Iowa taxpayers looking for clarity on Section 179
February 8, 2017
By Josh Miller, CPA
For the first time since 2009, Iowa taxpayers will likely face lower Section 179 expense limitations on their Iowa tax return than on their federal tax return. Section 179 allows many businesses to deduct up to the full purchase price of newly acquired assets in the year they are placed in service rather than having to depreciate the cost over several years.
All signs out of Des Moines point to the legislature not pushing through a last-minute bill to couple the Iowa code with federal in this regard. For some taxpayers, this could mean a tax increase of as much as $45,000 since they may not be able expense any of their asset acquisitions on their Iowa return despite being able to expense up to $500,000 on their federal return.
While the Iowa legislature has often changed their mind on this deduction well after year end, it is less likely to happen this spring with a unified Senate and House. A budget shortfall and less pressure from farmers who generally had a down year also factor into this lack of action.
What does this mean for you? If you are a business owner, you will need to discuss with your accountant how much this change will impact your tax plan, especially if you plan to file an extension later this spring 2017. This may also impact your forecast and equipment budgets, so a proactive, informed approach is key.
For more information or assistance on tax planning and preparation, call 888-556-0123, email email@example.com or submit our online form.