America's Property Tax Advisor

BPP Tax Exemption Threshold Raised

BY JOE MONZON, DENVER AND JOHN O'NEIL, CHICAGO, JANUARY 2022

More states are giving businesses a tax break on their business personal property. New laws went into effect January 1 in Colorado and Indiana. Michigan will modify its exemption threshold next year.

 

Colorado

 

House Bill 21-1312 changes the business personal property exemption from $7,900 to $50,000. Any business owner whose business personal property is $50,000 or less no longer needs to pay a personal property tax or to file a yearly declaration schedule with the assessor's office.

 

Business Personal Property can be defined as everything which is not real property, typically portable or movable items, including:

 

  • Furniture

  • Equipment

  • Machinery

  • Security devices

  • Signs and personal effects not otherwise exempt by law.

 

The State of Colorado will reimburse local governments for the lost property tax revenue caused by the increase, so it will have a net zero effect on the county taxing entities.

 

Indiana

 

With the passage of Senate Enrolled Act 336, Indiana companies with total personal property that cost less than $80,000 to acquire are now exempt from the business personal property tax. The prior exemption threshold was $40,000.

 

The change is expected to save businesses $18 million statewide. Local assessors will realize some administrative savings as a result of this bill. Taxpayers who claim the exemption must file one return form within the county, including only identifying information and checking a box claiming the exemption. The rest of the return may be left blank. Local assessors will not have to process the numeric portion of these returns.

 

Michigan

 

For 2023, Michigan small businesses will get a personal property tax break. House Bill 5351 lifts the BPP tax exemption threshold from $80,000 to $180,000 in true cash value.

 

The Michigan Association of Counties and other local government groups are urging the Legislature to address the consequences of the change. Estimates of the impact are as high as $75 million each year. Lawmakers voted for a $75 million reimbursement for the first year of the exemption, but they did not provide for the years beyond.