Description
Cause
Many U.S. states’ depreciation rules differ from the federal rules for state income tax returns. This is especially true following the passage of multiple economic stimulus packages over the years by congress. Often states choose to modify or decouple from the generous federal rules. Two depreciation areas frequently subject to different rules by the states are:
- Bonus depreciation – a percentage of the asset’s cost, expensed in the first year of the asset’s life on qualifying property (also referred to as the 168(k) allowance)
- Section 179 – First year expensing of qualified property, subject to various limits
For example, some states conform to the federal rules for expensing under Section 179, others impose a lower limit than the federal amount, and some do not allow it at all.
Following is an overview of current conformity (or lack of) by state. States do change their rules over the years, so a link and phone number is provided to each state’s tax agency, for detailed information. This information is applicable to C-corporations.
An amount in the Section 179 Expensing column indicates the maximum expense allowed by the state.
Resolution
| State | Link | Phone | Section 179 | Bonus | Notes |
| Alabama | 800-322-4106 | Yes | Yes | ||
| Alaska | Anchorage: 907-269-6620 | Yes | Yes | ||
| Arizona | 602-255-3381 | Yes | No | ||
| Arkansas | 501-682-4775 | $1,220,000 | No | Arkansas has adopted the IRC Section 179 for tax years beginning on or after January 1, 2022. In 2024, the Arkansas Section 179 deduction limit is $1,220,000 and the dollar-for-dollar phase out begins at $3,050,000. | |
| California | 800-852-5711 | $25,000 | No | ||
| Colorado | 303-238-SERV(7378) | Yes | Yes | ||
| Connecticut | 800-382-9463 | Yes | No | 80% of Section 179 is added back in the first year. In the next four years 25% of the disallowed amount is recovered in each year. In other words, 20% of the Section 179 amount is recovered in each year over five years. | |
| Delaware | 302-577-8205 | Yes | Yes | ||
| District of | 202-727-4TAX(4829) | $25,000 | No | ||
| Florida | 850-448-6800 | Yes | No | Bonus Depreciation for assets placed in service before January 1, 2027, is recovered over a total of seven years, including the year of addition. The 15-year life of Qualified Improvement Property (QIP) is not recognized. Depreciation is calculated using the longer life without bonus depreciation. | |
| Georgia | 877-GADOR11 | Yes | No | Georgia conforms to the Federal Section 179 limit, including adjustments for inflation, but does not recognize certain real property assets that qualify under Sections 179(d)(1)(B)(ii). | |
| Hawaii | Oahu: 800-222-3229 | $25,000 | No | ||
| Idaho | 800-972-7660 | Yes | No | ||
| Illinois | 800-732-8866 | Yes | No | Illinois conformed to the 100% Federal bonus/168k depreciation allowance from 9/28/20217 to 12/31/2022. Illinois typically conforms to the Federal bonus rate when it is 100%. Refer to the instructions for Form IL-4562 for more information. | |
| Indiana | 317-232-0129 | $25,000 | No | Indiana caps the Section 179 allowance at $25,000 but follows a $2,500,000 Section 179 phase-out threshold. | |
| Iowa | 800-367-3388 | $1,040,000 | No | As of 2020, Iowa fully conforms to the Federal Section 179 limits, including adjustments for inflation. | |
| Kansas | 785-368-8222 | Yes | Yes | ||
| Kentucky | 502-564-8139 | $100,000 | No | ||
| Louisiana | 855-307-3893 | Yes | Yes | ||
| Maine | 207-626-8475 | $25,000 | No | ||
| Maryland | 800-MD-TAXES | $25,000 | No | ||
| Massachusetts | 800-392-6089 | Yes | No | ||
| Michigan | 517-636-6925 | Yes | No | ||
| Minnesota | 651-556-3075 | Yes | No | For tax years beginning after December 31, 2019, Minnesota conforms to the Federal Section 179 limits. This includes carryover amounts for property placed in service in taxable years beginning before January 1, 2020, and for property placed in service before January 1, 2020 by a partnership or S-corporation filing on a fiscal year with a partner or shareholder filing on a calendar year. Minnesota subtractions related to prior year additions will continue to be allowed until the 5-year subtraction period ends. | |
| Mississippi | 601-923-7099 | Yes | Yes | Effective July 1, 2021, 100% Bonus Depreciation for aircraft and aviation equipment implemented. Effective January 1, 2022, 100% Bonus Depreciation was enacted for Qualified Improvement Property. | |
| Missouri | 573-751-4541 | Yes | Yes | ||
| Montana | 406-444-6900 | Yes | Yes | ||
| Nebraska | 800-742-7474 (Toll free in NE & IA) | Yes | Yes | ||
| Nevada | 866-962-3707 | No Corporate Income Tax | No Corporate Income Tax | ||
| New Hampshire | 603-230-5000 | $500,000 | No | Section 179 - For assets put in service after January 1, 2018 the allowable Section 179 deduction is $500,000. For assets put in service during 2017, the allowable section 179 deduction is $100,000. The Section 179 deduction limit was $25,000 through 12/31/2016. | |
| New Jersey | 609-292-6400 | $25,000 | No | ||
| New Mexico | 866-285-2996 | Yes | Yes | ||
| New York | 518-485-6027 | Yes | No | ||
| North Carolina | 877-252-3052 | $25,000 | Yes, Over six years | An addition is required for 85% of the amount of bonus depreciation deducted on the federal return. Any amount of the bonus depreciation added to federal adjusted gross income is deducted in five equal installments over first five taxable years beginning with the tax return for the following taxable year. | |
| North Dakota | 701-328-1249 | Yes | Yes | ||
| Ohio | 888-405-4039 | No | No | Ohio replaced the Franchise Tax with a Corporate Activity Tax (CAT) in 2009. The CAT is not an income tax, therefore nothing ties the CAT specifically to a federal income tax return, including Section 168(k) and Section 179 depreciation deductions. | |
| Oklahoma | 405-521-3160 | Yes | Yes | ||
| Oregon | 503-378-4988 In State: 800-356-4222 | Yes | Yes | ||
| Pennsylvania | 717-787-1064 888-PATAXES (728-2937) | Yes | No | ||
| Rhode Island | 401-574-8935 | Yes | No | ||
| South Carolina | 803-989-3153 | Yes | No | ||
| South Dakota | 800-TAX-9188 | No Corporate Income Tax | No Corporate Income Tax | ||
| Tennessee | 800-342-1003 | Yes | Yes |
| |
| Texas | 800-252-1381 | $25,000 | No | ||
| Utah | 800-662-4335 | Yes | Yes | ||
| Vermont | 802-828-5723 | Yes | No | ||
| Virginia | 804-367-8037 | Yes | No | ||
| Washington | 360-705-6705 | No Corporate Income Tax | No Corporate Income Tax | ||
| West Virginia | 800-982-8297 | Yes | Yes | ||
| Wisconsin | 608-266-2776 | Yes | No | ||
| Wyoming | 307-777-5200 | No Corporate Income Tax | No Corporate Income Tax |
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