Pennsylvania Personal Income Tax has made updates to their provisions regarding IRC Sec 179 expense deduction and IRC Sec 1031 Like-Kind Exchanges.
These changes will be applicable for property placed in service and like-kind exchange transactions occurring after December 31, 2022.
What is the change to the Sec 179 expense deduction?
Currently Pennsylvania limits the IRC Sec. 179 expense deduction to $25,000. Under the new provision IRC Sec. 179 expense deduction allowable in Pennsylvania will conform to the deduction allowed under federal tax law at the time the property is placed in service.
What is the change regarding like-kind exchanges?
Under current Pennsylvania law, gains resulting from like-kind exchanges of property occurring in Pennsylvania are generally subject to personal income tax at the time of sale.
Pennsylvania’s personal income tax will conform to federal IRC Sec. 1031 regarding the exchange of property held for productive use or investment. Federal law allows tax on the gain from real property to be postponed, or deferred, if the proceeds are re-invested in similar property as part of a qualifying like-kind exchange.
Both updates will generate significant tax deductions and tax savings for Pennsylvania taxpayers.
Learn more about our Tax Planning & Compliance services here.
Read more helpful News & Articles here.