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The bill with the extension of bonus depreciation is called the Tax Relief for American Families and Workers Act of 2024.
The bill not only extends 100% bonus depreciation but also includes research and development expensing (R&D Tax Credit) and an expansion of the Child Tax Credit. The bill also raises the small-business expense cap.
Real estate investors and owners are very focused on the 100% bonus depreciation extension under Section 168(k), which will retroactively extend 100% bonus through the end of 2025.
Bonus depreciation, under §168k, would extend 100% bonus depreciation for qualified property placed in service after December 31, 2022, but before January 1, 2026. The legislation would retain 20% bonus depreciation for property placed in service after January 1, 2026, but before January 1, 2027.
The $80 billion legislation was easily passed by the House last week and now is waiting for approval from the Senate. Unfortunately, there is only a 60/40 chance that the Senate will approve the bill. The Senate was supposed to pass the bill before their recess on February 12, but that did not happen.
Additional delays on the legislation bills could interrupt its passage. If any amendments were added, it would require another vote by the House, potentially killing it altogether. Republican members have concerns with the provisions of the Child Tax Credit. Enactment may depend on whether Senate leadership can come to a unanimous agreement, which would reduce the debate time and the number of amendments.
The bill is expected to create 900,000 new jobs, increase small business investment by $400B, and generate $58 billion in additional take-home pay for American workers.
Stay tuned…