Lawmakers from the two parties remain far from consensus on high-profile tax and budget questions, but the Iowa legislature has unanimously approved its first tax bill of the 2015 session. Senate File 126 (full text here) passed the Iowa Senate by 49 votes to 0 on February 4 and passed the Iowa House by 95 votes to 0 today. It “conforms Iowa’s revenue laws to incorporate federal changes” made during 2014. O.Kay Henderson reported for Radio Iowa,
The bill would extend a tax break to Iowa business owners, allowing them to claim the first half a million dollars worth of new equipment purchases as a tax deduction for the business. It also allows Iowa teachers to claim a tax credit for up to $250 for the supplies, equipment and materials used in their classroom.
Unlike most bills, which take effect on July 1 (at the start of the next fiscal year), SF 126 “takes effect upon enactment” and “applies retroactively to January 1, 2014, for tax years beginning on or after that date.” The fiscal note indicates that this bill will reduce state tax revenue by $98.98 million in the current fiscal year. About $83.5 million of that comes from one part of the bill:
Of the extended provisions, the most significant from a fiscal impact perspective is the extension of favorable depreciation expensing known as “Section 179 expensing.” This provision allows business taxpayers (including corporate taxpayers and business entities taxed through the individual income tax) to write off additional depreciation in the year a qualified depreciable asset is placed in service. Since the provision accelerates the claiming of depreciation, the provision reduces taxes owed in the first year, but increases taxes owed in later years.
Looking through the lobbyist declarations, I didn’t see any lobbyists registered against this bill. The Iowa Society of Public Accountants, Deere & Company, Iowa Community Foundations, and the Iowa Farm Bureau Federation all registered in favor. Speaking to Radio Iowa, Republican State Representative Chris Hagenow said certified public accountants and tax preparers had told lawmakers “this is a priority for them” to provide “certainty” going into tax season.