subsection:
13 NEW SUBSECTION. 13. The department shall adopt rules
14pursuant to chapter 17A to administer subsection 6, paragraphs
15“bu”, “bv”, and “bw”.
16 Sec. 4. Section 423.3, subsection 8, paragraph d,
17subparagraph (1), Code 2022, is amended by adding the following
18new subparagraph division:
19 NEW SUBPARAGRAPH DIVISION. (e) A specified digital
20product.
21 Sec. 5. Section 423.3, subsection 47, paragraph a,
22subparagraph (4), Code 2022, is amended by striking the
23subparagraph.
24 Sec. 6. Section 423.3, subsection 68, paragraph c,
25subparagraph (1), subparagraph division (a), Code 2022, is
26amended to read as follows:
27(a) “Clothing” includes but is not limited to the
28following: aprons, household and shop; athletic supporters;
29baby receiving blankets; bathing suits and caps; beach capes
30and coats; belts and suspenders; boots; coats and jackets;
31costumes; diapers (children and adults, including disposable
32diapers); earmuffs; footlets; formal wear; garters and garter
33belts; girdles; gloves and mittens for general use; hats
34and caps; hosiery; insoles for shoes; lab coats; neckties;
35overshoes; pantyhose; rainwear; rubber pants; sandals;
-1-1scarves; shoes and shoelaces; slippers; sneakers; socks and
2stockings; steel-toed shoes; underwear; uniforms, athletic and
3nonathletic; and wedding apparel.
4 Sec. 7. Section 423.3, subsection 104, paragraph a, Code
52022, is amended to read as follows:
6a. The sales price of specified digital products and of
7prewritten computer software sold, and of enumerated services
8described in section 423.2, subsection 1, paragraph “a”,
9subparagraph (5), or section 423.2, subsection 6, paragraphs
10“bq”, “br”, “bs”, and “bu”, “bv”, and “bw” furnished, to a
11commercial enterprise for use exclusively by the commercial
12enterprise. The use of prewritten computer software, a
13specified digital product, or service fails to qualify as a
14use exclusively by the commercial enterprise if its use for
15noncommercial purposes is more than de minimis.
16 Sec. 8. Section 423.3, subsection 104, paragraph b,
17subparagraph (1), Code 2022, is amended to read as follows:
18(1) “Commercial enterprise” means the same as defined in
19section 423.3, subsection 47, paragraph “d”, subparagraph (1),
20but also includes professions and occupations and includes
21public utilities as defined in section 476.1, subsection 3.
22 Sec. 9. Section 423.3, Code 2022, is amended by adding the
23following new subsections:
24 NEW SUBSECTION. 108. The sales price from the sale of
25feminine hygiene products. For purposes of this subsection,
26“feminine hygiene products” means tampons, panty liners,
27menstrual cups, sanitary napkins, and other similar tangible
28personal property designed for feminine hygiene in connection
29with the human menstrual cycle.
30 NEW SUBSECTION. 109. The sales price from the sale of a
31child or adult diaper, whether cloth or disposable.
32 Sec. 10. Section 423.4, subsection 1, paragraph a, Code
332022, is amended by adding the following new subparagraphs:
34 NEW SUBPARAGRAPH. (10) A nonprofit facility licensed by
35the state built on or after January 1, 2022, that provides
-2-1residential addiction recovery and emergency shelter services
2for children. For purposes of this subparagraph, “children”
3means the same as “child” as defined in section 234.1.
4 NEW SUBPARAGRAPH. (11) A fair as defined in section 174.1.
5 Sec. 11. REFUNDS. Refunds of taxes, interest, or penalties
6which arise from claims resulting from the enactment of section
7423.4, subsection 1, paragraph “a”, subparagraph (11), in this
8division of this Act, occurring between January 1, 2021, and
9the effective date of this section of this Act shall be limited
10to twenty-five thousand dollars in the aggregate, and shall not
11be allowed unless refund claims are filed by October 1, 2022,
12notwithstanding any other law to the contrary. If the amount
13of the claims totals more than twenty-five thousand dollars
14in the aggregate, the department of revenue shall prorate the
15twenty-five thousand dollars in the aggregate among all the
16claimants’ in relation to the amounts of the claimants valid
17claims.
