On Thursday, I had a bill that I chief authored heard before the House Taxes committee. House File 235 would conform Minnesota’s Section 179 expensing limits and provide the deduction upfront starting for equipment purchased in 2019. For any equipment that was purchased before 2019, the taxpayer would continue to take the deduction over 5 years instead of upfront.
Section 179 expensing allows a business or farm to deduct the cost of purchasing or leasing a piece of equipment. At the federal level, this deduction is taken upfront, allowing the business or farm to deduct the total value the year they purchase the item instead of waiting for the deduction to be spread out over 5 years.
Since 2006, Minnesota has not allowed upfront expensing; instead requiring addback where the business or farms can take the deduction over 5 years. Further, the state caps the deduction at $25,000 with a total phase-out of purchases at $200,000.
My bill would change that by conforming Minnesota to federal levels of deduction and expensing starting with equipment purchased in 2018.
It only makes sense that we ensure that Minnesota’s standards on these deductions mirror those at the federal level. This will make sure we have a level playing field and help encourage additional business and farm growth here in Minnesota.
That’s all for this week’s update. I urge you to contact me if you have any legislative questions, concerns, or ideas. I can be reached by phone at 651-296-4229 or via email at firstname.lastname@example.org.
Thanks and have a good weekend,