Sponsors (4)
The bill accelerates and expands tax deductions to spur investment and R&D and reduce near-term tax burdens for many businesses and property owners, but it does so at the cost of lower federal revenues, added compliance complexity, and benefits that may skew toward larger, better-capitalized firms.
Owners of qualifying business property (manufacturers, retailers, services, and other firms) can immediately expense the full cost of new qualifying property placed in service after Sept 27, 2017, lowering their taxable income in the year of purchase and improving near-term cash flow for investment.
Businesses and startups that incur research and experimental (R&E) expenses can deduct those costs immediately rather than amortizing them, improving cash flow and likely encouraging more U.S. R&D investment.
Owners of residential and nonresidential real property will receive inflation-indexed depreciation (with a 3% annual compounding), increasing reported depreciation deductions in many years and receiving parallel adjustment for AMT taxpayers; taxpayers may also irrevocably elect out to keep current rules.
All taxpayers face lower federal tax receipts because accelerated expensing (bonus depreciation), inflation-indexed depreciation, and immediate R&E deductions reduce near-term revenue, which could increase the federal deficit or crowd out other spending priorities.
Taxpayers and the IRS will face increased administrative and compliance burdens (including potential amended returns, basis adjustments, and election changes) as a result of retroactive provisions, new elections, and transitions in depreciation and R&E treatment.
Large firms and well-capitalized growers are likely to gain the most from accelerated deductions and removal of planting deadlines, potentially shifting tax burden away from less-advantaged taxpayers and reducing progressivity.
Based on analysis of 4 sections of legislative text.
Makes 100% bonus depreciation permanent, restores immediate expensing of R&E, and raises real‑property depreciation via a GDP‑indexed neutral cost recovery ratio (with opt‑out).
Official title: To amend the Internal Revenue Code of 1986 to permanently allow a tax deduction at the time an investment in qualified property is made, and for other purposes.
Introduced June 12, 2025 by Glenn Grothman · Last progress June 12, 2025
Makes permanent 100% bonus depreciation for qualified property placed in service after September 27, 2017; restores immediate expensing for research and experimental (R&E) expenditures rather than mandatory amortization; and creates an annual inflation-adjusted "neutral cost recovery ratio" that increases depreciation deductions for residential rental and nonresidential real property (with an opt‑out). The changes alter timing of deductions, affect basis/AMT treatment, include transitional rules, and treat some changes as retroactive to prior tax-law dates.