This bill amends Iowa's corporate income tax law to create a deduction for net controlled foreign corporation tested income (NCTI). The current law, specifically Code section 422.35(12), references global intangible low-taxed income (GILTI) under section 951A of the Internal Revenue Code (IRC). However, recent federal legislation has replaced GILTI with NCTI, which encompasses a broader range of foreign income. To align state law with this change, the bill removes the specific references to GILTI and allows for the deduction of income under section 951A of the IRC, now classified as NCTI.

Additionally, the bill includes a retroactive applicability provision, stating that the changes will take effect from January 1, 2026, for tax years beginning on or after that date. This ensures that taxpayers can benefit from the updated deduction for NCTI as soon as it is applicable, reflecting the recent changes in federal tax law.

Statutes affected:
Introduced: 422.35