The Economic, Revenue, and Distributional Effects of Permanent 100 Percent Bonus Depreciation by Erica York, Garrett Watson, Huaqun Li, Cody Kallen, Daniel Bunn published by Tax Foundation (8/2022).
“100 percent bonus depreciation allows firms an immediate tax deduction for investments in qualifying short-lived assets. The phaseout of 100 percent bonus depreciation, scheduled to take place after the end of 2022, will increase the after-tax cost of investment in the United States.
Preventing the phaseout and making 100 percent bonus depreciation a permanent feature of the U.S. tax code is crucial in the effort to increase business investment and create better opportunities for workers. Research indicates past instances of bonus depreciation have boosted capital accumulation and employment opportunities.
Permanent 100 percent bonus depreciation would increase long-run economic output by 0.4 percent, the capital stock by 0.7 percent, and employment by 73,000 full-time equivalent jobs. Over the 10-year budget window, permanent bonus depreciation would reduce federal revenue by $400 billion.
A permanent expansion of 100 percent bonus depreciation would support business investment, capital formation, and economic output over the long term while creating more opportunities for workers…”
