More states are giving businesses a tax break on their business personal property. New laws went into effect January 1 in Colorado and Indiana. Michigan will modify its exemption threshold next year.
Colorado
House Bill 21-1312 changes the business personal property exemption from $7,900 to $50,000. Any business owner whose business personal property is $50,000 or less no longer needs to pay a personal property tax or to file a yearly declaration schedule with the assessor's office.
Business Personal Property can be defined as everything which is not real property, typically portable or movable items, including:
- Furniture
- Equipment
- Machinery
- Security devices
- Signs and personal effects not otherwise exempt by law.
The State of Colorado will reimburse local governments for the lost property tax revenue caused by the increase, so it will have a net zero effect on the county taxing entities.
Indiana
With the passage of Senate Enrolled Act 336, Indiana companies with total personal property that cost less than $80,000 to acquire are now exempt from the business personal property tax. The prior exemption threshold was $40,000.
The change is expected to save businesses $18 million statewide. Local assessors will realize some administrative savings as a result of this bill. Taxpayers who claim the exemption must file one return form within the county, including only identifying information and checking a box claiming the exemption. The rest of the return may be left blank. Local assessors will not have to process the numeric portion of these returns.
Michigan
For 2023, Michigan small businesses will get a personal property tax break. House Bill 5351 lifts the BPP tax exemption threshold from $80,000 to $180,000 in true cash value.
The Michigan Association of Counties and other local government groups are urging the Legislature to address the consequences of the change. Estimates of the impact are as high as $75 million each year. Lawmakers voted for a $75 million reimbursement for the first year of the exemption, but they did not provide for the years beyond.
TECHNICAL INFORMATION CONTACTS:
Shane Moncrief
Principal
Ryan
404.942.6377
shane.moncrief@ryan.com
Joe Monzon
Vice President and Managing Consultant
303.590.9150
John O’Neil
Managing Consultant
630.413.9393
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.