Governor Branstad has used his line-item veto power to approve a bill that finally resolves what Iowa’s business tax laws look like for 2010 tax returns (which are due less than 3 weeks from now). For 2010 and 2011, Iowa is coupling with federal Section 179 rules. This means the Section 179 limit in Iowa is $500,000, same as for federal returns.
Iowa is still not coupling with federal bonus depreciation rules for 2010 or 2011. This means re-calculations of depreciation deductions will still have to be done for assets that you claimed bonus depreciation on.
It appears that the bill will also couple — for 2010 — with federal “front-side” deductions from income, such as the $250 deduction for K-12 teachers for classroom supplies. I have several teacher clients affected by this. Their returns have already been filed, so we’ll be filing amended returns to claim this extra $250 deduction.
Branstad had threatened to veto the entire bill because of certain provisions he didn’t like, pertaining to transfers of funds between agencies. But Branstad instead used his item-veto power to veto the parts he didn’t like, and to approve the tax provisions.