This bill amends the current law regarding business profits tax expense deductions by increasing the cap on expense deductions for property placed in service on or after January 1, 2027. Specifically, the cap will rise from $500,000 to $1,000,000, with subsequent increases of $500,000 every two years until it reaches a maximum of $2,500,000. The language in the bill reflects these changes by deleting the previous cap of $500,000 and the date of January 1, 2018, and inserting the new cap and the effective date of January 1, 2027.

The fiscal impact of this bill is expected to result in a decrease in revenue for the General Fund and Education Trust Fund starting in FY 2027, although the exact amount is indeterminable. The Department of Revenue Administration has indicated that while the bill allows for a significant increase in the deduction limit, it may also lead to a timing issue regarding the acceleration of depreciation claims for qualifying assets. The Department does not anticipate any additional administrative costs arising from the implementation of this bill.

Statutes affected:
Introduced: 77-A:3-a
As Amended by the Senate: 77-A:3-a
HB1597 text: 77-A:3-a