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Section 179 Expensing Addition

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Section 179 expensing lets businesses deduct the entire cost of certain equipment on their federal tax return in the year of purchase (instead of deducting depreciation over multiple years).

The Tax Cuts and Jobs Act (TCJA) modified section 179 expensing. The TCJA expanded the list of qualified property, increased the maximum expensing amount to $1 million, and increased the investment phase-out threshold.

Minnesota retains an 80% addition to income in the first year and a 20% subtraction for the five years following the addback. You may need to add back part of your federal deductions for section 179 expensing. Minnesota limits a portion of expensing on a state return to the difference of the amount currently allowable under federal law and the amount allowable in 2003.

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