Personal Property Tax - Depreciation of Assessed Value
Impact
If enacted, HB215 will revise the existing property tax laws to implement a depreciation model that takes into account the full depreciable amount as per federal tax guidelines. This change is expected to lower the tax liability for businesses and individuals who own personal property, effectively making it easier to conduct financial planning and budgeting. The shift towards a method consistent with the Internal Revenue Code could also lead to increased investment in personal property from businesses seeking tax advantages.
Summary
House Bill 215 focuses on the assessment and depreciation of personal property for tax purposes within Maryland. The bill proposes a change in how the value of personal property is calculated, establishing a depreciation method that aligns with the Internal Revenue Code. This move is significant because it allows for a more accelerated depreciation schedule compared to the existing law, which currently limits the depreciation of personal property to a maximum of 10% of its original cost per year, without allowing it to drop below 25% of its value.
Contention
While many proponents argue that this bill promotes fairness and aligns state tax laws with federal standards, there are concerns regarding its potential impact on local revenue streams. Some legislators and local government associations fear that the reduced tax revenues from personal property could hurt local services and funding, leading to possible contention during discussions in legislative committees. Consequently, there is a debate about balancing the need for competitive taxation policies with the necessity of maintaining adequate funding for essential local services.