State laws, which vary by state, primarily govern the taxtation of personal property. Personal property includes every tangible thing that is the subject of ownership, whether animate or inanimate, including a business fixture, and that does not constitute real property under state laws. The chief characteristic distinguishing personal property from real property is mobility. Improvements to land are generally considered real property. Unless specifically exempt by law, all other property is taxable as personal property.
In general, under state laws, anyone in business in the state is subject to tangible personal property tax on equipment, furniture, fixtures and inventory used in business. Every business operating in the state, with the exception of financial institutions and public utilities, must file a tangible personal property tax return annually with the state auditor. Such taxes are often imposed by the state and collected by local governments. Many types of personal property are exempt from taxation. These generally include household goods and personal effects. However, such items, if used in a business would be eligible for assessment and taxation. Other personal property typically exempt from taxation includes: custom software, livestock, inventories held solely for resale and intangible personal property.
