Federal Bonus Depreciation Subtraction

If you had an addition for federal bonus depreciation on your Minnesota tax return for 2015 or later, you may subtract 20% of that amount from taxable income on your 2023 return.

Both of these must be true to qualify:

• You deducted bonus depreciation on your federal tax return in one or more of the five previous years
• You added back 80% of that deduction on your Minnesota return in the same year

To claim the subtraction, complete Schedule M1MB, Business Income Additions and Subtractions. Include Schedule M1MB when filing Form M1, Individual Income Tax.

Special Circumstances

Sell or Dispose of Asset During the Five-Year Subtraction Period

You may not take the remainder of the subtraction in the sale year. Instead, you must continue with the five-year schedule.

Do not adjust your federal gain or loss on the asset's disposition due to the Minnesota treatment of the bonus depreciation.

Own an S Corporation That Converted from a C Corporation

You may claim prorated subtractions of the predecessor’s remaining bonus depreciation subtractions.

For details on this subtraction, see:

• See Minnesota Statute 290.0132, subdivision 9
• See Minnesota Treatment of Federal Bonus Depreciation on the state Legislature website