NOTE: Iowa did not couple with the bonus depreciation provisions allowed for federal tax purposes for the 2012 tax year.
Iowa Status on Federal Changes for Tax Year 2012
Effective with the enactment of Senate File 106 on February 14, 2013, Iowa tax provisions are coupled with federal provisions retroactive to January 1, 2012 in the areas listed below.
For Individual Income Tax Filers Only:
- Deduction of Educator Expenses
- Tuition and Fees Deduction for Higher Education
- Election to Deduct State Sales/Use Tax as an Itemized Deduction in lieu of State Income Tax
- Treatment of mortgage insurance premiums as qualified residence interest
- Tax Free Distribution from an IRA to Certain Charities for Individuals 70½ and Older
- Iowa allows the exclusion of 50% of the capital gain from the sale of employer securities of an Iowa corporation to an Iowa based employee stock ownership plan (ESOP), as long as the ESOP owns at least 30% of the outstanding employer securities after the sale.
- Members of the armed forces, armed forces military reserve and the national guard in an active duty status can exclude pay received from the federal government for military service performed.
- An Iowa geothermal heat pump tax credit is available equal to 20% of the federal residential energy tax credit for installations of geothermal energy systems for residential property located in Iowa.
For Individual Income Tax Filers as well as Corporate Income Tax (including S Corporations), Partnership, Fiduciary and Franchise Tax:
- 2012 section 179 limit for Iowa is $500,000, which is the same as the federal section 179 limit. The phase-out threshold is $2 million.
- Do not include any deduction for the small business health insurance tax credit that was not allowed as a deduction on the federal return.
- An Iowa solar energy system tax credit is available equal to 50% of the federal tax credit for installations of solar energy systems for residential and business property located in Iowa when an award has been issued by the Department. Click here for additional details.
Taxpayers who have already filed tax year 2012 returns may wish to review those returns and file an amended return, if needed, based on the provisions listed above.