Good news! MN Matches Federal Section 179
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POSTED: October 23, 2020 // BY: Randy Petersen
What is Section 179 expensing?
Income tax laws generally require businesses to spread deductions of capital expenditures over the useful lives of the purchased property. Section 179 expensing takes its name from a section of the Internal Revenue Code (IRC). It allows businesses to deduct the entire cost of qualifying property in the tax year the property is placed in service, rather than claiming depreciation deductions over a number of years. This allows the business to accelerate recognition of the expense from future tax years into the present year. The number of years over which property would otherwise be depreciated ranges from three to 15 years, depending on the type of property and its useful life as classified under the IRC.
This description comes directly from the MN House Research.
What Does This Mean for Minnesota Businesses?
Minnesota now aligns to the Federal Section 179 expensing law, which will:
- Help small businesses reinvest in Minnesota to help grow our economy.
- Fix retroactive tax increases for like exchanges to 2018 and 2019.
- Improve Minnesota’s competitiveness as most states, including neighboring states, have already conformed with federal law.
- Reduce tax compliance complexity and costs.
- Prevent Minnesota taxpayers from paying more in state taxes than they do on their federal income tax returns.
We are thankful to the Minnesota Legislature, along with the tireless work of the Minnesota Chamber, who focused on the bipartisan effort to get the job done. Also thanks to the MTA for providing a clear and succinct overview of the benefits.
What’s Next?
Now is the time to act. Here are the three things you should do now:
- Contact your vendors for a quote on your equipment needs to discuss delivery timeline.
- If you’re a vendor, reach out to your customers and share the great news to ensure delivery before the end of the year.
- Apply for financing, we are here to help!
You can each us at 952.224.4300 or at info@klcfinancial.com.