18 Sec. 12. EFFECTIVE DATE. Except as otherwise provided, this
19division of this Act takes effect January 1, 2023.
20 Sec. 13. EFFECTIVE DATE. The following takes effect January
211, 2024:
22The section of this division of this Act amending section
23423.3, subsection 47, paragraph “a”, subparagraph (4).
24 Sec. 14. EFFECTIVE DATE. The following, being deemed of
25immediate importance, take effect upon enactment:
261. The section of this division of this Act enacting a
27provision allowing for refunds of taxes, interest, or penalties
28which arise from the enactment of section 423.4, subsection 1,
29paragraph “a”, subparagraph (11).
302. The portion of the section of this division of this
31Act enacting section 423.4, subsection 1, paragraph “a”,
32subparagraph (11).
33 Sec. 15. RETROACTIVE APPLICABILITY. The following apply
34retroactively to January 1, 2021:
351. The section of this division of this Act enacting a
-3-1provision allowing for refunds of taxes, interest, or penalties
2which arise from the enactment of section 423.4, subsection 1,
3paragraph “a”, subparagraph (11).
42. The portion of the section of this division of this
5Act enacting section 423.4, subsection 1, paragraph “a”,
6subparagraph (11).
7DIVISION II
8MANUFACTURED FOOD — SALES TAX EXEMPTION
9 Sec. 16. Section 423.3, subsection 49, Code 2022, is amended
10to read as follows:
1149. a. The sales price from the sale of carbon dioxide
12in a liquid, solid, or gaseous form, electricity, steam, and
13other taxable services and the lease or rental of tangible
14personal property when used by a manufacturer of food products
15 to primarily produce marketable food products for human
16consumption food or food ingredients, including but not
17limited to treatment of material to change its form, context,
18or condition, in order to produce the food product or food
19ingredients, maintenance of quality or integrity of the
20food product or food ingredients, changing or maintenance of
21temperature levels necessary to avoid spoilage or to hold the
22food product or food ingredients in marketable condition,
23maintenance of environmental conditions necessary for the safe
24or efficient use of machinery and material used to produce
25the food product or food ingredients, sanitation and quality
26control activities, formation of packaging, placement into
27shipping containers, and movement of the material or food
28product or food ingredients until shipment from the building
29of manufacture.
30b. For purposes of this subsection, “food or food
31ingredients” means the same as “food and food ingredients” as
32defined in subsection 57, paragraph “d”, and includes tangible
33personal property that could be sold for ingestion or chewing
34by humans but is sold for another use.
35 Sec. 17. REFUNDS. Refunds of taxes, interest, or penalties
-4-1which arise from the enactment of this division of this Act,
2for sales or services occurring between January 1, 2019, and
3the effective date of this division of this Act, shall be
4limited to one hundred thousand dollars in the aggregate for
5any calendar year in which claims are eligible for a refund and
6shall not be allowed unless refund claims are filed by October
71, 2022, notwithstanding any other law to the contrary. If the
8amount of claims totals more than one hundred thousand dollars
9in the aggregate for any calendar year in which claims are
10eligible for a refund, the department of revenue shall prorate
11the one hundred thousand dollars in the aggregate among all the
12claimants for that particular calendar year in relation to the
13amounts of the claimants’ valid claims.
14 Sec. 18. EFFECTIVE DATE. This division of this Act, being
15deemed of immediate importance, takes effect upon enactment.
16 Sec. 19. RETROACTIVE APPLICABILITY. This division of this
17Act applies retroactively to January 1, 2019.
