This bill amends Section 422.7 of the Iowa Code to allow taxpayers to deduct excess business losses for individual income tax purposes, specifically addressing the limitations imposed by section 461(l) of the Internal Revenue Code (IRC). The new language specifies that for tax years beginning on or after January 1, 2021, but before January 1, 2023, taxpayers can subtract the amount by which their federal adjusted gross income was increased due to the application of section 461(l). Additionally, it clarifies that federal net operating loss deductions carried over from taxable years prior to January 1, 2023, are disallowed for state income tax purposes, except as outlined in the new provisions.

The bill also includes a retroactive applicability clause, ensuring that these changes apply to the specified tax years. This means that taxpayers who were affected by the limitations on business loss deductions during this period can now benefit from the ability to deduct those losses on their state income tax returns. Overall, the legislation aims to provide relief to taxpayers by allowing them to account for business losses that were previously disallowed under state law.

Statutes affected:
Introduced: 422.7