Budget & Taxes (Audits & Accountability)

This bill exempts certified public accountants (CPAs) from paying state income tax on fees earned from performing audits or examinations for local governments (such as cities, counties, or school districts). It modifies Iowa's tax codes (sections 422.7 and 422.35) to exclude this specific income from taxable earnings for both individual and corporate CPAs. The exemption applies retroactively to tax years beginning on or after January 1, 2026. This policy change directly affects CPAs who conduct government audits by reducing their state tax burden on those fees.

This bill (5374XD) exempts certified public accountants (CPAs) from Iowa state income tax on fees earned from auditing or examining local governments (like cities, counties, or school districts). It amends Iowa tax codes 422.7 (individual tax) and 422.35 (corporate tax) to exclude such income from taxable earnings. The exemption applies retroactively to tax years beginning on or after January 1, 2026. The bill directly affects CPAs who perform these government audits, removing a tax liability on their fees for this specific service.

This bill exempts certified public accountants (CPAs) from state income tax on fees earned from auditing or examining governmental subdivisions (like cities, counties, or school districts) in Iowa. It directly affects CPAs who perform these required audits, removing tax liability on that specific income under Iowa's individual (Code 422.7) and corporate (Code 422.35) tax codes. The key mechanism is amending those tax codes to exclude income from such governmental audits, effective retroactively for tax years beginning January 1, 2025. This creates a concrete tax benefit for CPAs working with local government entities, with no new reporting requirements for the affected income.