Because state tax codes are linked to the federal tax code in various ways, many of the expiring I.R.C. provisions that comprise the so-called fiscal cliff will have a mixed impact on state coffers, according to a recent report by the Pew Center on States.
States will be harmed by a tumble off the cliff to the extent that higher federal tax rates or reduced aid dampen state economies.
But states will benefit from the cliff to the extent that expiring federal tax breaks result in greater tax revenues. This is because for most states, the computation of corporate and individual income tax begins with federal adjusted gross income. From there, each state has its own modifications in the form of additions and subtractions that a taxpayer must make to this figure.
As a result, a higher federal adjusted gross income as a result of tax breaks scheduled to expire in 2013, will likely produce higher state tax liabilities as well.
One example of this is the federal treatment of bonus depreciation. In 2012, a taxpayer may take an additional first-year depreciation deduction equal to 50 percent of the property’s adjusted basis for qualified property acquired after Dec. 31, 2007, and before Jan. 1, 2013. If this provision is allowed to expire on Jan. 1, 2013, the states that conform to it will no longer offer the tax break.
example is the federal enhanced expensing provisions. In 2012, a taxpayer may
expense up to $139,000 of the cost of §179 property. But beginning, Jan. 1,
2013, if this provision is allowed to expire, the taxpayer may expense only up to
By Steven Roll
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)