What is the primary effect of the Tax Cuts and Jobs Act on California tax law concerning depreciation?

The primary effect of the Tax Cuts and Jobs Act on California tax law concerning depreciation is indeed the permanent increase of the IRC Section 179 expense. The Tax Cuts and Jobs Act significantly raised the limit on the amount of Section 179 expenses that a taxpayer can immediately deduct rather than depreciate over time. This change allows businesses to write off the cost of certain property and equipment in the year it is purchased and put into service, providing immediate tax relief and encouraging investment in capital assets.

The increase in the Section 179 deduction is beneficial for many taxpayers, particularly small businesses, as it simplifies the accounting process and improves cash flow. This allows them to invest more readily in their operations without the burden of long-term depreciation schedules.

In the context of California tax law, it is important to note that the state has not fully conformed to certain federal tax changes, including aspects of the bonus depreciation. Therefore, although the federal law allows for increased expensing and bonus depreciation, California’s tax regulations may differ, reflecting a more conservative approach to how depreciation is treated at the state level. This divergence emphasizes why the correct answer focuses on Section 179, which has been specifically accentuated by the federal law changes and somewhat aligns with California's existing tax frameworks, albeit