Iowa: Legislation Conforming to Bonus Depreciation Enacted

Senate File 619, signed into law on June 16, 2021, makes a number of changes to Iowa’s tax laws, many affecting individuals. For corporate taxpayers, one of the most significant changes is that for qualified property placed in service on or after January 1, 2021, Iowa conforms to federal 100 percent bonus depreciation. This change also applies to individuals. Further, the bill eliminated a provision in Iowa law stating effective for tax years beginning on or after January 1, 2020, the section 163(j) interest limitations do not apply, except for any year during which bonus depreciation under IRC section 168(k) is operative in computing net income for state purposes. Therefore, Iowa now conforms to bonus depreciation and remains decoupled, as it has been since 2020, from the IRC section 163(j) limitation.  Please contact Caroline Balfour with questions.