Iowa Lawmakers Opt Not to Align with Fed’s Section 179

Iowa Republican legislators have expressed frustration with Senate Democrats for rejecting a bill that would conform Iowa tax statutes with the federal Section 179, limiting the deduction to $25,000 rather than allowing for the $500,000 federal level.

In the Des Moines Register, Sen. Randy Feenstra (R) criticized Senate Democrats, saying they have failed Iowa farmers and small-business owners by choosing not to couple state law with the federal tax statute. He said the decision would cost Iowans millions of dollars.

The House passed a bill that coupled Section 179. The Senate rejected it. The state’s fiscal note says that while the House bill would reduce state revenue in the current budget year, it would increase state revenue in future fiscal years.

In a commentary on Agweb.com, Farm CPA Paul Neiffer estimated the cost to Iowa farmers at $40 million to $75 million in the 2015 tax year.

Since 2010, Section 179 has been at the $500,000 level for federal income tax purposes. Most states have adjusted statute to match that dollar amount. Iowa is among a handful to have a much lower allowance.

Governor Branstad (R) has said the current budget does not have enough room to allow for up to $500,000 with Section 179.

Although the tax filing deadline has passed, many believe pressure from the business community and farmers will prevail, and retroactive legislation will be passed. S