18DIVISION III
19National guard Pay
20 Sec. 20. Section 422.7, Code 2022, is amended by adding the
21following new subsection:
22 NEW SUBSECTION. 42B. Subtract, to the extent included, up
23to twenty thousand dollars of pay received by the taxpayer for
24service pursuant to 32 U.S.C. §502.
25 Sec. 21. APPLICABILITY. This division of this Act applies
26to tax years beginning on or after January 1, 2023.
27DIVISION IV
28NET OPERATING LOSS DEDUCTION
29 Sec. 22. Section 422.7, unnumbered paragraph 1, Code 2022,
30is amended to read as follows:
31The term “net income” means the adjusted gross income before
32the net operating loss deduction taxable income as properly
33computed for federal income tax purposes under section 63
34of the Internal Revenue Code before the net operating loss
35deduction, with the following adjustments:
-5-1 Sec. 23. Section 422.7, Code 2022, is amended by adding the
2following new subsection:
3 NEW SUBSECTION. 6. a. For tax years beginning in the 2023
4calendar year, subtract the amount of federal income taxes
5paid during the tax year to the extent payment is for a tax
6year beginning prior to January 1, 2023, and add any federal
7income tax refunds received during the tax year to the extent
8the federal income tax was deducted for a tax year beginning
9prior to January 1, 2023. Where married persons who have filed
10a joint federal income tax return file separately for state tax
11purposes, such total shall be divided between them according
12to the portion of the total paid by each. Federal income taxes
13paid for a tax year in which an Iowa return was not required to
14be filed shall not be subtracted.
15b. Notwithstanding any other provision of law to the
16contrary, amounts subtracted or added pursuant to this
17subsection shall not be included in the calculation of net
18income for purposes of section 422.5, subsection 3 or 3B, or
19section 422.13.
20c. This subsection is repealed January 1, 2028.
21 Sec. 24. Section 422.9, Code 2022, is amended by striking
22the section and inserting in lieu thereof the following:
23422.9 Carryforward of Iowa net operating loss — deduction.
241. If, after applying all of the adjustments provided for in
25section 422.7 and the allocation provisions of section 422.8,
26and subject to the modifications provided in section 172(d)
27of the Internal Revenue Code, the taxable income results in
28a net operating loss, such Iowa net operating loss, if any,
29shall be carried forward and such carryforward amounts shall be
30available as a deduction under this subsection in future years.
312. The deduction allowed under subsection 1 shall be
32calculated by subtracting the sum of the following from net
33income:
34a. The aggregate amount of net operating losses arising in
35taxable years beginning before January 1, 2023, carried to such
-6-1taxable year.
2b. The lesser of the aggregate amount of net operating
3losses arising in taxable years beginning after December 31,
42022, carried to such taxable year, or eighty percent of the
5excess of taxable income, if any, computed without regard to
6the deductions under this section and, to the extent included
7in the Iowa net income calculation, sections 199A and 250 of
8the Internal Revenue Code, over the amount determined under
9paragraph “a”.
10 Sec. 25. Section 422.35, subsection 11, Code 2022, is
11amended by striking the subsection and inserting in lieu
12thereof the following:
1311. a. If, after applying all of the adjustments provided
14for in this section and the allocation and apportionment
15provisions of section 422.33, the Iowa taxable income results
16in a net operating loss, such Iowa net operating loss shall
17be carried forward and such carryforward amounts shall be
18available as a deduction under this subsection in future years.
19b. For the current year subtract the sum of the following,
20to the extent available, any net operating loss carryforward
21amount as follows:
22(1) The aggregate amount of net operating losses arising in
23taxable years beginning before January 1, 2023, carried to such
24taxable year.
25(2) The lesser of the aggregate amount of net operating
26losses arising in taxable years beginning after December 31,
272022, carried to such taxable year, or eighty percent of the
28excess of taxable income, if any, computed without regard to
29the deductions under this subsection to the extent included in
30the Iowa net income calculation, section 250 of the Internal
31Revenue Code, over the amount determined under subparagraph
32(1).
