ARLINGTON, VA — The American Consumer Institute (ACI) releases its statement regarding Congress’ Plan to Extend 100 Percent Bonus Depreciation.

The American Consumer Institute is pleased to learn that the House Ways and Means Committee has released a new comprehensive tax package, which among many things like proposing revisions to R&D tax incentives, will extend the popular Tax Cuts and Jobs Act (TCJA) era tax provision known as 100 percent bonus depreciation.

As described in Section 168(k) of the Internal Revenue Code, 100 percent bonus depreciation allows qualifying businesses to write off the total cost of new assets in the same year rather than amortizing or applying the reduction in taxable income over a longer period. Common expenditures include large machinery and capital equipment that require significant investment. These assets are durable goods with multi-year lives, making the benefits provided by the tax provision particularly effective for facilitating capital formation. By not forcing businesses to carry over investment deductions into future years, expensing protects businesses from the erosive effects of inflation.

Unfortunately, this tax feature was temporary and began its sunset phase-out period on January 1 this year. This phase-out means that the allowance of 100 percent bonus depreciation will drop by 20 percent annually until it reaches zero after 2026, with this year marking the first drop. Consequently, businesses that maintain the same level of investment will experience increasingly high levels of taxation.

Democrats and Republicans alike have long lauded this tax provision as playing a significant role in driving economic development, business investment and worker employment opportunities. Perhaps that is one reason there continues to be bipartisan support for its existence and why House lawmakers have included a bonus depreciation extension in their tax package, which they hope to markup by Friday.

During this time of economic uncertainty, it’s more important than ever that businesses have the resources necessary to continue investing. Therefore, preserving the ability of businesses to fully expense future purchases must be part of any national conversation on capital investment.

The American Consumer Institute applauds House lawmakers’ decision to include 100 bonus depreciation in their tax package. Allowing businesses to continue applying 100 percent depreciation to qualifying assets through 2025 aligns with other expiring TCJA provisions and sends an unmistakable message to the nation that the government is serious about promoting a business-friendly environment. Even better would be if Congress agrees to pass the Accelerate Long-term Investment Growth Now (ALIGN) Act, a March bill that would make 100 percent bonus depreciation a permanent feature of the tax code. Research suggests that such action would increase long-term economic output and generate jobs.

Regardless of what happens next, house lawmakers deserve credit for introducing a measure that attempts to preserve the important benefits that 100 percent bonus depreciation provides.

You can learn more about 100 Percent Bonus Depreciation and other tax issues by visiting www.TheAmericanConsumer.Org or following us on Twitter @ConsumerPal.