New Tax Bill Includes 100% Bonus Depreciation

Those four provisions, York continued, “are the major features of the agreement, but the agreement includes other provisions for low-income housing, disaster relief, Section 179 expensing, U.S.-Taiwan provisions, and increases in certain reporting thresholds.”

Another new component “is that the agreement would offset the cost of the temporary tax cuts by making changes to the Employee Retention Tax Credit,” York explained.

“Ideally, lawmakers would be debating how to permanently stabilize the tax code, rather than working to enact last-minute, temporary, and retroactive tax changes in the weeks before the filing season kicks off,” York opined.

Important for Advisors

Jeff Bush of the Washington Update explained in another email to ThinkAdvisor on Tuesday that the 100% bonus depreciation is ”important to advisors as many of their clients are business owners. This is a big deal for small and medium-sized businesses.”

Bush noted that as he’s “traveled and spoken to groups, many of which are business owners, I sense they are maxing out their growth potential with the facilities, equipment, etc., they have now. They are eager to invest, and these changes to the tax code can be the final straw in getting them to reinvest in their companies.”

On the business tax side, the bill “would allow immediate expensing for U.S.-based R&D and 100% expensing for capital purchases,” Bush explained. “Also included is interest deductibility. These are expired tax changes written into the Tax Cuts and Jobs Act of 2017, and their restoration is a high priority for Republicans.”

Added Bush: “These business tax changes, the Fed lowering rates, and growing corporate profits bode well for economic growth in 2024 and beyond.”