33c. Any portion of a net operating loss which was sustained
34from that portion of the trade or business carried on outside
35the state of Iowa shall not be deducted.
-7- 1d. The deductions described in this subsection are allowed
2subject to the requirement that a corporation affected by the
3allocation provisions of section 422.33 shall be permitted to
4deduct only that portion of the deductions for net operating
5loss that is fairly and equitably allocable to Iowa, under
6rules prescribed by the director.
7 Sec. 26. REPEAL. 2018 Iowa Acts, chapter 1161, sections
8108, 109, 120, 128, and 129, are repealed.
9 Sec. 27. EFFECTIVE DATE. This division of this Act takes
10effect January 1, 2023.
11 Sec. 28. APPLICABILITY. This division of this Act applies
12to tax years beginning on or after January 1, 2023.
13DIVISION V
14FRANCHISE TAX
15 Sec. 29. Section 422.63, Code 2022, is amended to read as
16follows:
17422.63 Amount of tax.
181. The franchise tax is imposed annually in an amount equal
19to five the percent specified in subsection 2 of the net income
20received or accrued during the taxable year. If the net income
21of the financial institution is derived from its business
22carried on entirely within the state, the tax shall be imposed
23on the entire net income, but if the business is carried on
24partly within and partly without the state, the portion of net
25income reasonably attributable to the business within the state
26shall be specifically allocated or equitably apportioned within
27and without the state under rules of the director.
282. a. For tax years beginning prior to January 1, 2023,
29five percent.
30b. For tax years beginning on or after January 1, 2023, but
31before January 1, 2024, four and four-fifths percent.
32c. For tax years beginning on or after January 1, 2024, but
33before January 1, 2025, four and three-fifths percent.
34d. For tax years beginning on or after January 1, 2025, but
35before January 1, 2026, four and two-fifths percent.
-8- 1e. For tax years beginning on or after January 1, 2026, but
2before January 1, 2027, four and one-fifth percent.
3f. For tax years beginning on or after January 1, 2027,
4three and nine-tenths percent.
5DIVISION VI
6INSURANCE PREMIUMS TAX
7 Sec. 30. Section 432.1, subsection 2, Code 2022, is amended
8to read as follows:
92. The “applicable percent” for purposes of subsection 1 of
10this section and section 432.2 is the following:
11a. For calendar years beginning before the 2003 calendar
12year, two percent.
13b. For the 2003 calendar year, one and three-fourths
14percent.
15c. For the 2004 calendar year, one and one-half percent.
16d. For the 2005 calendar year, one and one-fourth percent.
17e. For the 2006 and subsequent calendar years year through
18the 2022 calendar year, one percent.
19f. For the 2023 calendar year, ninety-five hundredths of one
20percent.
21g. For the 2024 and subsequent calendar years, nine-tenths
22of one percent.
23 Sec. 31. Section 432.1, subsection 4, Code 2022, is amended
24to read as follows:
254. The “applicable percent” for purposes of subsection 3 is
26the following:
27a. For calendar years beginning before the 2004 calendar
28year, two percent.
29b. For the 2004 calendar year, one and three-fourths
30percent.
31c. For the 2005 calendar year, one and one-half percent.
32d. For the 2006 calendar year, one and one-fourth percent.
33e. For the 2007 and subsequent calendar years year through
34the 2022 calendar year, one percent.
35f. For the 2023 calendar year, ninety-five hundredths of one
-9-1percent.
2g. For the 2024 and subsequent calendar years, nine-tenths
3of one percent.
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2modifying sales and use taxes, individual and corporate
3income taxes, the franchise tax, and the insurance premiums
4tax, and including effective date, applicability, and
5retroactive applicability provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2SALES AND USE TAX ON SERVICES AND EXEMPTIONS
3 Section 1. Section 423.2, subsection 6, paragraph bu, Code
42022, is amended to read as follows:
5bu. Software as a service Cloud computing.
