Personal property tax is assessed against values that are based upon a combination of the acquisition cost and the "percent good" factor found in a published table. The percent good factor is developed from IRS economic life estimates assuming straight-line depreciation to a residual value. Depreciation of value is different from financial or tax depreciation. Property that is fully depreciated for accounting or tax purposes but still used in the business is taxable and must be reported. Leased personal property is generally assessed to the lessor, except for conditional sales agreements that are taxed to the lessee. Personally owned items used in the business are taxable.
All tangible personal property used in the business is taxable unless exempted. The following are exempt from personal property tax:
- Personal property with a total aggregate fair market value of $4,000 in 2013 ($3,900 in 2012) or less per taxpayer within a single county.
- An item of expensed personal property having an acquisition cost of $1,000 or less and having a percent good of 15% or less.
- Inventory held for resale in the normal course of business.
- Farm equipment and machinery used primarily for agricultural production.
- Livestock.
- Household furnishing.
- Intangible personal property.
- Personal property used for irrigation purposes.
