Registration Requirements In Iowa
All businesses in Iowa are required to register with the Iowa Secretary of State. Some businesses may be required to re-register annually. More information can be found on their website.
If you operate a business with nexus in Iowa, you must register with the Iowa Department of Revenue. More information can be found on their website below.
S Corporation Tax
Iowa recognizes the federal S-election, and Iowa S corporations are not required to pay tax to the state. However, individual S corporation shareholders will owe tax on their share of the corporation’s income. S corporations are required to file form IA1120S - Income tax return for s corporations
LLCs and partnerships are not required to pay income tax to Iowa. Instead, income from the business is distributed to individual LLC members or partners, who then pay Iowa income tax on that amount with their personal return. Partnerships are required to file form IA 1065 - Partnership return of income.
Franchise Income Tax
Financial institutions doing business in Iowa must file form IA1120F - Franchise return for Financial Institutions. Financial institutions include state banks chartered in or out of Iowa, national banks, national association banks, federal savings banks, production credit associations, federally chartered savings and loan associations, trust companies, financial institutions chartered by the federal Home Loan Bank Board, savings and loan associations incorporated in another state, and any financial institution controlled by the Resolution Trust Corporation.
S corporations and partnerships may file an Iowa composite tax return and pay any tax on behalf of nonresident shareholders who have no other Iowa income and meet minimum requirements. Tax rates vary by income and are as follows:
Individual Income Tax
Iowa generally conforms to the Internal Revenue Code on a rolling basis, and therefore it adopts most federal provisions, unless otherwise modified.
The starting point for computing Iowa's personal income tax liability is the federal adjusted gross income.
Iowa does allow their own state defined standard and itemized deduction. The amount of the standard deduction depends on filing status and the amount of adjusted gross income (AGI). The standard deduction ranges are as follows:
$2,110 for single tax filers
$2,110 for married taxpayers filing separately
$5,210 for married filing jointly
For 2019 and 2020, the QBI deduction allowed for Iowa will be an equal rate of 25% of the federal deduction. During 2021 the Iowa QBI deduction increases to 50% of the federal QBI deduction and during 2022 and thereafter it increases further to 75% of the federal QBI deduction.
Generally, you need to file an Iowa income tax return if you have net income of more than $9,000 for single filers, and $13,500 for all other filers. Tax rates for individuals are as follows:
CARES Act Guidance
Rolling conformity states generally adopt changes to the IRC as they are enacted at the federal level, unless otherwise modified. Iowa has decoupled from all the CARES Act provisions.
Returns for s corporations, partnerships, composite, individual, and franchise tax are generally due on the last day of the fourth month following the close of the tax year. For most taxpayers, this will be April 30th.
Estimated payments are not required for s corporations or partnerships filing a composite return. Businesses which file a franchise tax return in Iowa will need to make estimated payments adequate enough to owe less than $1,000 on their returns.
Individuals need to pay estimated taxes if they expect to owe more than $200 in tax from income not subject to withholding. The form IA 1040ES can be found here:
Filing An Extension
In order to be granted an extension in Iowa, 90% of the tax due must be paid by the due date of the return. This will allow for an additional 6 months to file a return without a late file penalty.
If your business was formed or is located in another state, but generates income in Iowa, it may be subject to Iowa taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.
Iowa Department of Revenue:
Iowa Secretary of State: