Pennsylvania enacted legislation addressing the mechanics of its statutory “decoupling” from federal 100% bonus depreciation. This legislation is a direct response to the Department of Revenue’s announcement that it would delay all depreciation deductions on 100% bonus depreciation property—for Pennsylvania corporate net income tax purposes—until the year in which the property is disposed of.
On June 22, 2018––in advance of the budget deadline––the Pennsylvania Legislature passed its budget, which notably did not include a Tax Reform Code bill. However, the Legislature did include in its negotiations, and ultimately passed, legislation “fixing” the depreciation computation for federal 100% bonus depreciation property—an expected $27.5 million cost to the Commonwealth over two years1 and a direct rebuke to the Department of Revenue’s policy announced back in December of delaying all depreciation on 100% bonus property until the year of disposal. On June 28, Governor Wolf signed this legislation into law as Act 72 of 2018.