Excluding from Iowa net income federal recovery rebates, certain paycheck protection program loan forgiveness, and pandemic-related unemployment compensation, and including effective date and retroactive applicability provisions

This bill excludes from Iowa net income federal recovery rebates, certain paycheck protection program loan forgiveness, and pandemic-related unemployment compensation. The bill is divided into divisions. DIVISION I —— FEDERAL RECOVERY REBATES. The bill relates to the state taxation of the federal recovery rebates (stimulus checks). In determining the amount of deduction for federal income tax for tax years beginning in the 2020 calendar year, the amount of the deduction for the tax year shall not be adjusted by the second round of stimulus checks received during the tax year of the income tax rebate provided pursuant to the federal Consolidated Appropriations Act, 2021, and the amount of such income tax rebate shall not be subject to state taxation. Current law excludes the first recovery rebate in 2020 Iowa Acts, chapter 1118, section 114. The division takes effect upon enactment. DIVISION II —— PAYCHECK PROTECTION PROGRAM (PPP). The bill excludes from the calculation of Iowa income tax the federal paycheck protection program second draw loan proceeds from the federal Consolidated Appropriations Act, 2021, Pub. L. 116-260, that are forgiven and excluded from federal gross income. Current law excludes the first round of paycheck protection program loan forgiveness in 2018 Iowa Acts, chapter 1118, section 109. The division takes effect upon enactment and applies retroactively to January 1, 2021, for tax years beginning on or after that date but before tax years beginning on or after January 1, 2022. DIVISION III —— UNEMPLOYMENT COMPENSATION. Under the bill, a taxpayer who has received compensation authorized pursuant to certain federal programs shall not include in the taxpayer’s Iowa net income the following: pandemic unemployment assistance; pandemic emergency unemployment compensation; pandemic unemployment compensation received through the memorandum issued by the president of the United States on August 8, 2020; and the extension of pandemic unemployment compensation. The division takes effect upon enactment and applies retroactively to January 1, 2020, for tax years beginning on or after that date but before January 1, 2022.