116-260) modified the deductibility of expenses paid with PPP loans. The federal Consolidated Appropriations Act, 2021 (P. Pursuant to 2020 Iowa Acts, House File 2641, signed by Governor Reynolds on June 29, 2020, a taxpayer’s PPP loan that is forgiven and properly excluded from federal gross income under section 1106(i) of the CARES Act in a tax year beginning on or after January 1, 2019, will also qualify for exclusion from income for Iowa tax purposes. Under the PPP, loans may be fully forgiven if the funds are used as permitted under the program. The CARES Act establishes a loan program for qualifying small businesses to incentivize such businesses to keep workers on payroll despite possible financial strain due to the COVID-19 pandemic. Paycheck Protection Program (PPP) under the CARES Act. Changes in the CARES Act that affect prior year federal income tax payments may affect the computation of the federal income tax deduction or refund for Iowa tax purposes for those years, and are outside the scope of this guidance. Not all provisions of the CARES Act are covered by this guidance. tax years beginning in calendar years 2018 or 2019), but it also includes explanations of certain other provisions and their impact on Iowa income taxes for tax years beginning on or after January 1, 2020, that may be of interest to taxpayers. This guidance focuses primarily on Iowa’s nonconformity with this federal law for tax years 2018 or 2019 (i.e. Iowa generally conforms with these federal tax changes to the extent they affect Iowa income taxes for tax years beginning on or after January 1, 2020. Iowa has not conformed with any of these federal tax changes to the extent they apply to a tax year beginning prior to January 1, 2020, except as noted in the section regarding Paycheck Protection Program below. The CARES Act includes a number of federal tax changes, and several are retroactive to tax years 20. On March 27, 2020, President Donald Trump signed Public Law 116-136, the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020.
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