Iowa Gov. Kim Reynolds signed Senate File 565 (SF 565) into law on June 1, 2023. SF 565 includes an update to the bonus depreciation provisions and to composite returns for financial institutions, among other items.
Conformity to Bonus Depreciation
Senate File 2417, enacted in 2018, created several future income tax changes contingent on the state meeting certain revenue triggers for Iowa’s fiscal year ending June 30, 2022. One of those future changes subject to the revenue triggers included Iowa’s conformity to federal bonus depreciation. Included in SF 565 is the repeal of said required revenue trigger.
As such, SF 565 updates Iowa’s law to conform to federal bonus depreciation rules and allows increased expensing under Internal Revenue Code Section 179 for assets placed in service on or after January 1, 2023.
Composite Returns for Financial Institutions
SF 565 removes financial institutions (and sole owners of one or more financial institutions) subject to the Iowa Financial Institution Franchise Tax from the recent requirement to file composite returns for tax years beginning on or after January 1, 2023.
The requirement was originally put into place under Senate File 608, enacted in 2022, for tax years beginning on or after January 1, 2022.
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