6 Sec. 2. Section 423.2, subsection 6, Code 2022, is amended
7by adding the following new paragraphs:
8 NEW PARAGRAPH. bv. Web hosting.
9 NEW PARAGRAPH. bw. Digital automated services.
10 NEW PARAGRAPH. bx. Scooter rentals.
11 Sec. 3. Section 423.2, Code 2022, is amended by adding the
12following new subsection:
13 NEW SUBSECTION. 13. The department shall adopt rules
14pursuant to chapter 17A to administer subsection 6, paragraphs
15“bu”, “bv”, and “bw”.
16 Sec. 4. Section 423.3, subsection 8, paragraph d,
17subparagraph (1), Code 2022, is amended by adding the following
18new subparagraph division:
19 NEW SUBPARAGRAPH DIVISION. (e) A specified digital
20product.
21 Sec. 5. Section 423.3, subsection 47, paragraph a,
22subparagraph (4), Code 2022, is amended by striking the
23subparagraph.
24 Sec. 6. Section 423.3, subsection 68, paragraph c,
25subparagraph (1), subparagraph division (a), Code 2022, is
26amended to read as follows:
27(a) “Clothing” includes but is not limited to the
28following: aprons, household and shop; athletic supporters;
29baby receiving blankets; bathing suits and caps; beach capes
30and coats; belts and suspenders; boots; coats and jackets;
31costumes; diapers (children and adults, including disposable
32diapers); earmuffs; footlets; formal wear; garters and garter
33belts; girdles; gloves and mittens for general use; hats
34and caps; hosiery; insoles for shoes; lab coats; neckties;
35overshoes; pantyhose; rainwear; rubber pants; sandals;
-1-1scarves; shoes and shoelaces; slippers; sneakers; socks and
2stockings; steel-toed shoes; underwear; uniforms, athletic and
3nonathletic; and wedding apparel.
4 Sec. 7. Section 423.3, subsection 104, paragraph a, Code
52022, is amended to read as follows:
6a. The sales price of specified digital products and of
7prewritten computer software sold, and of enumerated services
8described in section 423.2, subsection 1, paragraph “a”,
9subparagraph (5), or section 423.2, subsection 6, paragraphs
10“bq”, “br”, “bs”, and “bu”, “bv”, and “bw” furnished, to a
11commercial enterprise for use exclusively by the commercial
12enterprise. The use of prewritten computer software, a
13specified digital product, or service fails to qualify as a
14use exclusively by the commercial enterprise if its use for
15noncommercial purposes is more than de minimis.
16 Sec. 8. Section 423.3, subsection 104, paragraph b,
17subparagraph (1), Code 2022, is amended to read as follows:
18(1) “Commercial enterprise” means the same as defined in
19section 423.3, subsection 47, paragraph “d”, subparagraph (1),
20but also includes professions and occupations and includes
21public utilities as defined in section 476.1, subsection 3.
22 Sec. 9. Section 423.3, Code 2022, is amended by adding the
23following new subsections:
24 NEW SUBSECTION. 108. The sales price from the sale of
25feminine hygiene products. For purposes of this subsection,
26“feminine hygiene products” means tampons, panty liners,
27menstrual cups, sanitary napkins, and other similar tangible
28personal property designed for feminine hygiene in connection
29with the human menstrual cycle.
30 NEW SUBSECTION. 109. The sales price from the sale of a
31child or adult diaper, whether cloth or disposable.
32 Sec. 10. Section 423.4, subsection 1, paragraph a, Code
332022, is amended by adding the following new subparagraphs:
34 NEW SUBPARAGRAPH. (10) A nonprofit facility licensed by
35the state built on or after January 1, 2022, that provides
-2-1residential addiction recovery and emergency shelter services
2for children. For purposes of this subparagraph, “children”
3means the same as “child” as defined in section 234.1.
