The House Ways and Means Committee approved legislation on Thursday that was introduced by Rep. Pat Tiberi (R-Ohio) to permanently extend 50 percent bonus depreciation for businesses.
Since it was first enacted in 2002, 50 percent bonus depreciation has been increased, extended and allowed to lapse a number of times. Under Tiberi’s bill, business owners would permanently be allowed to deduct half of all new equipment purchases immediately.
“It’s clear to employers and policy experts alike that bonus depreciation helps grow the economy and encourages job growth,” Tiberi said. “As the Tax Foundation has reported, making bonus depreciation permanent would support the creation of 212,000 new jobs, and increase federal revenue by $23 billion per year. I encourage my colleagues who have supported bonus depreciation in the past to continue supporting this pro-growth measure.”
The bill would also benefit businesses that have limited ability to use bonus deprecation because they operate at a loss. A number of restrictions on corporate alternative minimum tax credits would be lifted under the measure so those businesses could use them for capital reinvestment.
Under the bill, the definition of “qualifying property” would be expanded to include retail improvements, which would allow retailers who own their businesses to make more frequent interior renovations.
Seventy-seven organizations supported the bill, including the National Association of Manufacturers and the U.S. Chamber of Commerce. Leaders from the groups said the bill would provide a pathway to broader tax reform.