Iowa Updates Depreciation Deduction Rules

Iowa has updated its rules for deducting certain depreciable business assets. Iowa conforms to recent IRC Sec. 179 deduction changes but has adopted state specific limitations on the deduction in some years.

The rules also implement the new special election available to taxpayers who receive the deduction from pass-through entities. Updated examples are also included.

Iowa Limitations on Deducting Depreciation

The deduction allowances for individuals and pass-through entities in Iowa are:

  • in 2017 $25,000 limitation and $200,000 reduction limitation;
  • in 2018 $70,000 limitation and $200,000 reduction limitation;
  • in 2019 $100,000 limitation and $400,000 reduction limitation; and
  • in 2020 and later the Iowa limitation are the same as Federal.

The deduction allowances for corporations, and financial institutions subject to the franchise tax, in Iowa are:

  • in 2017 $25,000 limitation and $200,000 reduction limitation;
  • in 2018 $25,000 limitation and $200,000 reduction limitation;
  • in 2019 $100,000 limitation and $400,000 reduction limitation; and
  • in 2020 and later the Iowa limitation are the same as Federal.

Rules 701—40.65(422), 53.23(422), and 59.24(422), Iowa Department of Revenue, effective December 26, 2018

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