STATE TAXES: Senate Passes Tax Code Changes
The state Senate passed a bill that could boost tax returns for Iowans over the next few years.
The bill makes Iowa tax laws reflect the federal laws that were altered or extended by the fiscal cliff bill passed on January 1.
Senators say matching the federal provisions will make it easier for Iowans to prepare their taxes and easier for the Department of Revenue to process tax returns.
The bill now goes to the House for consideration. If it fails there, Iowans could lose thousands of dollars worth of credits when they file their taxes.
Some items included in the bill are:
- Permanently extending the child tax credit at its current level of $1,000 (would have been reduced to $500)
- Extend through 2017 expansions to the Earned Income Tax Credit (EITC) for families with three or more children, as well as making permanent the increased income phase-out range for married couples filing a joint return
- Permanently extend the child and dependent care tax credit at its current level of care expenses of $3,000 for one child and $6,000 for two or more (would have reverted to expense levels of $2,400/$2,800)
- Permanently extending the student loan interest deduction
- Extend the deduction for up to $250 of out-of-pocket expenses by teachers for two years
- Allow small businesses and farmers to expense, rather than depreciate the first $500,000 of equipment cost for purchases in 2012 and 2013.