As reported by Joe Kristan of Tax Update Blog, don't count on your state to adopt the new higher depreciation allowances of the new Small Business Credit and Jobs Act of 2010. If your state don't allow the higher deductions, your business's state income tax bill will be higher than you might think.
Section 179 Deduction Increase
Section 179 accelerated depreciation deductions for purchase of business property were expanded in recent years to a maximum $250,000 annually. The law increases the Section 179 depreciation limit to $500,000 (with limits on the amount purchased). Of course, you can only take the deduction if you spend the money to buy the property and this provision ends December 31, 2010, unless Congress extends it.
Accelerated Bonus Depreciation Continued
The 50% Bonus Depreciation provision was supposed to end December 31, 2009. The new law continues that extra depreciation through business purchases in 2010. This is a 50% bonus for new property purchased and put in place in 2010.
States With Different Depreciation Allowances
As I have reported before, at least 12 states currently do not accept the accelerated provisions set by the IRS for federal tax savings on depreciation. Paul Neiffer of Farm CPA Today thinks many states will not accept the higher limits. Check with your state's taxing authority (usually a "department of revenue") or ask your tax adviser before you make a purchase which may not get you the higher tax benefits in your state.
Read more about Accelerated Depreciation and the Small Business Jobs and Credit Act of 2010.