The calculation of QREs conformed with the federal research tax credit under IRC Sec. 2317, Iowa’s RAC provided a refundable credit equal to 6.5% of a taxpayer’s increasing qualified research expenditures (QREs) in Iowa.
7 Once such annual rate reductions results in a flat corporate income tax rate of 5.5%, Iowa’s corporate income tax rate will remain at 5.5% for all subsequent tax years. 6 Such corporate income tax rate reductions cannot result in a tax rate below 5.5%. 5 These new rates, rounded to the nearest 0.1%, are then applied to the tax year beginning on or after the January 1 following the applicable determination date. 4 If such receipts exceed $700 million, the Iowa Department of Revenue (Department of Revenue) is required to adjust the corporate income tax rates based on the rates that would have generated $700 million of Iowa net corporate income tax receipts in the preceding fiscal year. 1 thereafter (defined in the legislation as the “determination date”), the Iowa Department of Management must determine the Iowa net corporate income tax receipts for the preceding fiscal year. 9.8% on Iowa taxable income over $250,000.5.5% on a taxpayer’s first $100,000 of Iowa taxable income.Under the legislation, Iowa’s corporate income tax for the 20 tax years is imposed at the following graduated rates: 2317 provides that Iowa’s top two graduated corporate income tax rates will be reduced contingent upon the state’s corporate income tax receipts for the preceding fiscal year exceeding $700 million. 1 The legislation also significantly changes both the calculation of and timing for claiming the Iowa research activities credit (Iowa RAC).īeginning with the 2023 tax year, H.F. 2317) that reduces the state’s corporate income tax rate contingent upon future revenue targets being satisfied phases in reductions to Iowa’s individual income tax rate and modifies the taxability of certain income received by retirees and farmers. Kim Reynolds approved significant tax legislation (H.F.
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