Governor Branstad has vetoed a bill that would have coupled Iowa tax law with federal tax law on bonus depreciation for 2011.
Bonus depreciation allows an extra depreciation deduction to be taken in the year certain asset are placed in service. For assets placed in service from September 10, 2010, through the end of 2011, taxpayers can take bonus depreciation of 100%, essentially expensing the entire cost of the asset in the year it’s placed in service. Some form of bonus depreciation has existed for quite a few years. For example, it was 50% for 2009 through September 9, 2010. But Iowa has never coupled with bonus depreciation, meaning taxpayers have to re-calculate deductions and basis information on Iowa returns.
The legislature had passed a bill that would have coupled with 100% bonus depreciation for 2011, but the governor used his item-veto power to veto that part of the bill, as well as provisions that would have increased the Iowa Earned Income Credit for 2011.