Bonus depreciation came into the spotlight with the Tax Cuts and Jobs Act of 2017. The law expanded bonus depreciation to 100 percent for business assets placed in service between Sept. 28, 2017, and Dec. 31, 2022, but the Pennsylvania Department of Revenue is not allowing the deduction.

Pennsylvania is the only state that fully disallows depreciation on certain assets due to Corporation Tax Bulletin 2017-02, which was recently issued by the Department of Revenue. Therefore, corporations in Pennsylvania will not get to deduct on state taxes the added back bonus depreciation until the asset is sold or otherwise disposed. Pennsylvania Institute of Certified Public Accountants members believe that allowing bonus depreciation deductions for Pennsylvania businesses is critical to the growth and prosperity of the state economy.

Corporate taxpayers will see an increase in their tax liabilities until the assets are sold, which could put Pennsylvania corporations at a competitive disadvantage for growing their businesses. And if businesses aren’t growing, it’s likely that the state economy isn’t either.

Bonus depreciation is a method of accelerated depreciation that allows corporations to immediately deduct an additional percentage of the purchase price of eligible business assets in the year in which those assets are placed in service (not just when the asset is sold or otherwise disposed). It is offered to encourage corporations to invest in additional capital assets.

The PICPA supports Senate Bill 1056 — and it supported House Bill 2017, which was approved by a state House vote of 183-4 — which would align federal and state depreciation rules. Tell your state representative that you support business-friendly legislation too.

Sincerely,

Joseph E. Seibert,

CPA PICPA President

Harrisburg