Sponsors (4)
Introduced June 12, 2025 by Glenn Grothman · Last progress June 12, 2025
The bill increases near‑term tax relief and cash flow for property owners and businesses (including immediate R&E expensing and expanded/adjusted depreciation) to encourage investment, at the cost of reduced federal revenue, potential fairness shifts toward better‑capitalized firms, and added compliance and administrative complexity.
Businesses and other owners of qualifying property can immediately deduct (100% bonus depreciation) the cost of qualifying property placed in service after Sept 27, 2017, producing large up‑front tax deductions and improved cash flow in the purchase year.
Businesses (including many small firms) can immediately deduct research and experimental (R&E) expenses rather than amortizing them, lowering taxable income in the year costs are incurred and improving near‑term cash flow that can encourage R&D and investment in the U.S.
Owners of residential and nonresidential real property receive inflation‑indexed depreciation (with a 3% annual compounding), increasing reported depreciation deductions over many years and reducing tax liability for affected properties (with a parallel adjustment for AMT taxpayers).
All taxpayers face lower federal tax receipts in the near and medium term because of permanent/expanded bonus depreciation, inflation‑indexed depreciation, and immediate R&E expensing, which increases the federal deficit or forces tradeoffs in other spending or tax policy.
Accelerating deductions (especially by large firms) shifts tax benefits toward earlier years and may reduce progressive revenue collection, effectively shifting some tax burdens onto other taxpayers or reducing resources for programs that benefit middle‑ and lower‑income Americans.
Retroactive application of expanded bonus depreciation could force many taxpayers and the IRS to amend prior returns and process adjustments, creating administrative burdens, paperwork, and transition costs.
Based on analysis of 4 sections of legislative text.
Makes 100% bonus depreciation permanent, restores immediate expensing for R&E, and adjusts real-property depreciation annually by an inflation‑based ratio (with opt-out).
Makes several changes to business tax rules: it permanently sets bonus depreciation at 100% for qualified property placed in service after Sept 27, 2017; restores immediate expensing for research and experimental (R&E) expenditures (undoing the prior mandatory amortization of certain foreign R&E costs); and requires annual adjustments to depreciation deductions for residential and nonresidential real property using an inflation-based ratio (with a 3% compounded floor) while allowing an irrevocable opt-out for each property. The bill also updates related Internal Revenue Code cross-references and applies parallel adjustments for alternative minimum tax depreciation. The changes affect businesses, owners of rental and commercial real estate, taxpayers claiming bonus depreciation, owners of specified plants, and tax administrators; they take effect at different dates (some retroactive to 2017 treatment for bonus depreciation, R&E expensing for years beginning after 2021, and the real-property rule for tax years ending on or after enactment).