How are bonus depreciation amounts treated under California tax law?

Under California tax law, bonus depreciation amounts are not allowed. This means that while federal tax law permits businesses to take a significant depreciation deduction for qualifying property, California does not conform to this federal provision. Instead, California has its own depreciation rules that differ significantly from the federal guidelines.

Businesses operating in California must rely on the standard depreciation methods as prescribed by state law, which can result in higher taxable income for California tax purposes compared to federal taxes. This distinction is important for taxpayers to understand, as it can lead to discrepancies in tax liability based on the application of bonus depreciation at the federal level versus the inability to utilize it under California law. As a result, taxpayers should plan accordingly and may need to perform separate calculations for federal and state taxes to ensure compliance with the respective laws.