Senator Seeks to Make Bonus Depreciation Permanent

U.S. Senator Pat Roberts (R-Kan.) introduced legislation June 24 to make permanent a 50% depreciation bonus on new equipment and property purchases.

He said the move will encourage investments and economic growth by allowing businesses to deduct half the cost of new purchases immediately, potentially driving reinvestment and growth.

“This legislation will provide much needed certainty in the tax code so businesses can better plan investments that create more jobs and growth in our communities.” Roberts said. “Bonus depreciation has been extended and expired many times, and it is time we make this permanent to give businesses more predictability in an already overly complex tax code.”

Bonus depreciation was first enacted in 2002 and has been extended and allowed to expire multiple times. This legislation amends the U.S. tax code to permanently allow businesses to deduct half of qualified purchased property immediately. More generous depreciation deductions reduce the after-tax cost of investing, encouraging higher levels of investment spending.

The legislation contains additional improvements such as expanding the definition of qualifying property under bonus depreciation to include retail and restaurant improvements, and allowing businesses to claim unused Corporate Alternative Minimum Tax credits and use them for capital investment.

The Tax Foundation has reported that a permanent extension of bonus depreciation would boost gross domestic product by more than 1% in the long run, lift investment by more than 3%, and create more than 200,000 jobs.

Sens. Johnny Isakson (R-Ga.), Roy Blunt (R-Mo.), and Pat Toomey (R-Pa.) are original cosponsors of this legislation. S