The House-passed budget reconciliation bill includes a temporary bonus depreciation provision that allows a 100 percent deduction (rather than several years of partial deductions to reflect amortization of the cost of the property) for qualified property acquired and placed in service by a business.

The provision extends the first-year depreciation deduction through 2029. It increases to 100 percent the cost of qualified property acquisitions eligible for the bonus depreciation deduction. The qualified property must be acquired and placed in service after January 19, 2025 and before January 1, 2030. Qualified property includes most computer software.

Prospects: This bonus depreciation provision enjoys wide bipartisan support. Although Democrats are not participating in the enactment of the budget reconciliation bill, they are active in trying to kill it and/or portions of it. Because they generally support the bonus depreciation proposal, though, it is unlikely they will try to kill this particular provision.

The House provision is temporary—it expires at the end of 2029. This was a revenue-driven decision by House tax writers. GOP Senators, however, are anxious to make this provision permanent (i.e., not subject to an expiration date). Thus, Senators may change the provision to eliminate its expiration date.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org