Position on the Proposed Restoration of 100% Bonus Depreciation | Absolute Importance

Overview

In his March 4 address to Congress, President Trump announced his intention to restore 100% bonus depreciation retroactive to January 20, 2025. This provision, originally enacted under the 2017 Tax Cuts and Jobs Act (TCJA), allowed businesses to fully and immediately deduct the cost of qualified property—such as equipment, software, and real property improvements—placed in service during the year.
Under current law, bonus depreciation began phasing out in 2023 and will fully expire by 2027. The bonus rate is 60% in 2024 and will decline to 40% in 2025, 20% in 2026, and 0% in 2027. President Trump’s proposal would reverse that trajectory, reinstating full expensing for capital investment.
As a firm that specializes in cost segregation studies, Maven Cost Segregation: Tax Advisors supports this policy and encourages real estate professionals, CPA firms, and tax advisors to advocate for its passage.

Why This Matters: Technical and Economic Rationale

1. Stronger Incentives for Investment

100% bonus depreciation allows businesses to fully expense capital expenditures in the year they are made. This reduces the after-tax cost of investment and improves project-level cash flow. For real estate investors, this accelerates the timeline to reinvest in new acquisitions, construction, and improvement projects.

2. Boosts Economic Growth and Job Creation

According to the Congressional Budget Office (CBO), extending 100% bonus depreciation would reduce the user cost of capital by 2.3% in 2027, increase private investment by 1.5%, and boost GDP by 0.3% by 2034. The Tax Foundation projects increases to capital stock, wages, and long-term economic output.

3. Offsets Inflationary Erosion

In a high-inflation environment, depreciation deductions that occur over multiple years are worth less in real terms. Immediate expensing helps preserve the present value of deductions, making it especially important for inflation-sensitive sectors like construction and manufacturing.

4. Enables Real Estate Optimization

For properties that do not qualify for Section 179 deductions (due to use type, entity structure, or asset limits), bonus depreciation remains a critical tool. When paired with a cost segregation study, bonus depreciation allows for accelerated deductions on 5-, 7-, and 15-year property classes—covering site improvements, interior finishes, and certain mechanical systems.

Who Benefits?

  • Real Estate Investors:
    Enhanced first-year deductions make more deals viable, improve return on equity, and create more liquidity for reinvestment.
  • CPA and Tax Firms:
    Clearer tax planning and increased demand for advanced depreciation strategies.
  • Cost Segregation Firms:
    Greater utility of detailed engineering studies, as more assets can be moved into short-life categories with immediate expensing.
  • American Businesses:
    Particularly in capital-intensive industries—manufacturing, logistics, hospitality, retail, construction—this provision supports long-term capital formation.

Policy Cost and Fiscal Outlook

  • Short-Term Cost:
    Treasury’s Office of Tax Analysis estimates a 10-year revenue loss of $735 billion if 100% expensing becomes permanent. The largest loss ($217B) occurs in the first year.
  • Long-Term Neutrality:
    Because depreciation is a timing issue, the policy’s long-term cost is mitigated by reduced deductions in later years. CBO notes that some revenue losses are offset as early as 2024.
  • Potential Offsets:
    Congress may explore limiting other tax benefits (e.g., §163(j) interest deductions) to fund expensing—an area to watch for tax advisors.

How to Take Action

We urge all stakeholders to support the restoration of 100% bonus depreciation by engaging directly with policymakers. Here's how:

Step 1: Contact Your U.S. Senators and Representatives

When calling or writing, be concise, respectful, and clear about your support. Use specific language:
“I support the restoration of 100% bonus depreciation for domestic investment. This policy encourages reinvestment in American industry, supports small businesses, and strengthens economic growth.”

Step 2: Share This Page

  • CPA firms and cost segregation providers: share this position statement with your networks.
  • Trade associations and chambers of commerce: distribute this message as part of your policy alerts.
  • Taxpayers and clients: make this part of your year-end planning discussions.

A Patriotic Investment in America’s Future

Encouraging capital investment is not only smart fiscal policy—it’s patriotic. A return to 100% bonus depreciation supports domestic manufacturing, revitalizes real estate development, and reaffirms our national commitment to economic competitiveness.
It’s a policy that rewards businesses for investing in America.
Maven Cost Segregation: Tax Advisors stands with real estate investors, engineers, and accountants across the country in supporting this restoration. Let’s move forward with clarity, precision, and purpose.

IF YOU ARE A COST SEGREGATION COMPANY OR ACCOUNTING FIRM AND WOULD LIKE TO JOIN THE #BRINGBACKBONUS CAUSE PLEASE REACH OUT TO US TO LEARN MORE

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Sean Graham, CPA
Lead Technical Accountant
Maven Cost Segregation: Tax Advisors