The recently passed 1,116-page bill by the House could significantly impact the horse racing industry by allowing horse owners to write off 100% of the cost of a racehorse for five years, compared to the current 40% deduction. This change, known as bonus depreciation, would enable owners to fully deduct the purchase price of a horse, incentivizing investment in the yearling market. The bill is now headed to the Senate, where there is speculation about making the 100% deduction permanent.

The Tax Cuts and Jobs Act of 2017 initially set bonus depreciation at 100% until 2023, after which it would gradually decrease to 0% by 2027. The proposed bill aims to revert to the original 100% deduction, which has excited industry stakeholders. Bloodstock advisor David Ingordo noted that this tax strategy would encourage more buyers to invest in yearlings, potentially increasing their budgets and stimulating the market.

Communications director Thomas Meis from the National Thoroughbred Racing Association (NTRA) indicated that Senate Republicans are considering making the bonus depreciation permanent, which would provide greater economic certainty for horse owners. Currently, the tax breaks are set to expire after five years, but there is optimism that the Senate may extend this benefit indefinitely, which would be a significant advantage for the racing industry.