This bill creates a new tax deduction for Iowa renters, allowing individuals to subtract gross rent paid for their primary home (including manufactured/mobile homes) from their individual income tax. It directly affects renters who use a dwelling as their main residence, covering rent for the home itself and up to one acre of land for manufactured homes. The deduction applies to rent paid at arm's length for occupancy, with "homestead" defined as a rented primary residence. The provision takes effect for tax years beginning January 1, 2026.
This Iowa bill (HF 496) lowers the state's individual income tax rates for 2026 and beyond. It reduces the standard tax rate from 3.8% to 2.5% on taxable income, and lowers the alternate tax rate from 4.3% to 3.0% for higher-income filers. The changes apply to all Iowa residents and nonresidents with taxable income, affecting most individual income tax returns filed for tax years beginning January 1, 2026. The bill modifies existing tax calculation methods but does not change filing requirements or exemptions.
HF 566 modifies Iowa's individual income tax rates for married couples filing jointly. It sets the tax rate to 0% for couples with five or more dependents under 18 or for first/second-time joint filers, and creates a $1,000 per dependent tax credit (up to 10 dependents under 18) for these couples. Any excess credit is refundable or can be applied to future tax bills. The bill takes effect immediately upon enactment and applies retroactively to tax years beginning January 1, 2025.
HF 568 removes interest income earned from banks and credit unions from Iowa's calculation of individual income tax. This directly affects Iowa taxpayers who earn interest on savings accounts, certificates of deposit, or similar deposits at qualifying financial institutions. The bill defines "bank" broadly (including credit unions and savings associations) and specifies that the change applies retroactively to tax years beginning on or after January 1, 2025. It does not change other tax rules but reduces taxable income for affected individuals starting in 2025.
This bill allows Iowa individual income taxpayers to deduct expenses paid to licensed nursing facilities (under Chapter 135C) for health-related care and services, provided those costs weren't already deducted for federal tax purposes. It directly affects Iowans paying for nursing care who file state income tax returns. The deduction applies to expenses incurred for health services, not general living costs at the facility. The law includes retroactive application, making it effective for tax years beginning on or after January 1, 2025.
HF 794 requires Iowa to withhold state income tax from sports wagering winnings whenever federal income tax is withheld on those winnings. This applies to individuals who win amounts triggering federal tax withholding, such as winnings over $600 from gambling under federal rules. The law will take effect on January 1, 2026.
HF 30 creates a tax deduction for Iowa law firms representing indigent clients in specific court-appointed cases. It directly affects eligible law firms with two or more attorneys (who practice at least half the year) and attorneys licensed for fewer than 10 years, for cases appointed on or after July 1, 2025. The deduction equals the difference between $150 per hour (or the firm's actual rate) and the state's standard hourly rate ($76-$86) for such cases, calculated based on the firm's pro rata share. The deduction applies retroactively to tax years beginning January 1, 2025.
HF 110 proposes to exclude overtime pay from the individual income tax in Iowa. This bill directly affects individuals who earn overtime compensation. It allows taxpayers to subtract the portion of their compensation earned at one and a half times their regular rate from their taxable income. These provisions would apply to tax years beginning on or after January 1, 2026.
HF 988 establishes catastrophic savings accounts for Iowa residents who own homes, effective January 1, 2026. This bill allows account holders to deduct contributions to these accounts from their state income tax, with lifetime limits tied to their homeowner's insurance premiums or the home's assessed value for self-insured individuals. Interest earned on these accounts is also tax-deductible. Funds can be withdrawn tax-free to pay deductibles for homeowner's insurance related to defined catastrophic events like floods or windstorms. However, withdrawals for non-qualified expenses are subject to state income tax and a 2.5% penalty.
SSB 1239 proposes to eliminate Iowa's individual income tax and alternate income tax, affecting all individual taxpayers. It establishes a "taxpayer relief trust fund" and an "income tax elimination fund," along with an "income tax elimination board" to oversee this process. The bill mandates the transfer of state funds, including an initial $2.6 billion, into the taxpayer relief trust fund. These funds, to be administered by the Iowa Public Employees’ Retirement System (IPERS), are intended to generate investment returns to support the future elimination of the individual income tax.
