The Iowa Legislature updated Iowa’s tax laws to reflect recent changes in federal tax laws.
Due to a delay at the federal level, businesses, teachers, homeowners, and students have been waiting for state action before they file their 2014 taxes in order to claim deductions renewed by the federal government in December. For the last several years, Iowa has generally “coupled” with these federal changes.
Each year, the Legislature must pass an Internal Revenue Code (IRC) update bill to conform state and federal tax laws. This is important, since failure to do so would complicate the tax system, by requiring different calculations for state and federal tax returns and would require many tax filers to possibly have to file amended returns. Major provisions of this year’s bill include:
– Business Costs: Allows small businesses and farmers to expense the first $500,000 of equipment costs (Section 179)
– Mortgages: Allows deduction of the cost of mortgage insurance
– Teachers: Extends the $250 teacher deduction for out-of-pocket classroom expenses
– Work Opportunity: Businesses receive a tax credit on wages paid if they hire a hard-to-employ individual