4 NEW SUBPARAGRAPH. (11) A fair as defined in section 174.1.
5 Sec. 11. REFUNDS. Refunds of taxes, interest, or penalties
6which arise from claims resulting from the enactment of section
7423.4, subsection 1, paragraph “a”, subparagraph (11), in this
8division of this Act, occurring between January 1, 2021, and
9the effective date of this section of this Act shall be limited
10to twenty-five thousand dollars in the aggregate, and shall not
11be allowed unless refund claims are filed by October 1, 2022,
12notwithstanding any other law to the contrary. If the amount
13of the claims totals more than twenty-five thousand dollars
14in the aggregate, the department of revenue shall prorate the
15twenty-five thousand dollars in the aggregate among all the
16claimants’ in relation to the amounts of the claimants valid
17claims.
18 Sec. 12. EFFECTIVE DATE. Except as otherwise provided, this
19division of this Act takes effect January 1, 2023.
20 Sec. 13. EFFECTIVE DATE. The following takes effect January
211, 2024:
22The section of this division of this Act amending section
23423.3, subsection 47, paragraph “a”, subparagraph (4).
24 Sec. 14. EFFECTIVE DATE. The following, being deemed of
25immediate importance, take effect upon enactment:
261. The section of this division of this Act enacting a
27provision allowing for refunds of taxes, interest, or penalties
28which arise from the enactment of section 423.4, subsection 1,
29paragraph “a”, subparagraph (11).
302. The portion of the section of this division of this
31Act enacting section 423.4, subsection 1, paragraph “a”,
32subparagraph (11).
33 Sec. 15. RETROACTIVE APPLICABILITY. The following apply
34retroactively to January 1, 2021:
351. The section of this division of this Act enacting a
-3-1provision allowing for refunds of taxes, interest, or penalties
2which arise from the enactment of section 423.4, subsection 1,
3paragraph “a”, subparagraph (11).
42. The portion of the section of this division of this
5Act enacting section 423.4, subsection 1, paragraph “a”,
6subparagraph (11).
7DIVISION II
8MANUFACTURED FOOD — SALES TAX EXEMPTION
9 Sec. 16. Section 423.3, subsection 49, Code 2022, is amended
10to read as follows:
1149. a. The sales price from the sale of carbon dioxide
12in a liquid, solid, or gaseous form, electricity, steam, and
13other taxable services and the lease or rental of tangible
14personal property when used by a manufacturer of food products
15 to primarily produce marketable food products for human
16consumption food or food ingredients, including but not
17limited to treatment of material to change its form, context,
18or condition, in order to produce the food product or food
19ingredients, maintenance of quality or integrity of the
20food product or food ingredients, changing or maintenance of
21temperature levels necessary to avoid spoilage or to hold the
22food product or food ingredients in marketable condition,
23maintenance of environmental conditions necessary for the safe
24or efficient use of machinery and material used to produce
25the food product or food ingredients, sanitation and quality
26control activities, formation of packaging, placement into
27shipping containers, and movement of the material or food
28product or food ingredients until shipment from the building
29of manufacture.
30b. For purposes of this subsection, “food or food
31ingredients” means the same as “food and food ingredients” as
32defined in subsection 57, paragraph “d”, and includes tangible
33personal property that could be sold for ingestion or chewing
34by humans but is sold for another use.
35 Sec. 17. REFUNDS. Refunds of taxes, interest, or penalties
-4-1which arise from the enactment of this division of this Act,
2for sales or services occurring between January 1, 2019, and
3the effective date of this division of this Act, shall be
4limited to one hundred thousand dollars in the aggregate for
5any calendar year in which claims are eligible for a refund and
6shall not be allowed unless refund claims are filed by October
71, 2022, notwithstanding any other law to the contrary. If the
8amount of claims totals more than one hundred thousand dollars
9in the aggregate for any calendar year in which claims are
10eligible for a refund, the department of revenue shall prorate
11the one hundred thousand dollars in the aggregate among all the
12claimants for that particular calendar year in relation to the
13amounts of the claimants’ valid claims.
