ST. PAUL – Income tax legislation that would greatly assist farmers and other Main Street business owners is moving closer to reality in the Minnesota House.
Tax conformity between the federal government and the State of Minnesota is needed on Federal Section 179 – accelerated depreciation. If approved, State Representative Greg Davids (R-Preston), who is the Republican Lead on the Minnesota House Taxes Committee, and State Representative Dan Fabian (R-Roseau), who also serves on the taxes committee, said the benefit could mean tens of thousands of dollars in benefits for those utilizing the provision.
“This would be extremely helpful to farm families and small business owners who are looking to continuing investing in their operation and helping their communities,” Davids said.
Section 179 expensing allows a business to deduct the cost of purchasing or leasing a piece of equipment. On the federal level, this deduction is taken upfront, allowing the business to deduct the total value the year they purchase it, rather than taking the deduction over several years. The business is limited to a total write off of $1 million.
Minnesota, since 2006, has not allowed upfront expensing and caps the deduction at $25,000 with a total phase out of purchases at $200,000.
Legislation that was debated in the Minnesota House Taxes Committee recently would conform Minnesota with the federal levels of deduction and expensing, beginning with 2018 equipment purchases.
“Nearly every ag group in the state is pushing for Section 179 conformity,” Fabian said. “With income tax season now in full swing, it’s time to make this happen.”
Davids and Fabian said the Section 179 language was held over for possible inclusion in a more comprehensive taxes bill that will be unveiled later this session.