Wisconsin Assembly Bill AB922

Wisconsin 2023-2024 Regular Session

• Introduced: 1/12/24
• Refer: 1/12/24
• Failed: 4/15/24

Caption

Adopting federal income tax provisions related to depreciation and amortization. (FE)

Impact

The adoption of the federal provisions is likely to have a significant impact on businesses operating in Wisconsin. Specifically, taxpayers will be able to take advantage of an 80% depreciation deduction for qualified property placed in service during 2023, with graduated reduction rates set for subsequent years – 60% for 2024, 40% for 2025, and 20% for 2026. This could foster greater investment in business infrastructure, leading to enhanced economic development and job creation within the state. The bill's approach to phasing out the bonus depreciation allowance by 2027 aligns state tax policy with federal law, ensuring consistency in tax treatment across jurisdictions.

Summary

Assembly Bill 922 is designed to align Wisconsin's state income and franchise tax provisions with the federal Internal Revenue Code regarding depreciation and amortization. By adopting these updated provisions starting from tax year 2023, the bill allows taxpayers to claim substantial depreciation deductions on qualified property, thereby potentially improving cash flow for businesses that make capital investments. The measure is in response to recent changes in federal tax legislation that introduced enhanced bonus depreciation benefits for taxpayers, which are set to expire after tax year 2026.

Contention

Although AB922 presents opportunities for business growth, there may be points of contention surrounding its passage. Some lawmakers may express concerns about the fiscal implications at the state level, particularly regarding how these tax incentives might affect state revenue. Additionally, there could be discussions about whether this approach adequately supports small businesses versus larger corporations, as access to depreciation benefits could vary significantly among different business sizes and sectors. As with any tax-related legislation, opinions may diverge on the long-term benefits versus immediate fiscal constraints associated with implementing these changes.