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Iowa Department of Revenue lists two dozen 2026 tax and alcohol law changes, including new nicotine excise tax
Summary
Department of Revenue presenter Tyler Ackerson outlined roughly 20 bills from the 2026 legislative session affecting withholding limits, tax credits, fuel and alcohol rules, a new wholesale tax on alternative nicotine and vapor products (with proceeds to the health care trust fund), and several administrative rule and reporting changes.
Tyler Ackerson of the Iowa Department of Revenue reviewed a long list of bills from the 2026 legislative session that touch department administration, taxpayer reporting, tax credits and excise taxes. "We oversee topics related to tax, alcoholic beverage control, and lottery operations," Ackerson said at the start of the session.
Key items Ackerson summarized include:
- Senate Joint Resolution 11: a proposed constitutional amendment that, if approved by voters in November 2026, would raise the legislative threshold to two‑thirds in both chambers to increase income tax rates or impose a new income tax.
- Withholding for workforce training (transcript reference 'Cinephile 21 68'): the transcript describes raising the annual maximum that can be transferred for job training projects under chapter 260E from $7,750,000 to $9,250,000.
- Changes to tax credit definitions: a bill removing certain religious exclusions from the tuition and textbook tax credit and early childhood development tax credit, with those changes retroactive to tax year 2026.
- Gambling withholding conformity: a change removing set dollar thresholds for withholding on some racing and slot winnings and aligning withholding to federal information‑return filing thresholds as of 07/04/2025.
- Administrative rules and agency procedures (Senate File 24 63): several agency rules were rescinded and replaced with uniform agency procedure rules effective July 1; additional chapters to be rescinded on 01/01/2027 and new 5‑year review formatting requirements start in 2028.
- Sales tax and targeted exemptions: multiple bills create or expand sales tax exemptions (e.g., equipment for telecom/internet, honeybees sales exemption, and a targeted exemption for qualifying nuclear electric generation facilities with a clawback if construction/restart milestones are not met; the nuclear exemption is retroactive to 01/01/2026 and sunsets 07/01/2051).
- Excise tax on alternative nicotine and vapor products (Senate File 24 80): the transcript states a new wholesale tax of 5¢ per container (up to 20 units, prorated beyond) on alternative nicotine products and 5¢ per milliliter of nicotine in vapor products, with distributors required to be licensed and new tax revenue deposited in the health care trust fund. The bill includes an appropriation of $3,000,000 annually beginning FY 07/01/2027 to the Board of Regents for pediatric cancer research at the University of Iowa Stead Family Children's Hospital.
- Fuel tax, reporting and compliance: changes to fuel excise tax treatment for high‑ethanol gasoline used in implements of husbandry (exemption certificate requirement), and new filing deadlines and consequences for retail fuel dealers that fail to timely file gallonage reports, affecting eligibility for certain biodiesel and E‑85 promotional credits.
- Economic development and credit changes: an IEDA bill (House File 2799) creates a qualifying wage tax credit for businesses relocating their headquarters to Iowa, extends the major economic growth (mega) program repeal date to 01/01/2030, changes the new jobs tax credit (repeal on enactment with preservation for previously awarded credits), and adds training funds and reporting requirements tied to withholding payments.
- Alcohol policy changes: House File 2200 removes certain employment and political activity prohibitions for Iowa Alcoholic Beverages Commission members and department employees and allows narrow cross‑tier ownership interests with annual disclosure; a separate bill allows out‑of‑state wine manufacturers that ferment their own products to obtain a Class A wine permit to self‑distribute in Iowa and authorizes cities to create local 'social districts' where alcohol consumption is permitted under city ordinance.
Ackerson and Belke repeatedly pointed attendees to revenue.iowa.gov and encouraged subscribing to GovDelivery for guidance and upcoming resources. The presenters said slides and a recording would be made available by Iowa SourceLink.
No formal votes or actions were taken during the webinar; the session functioned as informational guidance on newly enacted statutory changes and department implementation plans.
