On Thursday, Oct. 15, 2020, in its fifth special session, the Minnesota Legislature passed a bill to conform to section 179 expensing effective for tax year 2020 providing $208 million in tax relief over the next three years. The Minnesota Chamber has advocated for this law change for the past three sessions and we are pleased it has been accomplished.
Section 179 of the federal tax code dictates when businesses can deduct the cost of purchasing certain equipment. In 2019, Minnesota conformed to some federal tax reforms, but not many of the expensing provisions. This put small businesses and farmers at a disadvantage and hit many with retroactive bills.
Now more than ever, it’s critical to support Minnesota small businesses, as our state continues to deal with the public health and financial impacts of the pandemic. The Minnesota Chamber thanks the elected officials who on a bipartisan vote took this step to invest in the employees and communities which these businesses and farms support. This helps lay the foundation to help Minnesota’s economy recover and grow, and retain and create jobs. The tax provisions were passed along with the $1.87 billion bonding bill including $300 million in trunk highway bonds.
Aligning state and federal tax codes for section 179 expensing would:
- Help small businesses and farmers reinvest in Minnesota to help grow our economy.
- Fix retroactive tax increases for like/kind 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.
Read more on the Bonding Bill Passed here