14 Sec. 18. EFFECTIVE DATE. This division of this Act, being
15deemed of immediate importance, takes effect upon enactment.
16 Sec. 19. RETROACTIVE APPLICABILITY. This division of this
17Act applies retroactively to January 1, 2019.
18DIVISION III
19National guard Pay
20 Sec. 20. Section 422.7, Code 2022, is amended by adding the
21following new subsection:
22 NEW SUBSECTION. 42B. Subtract, to the extent included, up
23to twenty thousand dollars of pay received by the taxpayer for
24service pursuant to 32 U.S.C. §502.
25 Sec. 21. APPLICABILITY. This division of this Act applies
26to tax years beginning on or after January 1, 2023.
27DIVISION IV
28NET OPERATING LOSS DEDUCTION
29 Sec. 22. Section 422.7, unnumbered paragraph 1, Code 2022,
30is amended to read as follows:
31The term “net income” means the adjusted gross income before
32the net operating loss deduction taxable income as properly
33computed for federal income tax purposes under section 63
34of the Internal Revenue Code before the net operating loss
35deduction, with the following adjustments:
-5-1 Sec. 23. Section 422.7, Code 2022, is amended by adding the
2following new subsection:
3 NEW SUBSECTION. 6. a. For tax years beginning in the 2023
4calendar year, subtract the amount of federal income taxes
5paid during the tax year to the extent payment is for a tax
6year beginning prior to January 1, 2023, and add any federal
7income tax refunds received during the tax year to the extent
8the federal income tax was deducted for a tax year beginning
9prior to January 1, 2023. Where married persons who have filed
10a joint federal income tax return file separately for state tax
11purposes, such total shall be divided between them according
12to the portion of the total paid by each. Federal income taxes
13paid for a tax year in which an Iowa return was not required to
14be filed shall not be subtracted.
15b. Notwithstanding any other provision of law to the
16contrary, amounts subtracted or added pursuant to this
17subsection shall not be included in the calculation of net
18income for purposes of section 422.5, subsection 3 or 3B, or
19section 422.13.
20c. This subsection is repealed January 1, 2028.
21 Sec. 24. Section 422.9, Code 2022, is amended by striking
22the section and inserting in lieu thereof the following:
23422.9 Carryforward of Iowa net operating loss — deduction.
241. If, after applying all of the adjustments provided for in
25section 422.7 and the allocation provisions of section 422.8,
26and subject to the modifications provided in section 172(d)
27of the Internal Revenue Code, the taxable income results in
28a net operating loss, such Iowa net operating loss, if any,
29shall be carried forward and such carryforward amounts shall be
30available as a deduction under this subsection in future years.
312. The deduction allowed under subsection 1 shall be
32calculated by subtracting the sum of the following from net
33income:
34a. The aggregate amount of net operating losses arising in
35taxable years beginning before January 1, 2023, carried to such
-6-1taxable year.
2b. The lesser of the aggregate amount of net operating
3losses arising in taxable years beginning after December 31,
42022, carried to such taxable year, or eighty percent of the
5excess of taxable income, if any, computed without regard to
6the deductions under this section and, to the extent included
7in the Iowa net income calculation, sections 199A and 250 of
8the Internal Revenue Code, over the amount determined under
9paragraph “a”.
10 Sec. 25. Section 422.35, subsection 11, Code 2022, is
11amended by striking the subsection and inserting in lieu
12thereof the following:
1311. a. If, after applying all of the adjustments provided
14for in this section and the allocation and apportionment
15provisions of section 422.33, the Iowa taxable income results
16in a net operating loss, such Iowa net operating loss shall
17be carried forward and such carryforward amounts shall be
18available as a deduction under this subsection in future years.
19b. For the current year subtract the sum of the following,
20to the extent available, any net operating loss carryforward
21amount as follows:
22(1) The aggregate amount of net operating losses arising in
23taxable years beginning before January 1, 2023, carried to such
24taxable year.
