This bill introduces a tax deduction for individual and corporate income taxes for income derived from indigent representation by eligible law firms in Iowa. It defines an "eligible law firm" as one with two or more attorneys practicing for at least half of each tax year during which they handle an "eligible case." An "eligible case" refers to appointments made on or after July 1, 2025, for attorneys who have been licensed for fewer than ten years, specifically in accordance with Iowa Code sections 814.11 and 815.10, which pertain to the right to counsel for indigents and court-appointed counsel, respectively.

The deduction amount is calculated based on the difference between the total hours billed by the eligible attorney multiplied by either $150 or the actual hourly rate charged by the law firm, whichever is lower, and the total hours billed multiplied by the hourly rate in effect for the case as specified in section 815.7. Additionally, individual taxpayers who are partners in a partnership, shareholders in a subchapter S corporation, or members of a limited liability company can deduct their pro rata share of the deduction. The bill also includes a provision for retroactive applicability, making it effective for tax years beginning on or after January 1, 2025.

Statutes affected:
Introduced: 422.7, 814.11