The state of Iowa has made the following tax law changes for tax year 2023:
Alternative Minimum Tax (AMT)
- Iowa's alternative minimum tax has been repealed.
- The AMT credit carryforward from a previous year may be applied until January 1, 2024.
- Iowa will no longer have its own standard or itemized deductions, incorporating the federal standard or itemized deduction instead.
- All taxpayers must now use the same filing status on their Iowa return as their federal return.
- Married taxpayers no longer have the option to file separately on a combined return.
- The number of tax brackets has decreased, accompanied by reduced rates.
- This reduction is part of a phased plan, with Iowa aiming for a single tax rate of 3.9% by 2026.
- Farm Tenancy Income Exclusion: Retired farmers can exclude income from a farm tenancy agreement by meeting specific holding period and material participation requirements.
- Education Savings accounts payments used for qualifying expenses: The amount of education savings account payments used for qualifying expenses may be deducted.
- Iowa Composite Credits: These credits should be reported on line 27 of the Iowa IA 1040. You must include the IA Schedule CC with your return.