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The bill boosts near-term private investment incentives and cash flow (including for farms, landlords, and R&D firms) by accelerating and making permanent certain tax deductions, but does so at the cost of lower federal revenues and increased administrative complexity, with benefits that favor capital-intensive firms.
Businesses of all sizes (including farmers and owners of orchards/vineyards) can immediately expense qualifying tangible property and certain perennial plants, permanently restoring 100% bonus depreciation and making it retroactive, which lowers near-term taxable income and reduces tax bills for investments.
Owners of residential and nonresidential rental property (including pass-through owners) receive inflation-indexed depreciation adjustments and an election to opt out for specific property, preserving real tax relief over time and preventing mismatches with AMT.
Businesses that conduct R&E can deduct research and experimental costs immediately in the year paid or incurred (rather than amortizing), improving near-term cash flow and encouraging near-term investment in innovation while keeping existing scope and reasonableness limits.
All taxpayers face lower federal tax receipts because permanent 100% expensing, higher depreciation for rentals, and immediate R&E deductions accelerate deductions, which likely increases federal deficits or pressures other spending and tax policy choices.
Taxpayers, small businesses, pass-throughs, financial institutions, and the IRS will face substantial administrative and compliance burdens (including retroactive accounting adjustments, updated filings, and the need for IRS guidance) because several changes apply to prior periods and alter reporting rules.
Capital-intensive firms and businesses with large equipment investments (often larger corporations) benefit disproportionately from accelerated expensing compared with labor-intensive firms, potentially skewing competitive balance and concentrating tax benefits.
Based on analysis of 4 sections of legislative text.
Makes 100% bonus depreciation permanent, indexes real-property depreciation for inflation, and restores immediate expensing of research costs (effective retroactively to 2022 for R&E).
Introduced June 12, 2025 by Rafael Edward Cruz · Last progress June 12, 2025
Makes several changes to the tax code to encourage business investment and research: it makes 100% bonus depreciation permanent (treating the change as if included in the 2017 tax law), creates an inflation-adjustment multiplier that increases annual depreciation deductions for residential and nonresidential real property, and restores immediate deductibility of research and experimental expenses (effective for tax years beginning after 2021). The bill includes implementation rules for partnerships and passthroughs, limits on how the added depreciation amounts are treated for basis and recapture, and alternative minimum tax adjustments.