Senate File 512 enacted April 12, 2011, House File 652 enacted May 11, 2011, and Senate File 533 enacted on July 27, 2011 made changes impacting Iowa income tax provisions for tax year 2011.
NOTE: Iowa did not couple with the bonus depreciation provisions allowed for federal tax purposes for the 2011 tax year.
For Individual Income Tax Filers Only:
- Allow itemized deductions in full for high income taxpayers
- Maintain increased eligibility for student loan interest deduction
- Maintain increased expense amount allowed for the child and dependent care credit
- Coupled with federal earned income tax credit changes
- Allow teachers to deduct the first $250 of out-of-pocket expenses for classroom supplies
- Allow individuals to deduct state sales/use tax in lieu of state income tax as an itemized deduction
- Allow a deduction for tuition and fees for higher education
- Allow tax free distributions from IRA’s to certain public charities
- An exemption applies to all pay received from the federal government for military service performed while on active duty status in the armed forces, the armed forces military reserve, or the national guard. Employers paying wages that qualify for this exemption should stop withholding Iowa income tax from those payments immediately.
- Make an adjustment on the 2011 tax year return for Iowa’s coupling with the federal Tuition & Fees Deduction and Educator Expenses Deduction for 2010. The taxpayer has the option to amend 2010 or adjust 2011.
For Individual Income Tax Filers as well as Corporate Income Tax (including S Corporations), Partnership, Fiduciary and Franchise Tax:
- $500,000 Section 179 asset expensing limit for 2011
Make an adjustment on the 2011 tax year return for Iowa’s coupling with the federal Section 179 expensing limit for 2010. The taxpayer has the option to amend 2010 or adjust 2011.