25(2) The lesser of the aggregate amount of net operating
26losses arising in taxable years beginning after December 31,
272022, carried to such taxable year, or eighty percent of the
28excess of taxable income, if any, computed without regard to
29the deductions under this subsection to the extent included in
30the Iowa net income calculation, section 250 of the Internal
31Revenue Code, over the amount determined under subparagraph
32(1).
33c. Any portion of a net operating loss which was sustained
34from that portion of the trade or business carried on outside
35the state of Iowa shall not be deducted.
-7- 1d. The deductions described in this subsection are allowed
2subject to the requirement that a corporation affected by the
3allocation provisions of section 422.33 shall be permitted to
4deduct only that portion of the deductions for net operating
5loss that is fairly and equitably allocable to Iowa, under
6rules prescribed by the director.
7 Sec. 26. REPEAL. 2018 Iowa Acts, chapter 1161, sections
8108, 109, 120, 128, and 129, are repealed.
9 Sec. 27. EFFECTIVE DATE. This division of this Act takes
10effect January 1, 2023.
11 Sec. 28. APPLICABILITY. This division of this Act applies
12to tax years beginning on or after January 1, 2023.
13DIVISION V
14FRANCHISE TAX
15 Sec. 29. Section 422.63, Code 2022, is amended to read as
16follows:
17422.63 Amount of tax.
181. The franchise tax is imposed annually in an amount equal
19to five the percent specified in subsection 2 of the net income
20received or accrued during the taxable year. If the net income
21of the financial institution is derived from its business
22carried on entirely within the state, the tax shall be imposed
23on the entire net income, but if the business is carried on
24partly within and partly without the state, the portion of net
25income reasonably attributable to the business within the state
26shall be specifically allocated or equitably apportioned within
27and without the state under rules of the director.
282. a. For tax years beginning prior to January 1, 2023,
29five percent.
30b. For tax years beginning on or after January 1, 2023, but
31before January 1, 2024, four and four-fifths percent.
32c. For tax years beginning on or after January 1, 2024, but
33before January 1, 2025, four and three-fifths percent.
34d. For tax years beginning on or after January 1, 2025, but
35before January 1, 2026, four and two-fifths percent.
-8- 1e. For tax years beginning on or after January 1, 2026, but
2before January 1, 2027, four and one-fifth percent.
3f. For tax years beginning on or after January 1, 2027,
4three and nine-tenths percent.
5DIVISION VI
6INSURANCE PREMIUMS TAX
7 Sec. 30. Section 432.1, subsection 2, Code 2022, is amended
8to read as follows:
92. The “applicable percent” for purposes of subsection 1 of
10this section and section 432.2 is the following:
11a. For calendar years beginning before the 2003 calendar
12year, two percent.
13b. For the 2003 calendar year, one and three-fourths
14percent.
15c. For the 2004 calendar year, one and one-half percent.
16d. For the 2005 calendar year, one and one-fourth percent.
17e. For the 2006 and subsequent calendar years year through
18the 2022 calendar year, one percent.
19f. For the 2023 calendar year, ninety-five hundredths of one
20percent.
21g. For the 2024 and subsequent calendar years, nine-tenths
22of one percent.
23 Sec. 31. Section 432.1, subsection 4, Code 2022, is amended
24to read as follows:
254. The “applicable percent” for purposes of subsection 3 is
26the following:
27a. For calendar years beginning before the 2004 calendar
28year, two percent.
29b. For the 2004 calendar year, one and three-fourths
30percent.
31c. For the 2005 calendar year, one and one-half percent.
32d. For the 2006 calendar year, one and one-fourth percent.
33e. For the 2007 and subsequent calendar years year through
34the 2022 calendar year, one percent.
35f. For the 2023 calendar year, ninety-five hundredths of one
-9-1percent.
2g. For the 2024 and subsequent calendar years, nine-tenths
3of one percent.
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