The Potential Impact of 100% Bonus Depreciation Extension on American Businesses

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The ongoing debate around the Tax Relief for American Families and Workers Act of 2024 continues to capture the attention of business owners nationwide. One of its key provisions, the extension of 100% bonus depreciation, shows significant promise in boosting American businesses and infrastructure if passed by the Senate. This Act underscores the vitality of tax policy in driving business growth and innovation.

Why is 100% Bonus Depreciation Extension Crucial for Business Growth?

The Act includes three principal tax amendments that have direct implications for businesses across the United States:

  1. Immediate expensing of domestic Section 174 research and experimental expenditures
  2. A hike in bonus depreciation for qualified property to 100% (currently 60% for the 2024 taxable year)
  3. Adjustment of the interest expense limitation to be based on 30% of taxable income before depreciation and amortization

The extension of 100% bonus depreciation is a lifeline for businesses that weathered severe limitations during the 2022 and 2023 taxable years. It provides firms with an avenue to deduct the cost of qualified property as 100% bonus depreciation in the same acquisition year, fortifying their financial standing and fostering growth.

While the proposal has elicited commendations across the board, its future hangs in the balance as Senate approval remains uncertain.

The Role of 100% Bonus Depreciation in American Competitiveness

Several business leaders ceaselessly urge the reestablishment of immediate expensing for domestic research. This move, they argue, is pivotal in providing a sense of stability for businesses. Widening the bonus depreciation could also counterbalance the U.S.’s declining position in global competitiveness regarding research incentives.

For instance, reduced research funding hampered First Solar, the largest solar manufacturer in the Western Hemisphere, from opening a $400 million manufacturing plant in Ohio – a move that would have generated over a thousand jobs. This situation reinforces the need for an expedited approval of the Act to prevent the U.S. from trailing behind other innovative countries.

The Road Ahead

The passage of this Act is vital to the survival of small and midsize businesses while keeping the U.S. as a formidable competitor in the global arena. Despite minimal technical issues with the proposed bill, a definitive solution is yet awaited.

The potential extension of 100% bonus depreciation will not only spur business growth but also generate jobs, promote innovation, and strengthen the country’s infrastructure. The benefits far outweigh the minimal fiscal impact on the federal budget, bolstering the argument in favor of passing this Act promptly.

The livelihoods and growth of millions of small businesses are at stake. While the Act’s future remains uncertain, hope for its timely passage is undying. After all, the prosperity of American businesses rests heavily on these critical tax provisions.


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Jose A. Ramirez

Jose A. Ramirez is a corporate accountant turned entrepreneur who has dedicated his life to helping businesses develop CASH SAVING SYSTEMS.
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