The One Big Beautiful Bill Act (OBBBA), signed into law by President Trump on July 4, 2025, permanently restores the 100 percent bonus depreciation deduction for qualified property purchased and placed in service after January 19, 2025. This provision allows businesses, including those in the thoroughbred horse racing industry, to immediately expense the full cost of tangible property with a recovery period of 20 years or less, such as racehorses, leading to record-breaking sales and significant tax advantages. Properties placed in service before January 19, 2025, remain subject to a reduced 40 percent bonus depreciation rate.

Bonus depreciation offers greater flexibility than Section 179 deductions, as it is not limited by income or deduction caps, allowing businesses to create taxable losses if depreciation exceeds income. For example, a racing operation purchasing $4 million in horses with $3.5 million taxable income can fully expense the purchase under bonus depreciation, resulting in a net loss, whereas Section 179 deductions would be limited to taxable income. This permanent restoration is highly beneficial for taxpayers, though professional tax advice is recommended to optimize deductions in coordination with other federal and state tax rules.