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SSB 3105

A bill for an act creating a state corporate income tax deduction for net controlled foreign corporation tested income, and including retroactive applicability provisions.

2025-2026 Regular Session

Iowa bill creates corporate income tax deduction for foreign subsidiary earnings with retroactive effect, reducing state revenue to benefit multinational corporations.

Subcommittee Meeting: 02/09/2026 12:30PM Senate Lounge.
#corporatetaxes #foreignbusinesses #income #incometaxes #internalrevenuecode
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Bill Summary · SSB 3105

Legislative bill overview

SSB 3105 would create a state corporate income tax deduction for Iowa corporations on their "net controlled foreign corporation tested income"—essentially income earned by foreign subsidiaries of Iowa-based companies. The bill includes retroactive applicability, meaning it would apply to tax years before its official enactment date.

Why is this important

This directly affects Iowa's corporate tax revenue and competitiveness for business taxation. By allowing deductions for foreign-source income, the state reduces taxes on multinational corporations, potentially incentivizing corporate headquarters or investment in Iowa but at the cost of state tax collections. The retroactive provision means immediate revenue loss for prior tax years.

Potential points of contention

  • Revenue impact: Retroactive application could result in significant refunds to corporations for prior years, reducing state revenue when budgets may be tight
  • Fairness concerns: The deduction primarily benefits large multinational corporations; critics may argue this shifts tax burden to smaller businesses and individuals
  • Federal tax alignment: The bill references federal tax code concepts (controlled foreign corporation tested income from the 2017 Tax Cuts and Jobs Act), which could create complexity and administrative challenges in state implementation

Compiled from official sources — confirm details with the bill’s official record.

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