Bills › 91st General Assembly
Creating a state corporate income tax deduction for net controlled foreign corporation tested income, and including retroactive applicability provisions
Sponsored by the Senate Commerce Committee
Where it is now
- Done: IntroducedFebruary 3, 2026
- Done: SubcommitteeFebruary 3, 2026
- Done: Senate committeeFebruary 11, 2026
- Skipped: Passes the SenateContinued as SF 2492
- Next: House committee
- Next: Passes the House
- Next: To the Governor
- Next: Signed into law
Became SF 2492 → Its progress continues under the new number. Go to SF 2492 What’s a funnel?
What’s in it
AI summary Iowa businesses that earn money from foreign companies would be able to take a deduction on their state taxes. This change updates the law to match new federal rules that renamed a specific type of foreign income. By making this update, the state ensures companies can still use the tax deduction even though the name of the income has changed.1
Read the official explanation
This bill creates a state corporate income tax deduction for net controlled foreign corporation tested income (NCTI).35(12) specifically references global intangible low-taxed income (GILTI) under section 951A of the Internal Revenue Code (IRC) for purposes of a state corporate income tax deduction allowed under that Code section. Recent federal legislation replaced GILTI with NCTI under section 951A of the IRC. NCTI is the aggregate amount of net income subject to federal tax that is earned by a taxpayer from controlled foreign corporations of the taxpayer, and is applied more broadly to foreign income than GILTI. 35(12) specifically references GILTI income under section 951A of the IRC. The bill strikes the specific reference to GILTI but continues to allow the deduction for income under section 951A of the IRC which is now recharacterized as NCTI.
Why it matters. Corporations in Iowa that earn income from controlled foreign corporations would be able to claim a state corporate income tax deduction for this income. This change updates the tax code to reflect federal changes that replaced the previous GILTI income category with net controlled foreign corporation tested income.2
Senate subcommittee
Named February 18, 2026. On March 4, 2026 it recommended passage.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
1 written public comment to its subcommittee: February 9, 2026 (1) · on the Legislature’s site
Fiscal note
AI summary This bill creates a new state corporate income tax deduction for certain foreign corporation income to replace an existing deduction. It is expected to decrease revenue to the state's General Fund by $2.1 million in fiscal year 2026, $9.2 million in fiscal year 2027, $11.4 million in fiscal year 2028, $11.7 million in fiscal year 2029, $11.9 million in fiscal year 2030, and $12.1 million in fiscal year 2031.4
Read the fiscal note
Description
Senate File 2492 creates a State corporate income tax deduction for net controlled foreign corporation (CFC) tested income (net CFC tested income or NCTI) from a foreign corporation, replacing the tax deduction for global intangible low-taxed income (GILTI). The Bill applies retroactively to tax years beginning on or after January 1, 2026.
Background
The One Big Beautiful Bill Act of 2025 replaced GILTI with NCTI, which is a U.S. tax law that requires Americans who are owners of foreign corporations to pay federal tax, offset by a 40.0% federal deduction. Currently, the Iowa Code specifically references a deduction for GILTI under 26 U.S.C. §951A; however, federal code changed GILTI to NCTI.
Assumptions
- The projection for NCTI is based on tax year (TY) 2023 and TY 2024 GILTI information reported on Iowa corporate income tax returns.
- Net CFC tested income represents 103.5% of GILTI reported on Iowa corporate tax returns, based on Internal Revenue Service ratios of NCTI to GILTI from TY 2018 and TY 2021.
- Iowa’s total apportioned share of GILTI reported in TY 2024 is approximately $39.750 billion from 838 taxpayers, representing approximately 87.0% of all corporate income tax returns that are expected to be filed.
- The number of corporate income taxpayers in TY 2024 remains similar to the amount in TY 2023.
- The Iowa Department of Revenue (IDR) estimates a TY 2024 revenue impact of $10.9 million due to the NCTI deduction.
- Based on Moody’s projections used by the IDR, the annual average percentage increase in corporate profits is 1.9%, which is assumed for tax years beginning in TY 2025.
- The Bill is expected to have fiscal impacts beginning annually in FY 2026 due to the retroactivity of the Bill.
Fiscal Impact
Senate File 2492 is expected to decrease revenue to the General Fund by the following amounts:
- FY 2026 = $2.1 million
- FY 2027 = $9.2 million
- FY 2028 = $11.4 million
- FY 2029 = $11.7 million
- FY 2030 = $11.9 million
- FY 2031 = $12.1 million
Sources
- Iowa Department of Revenue
- Internal Revenue Service
- Final Fiscal Note — Corporate Income Tax, Section 951A Income · May 14, 2026 · $12.1M
- Corporate Income Tax, Section 951A Income · April 20, 2026 · $12.1M
Family tree
Study bill
91st General Assembly