WASHINGTON – U.S. Senators Jim Risch (R-Idaho) and James Lankford (R-Okla.) introduced the Accelerate Long-term Investment Growth Now (ALIGN) Act, which would make permanent a provision in the 2017 Tax Cuts and Jobs Act (TCJA) that allowed businesses to fully expense new investments (machinery, equipment, etc.) in the year of purchase. That provision currently began to phase out in the federal tax code starting at the end of 2022 and expires at the end of 2026.
“The Tax Cuts and Jobs Act created real economic boom in America. The provision that enabled Idaho businesses to write off new investments in equipment, machinery, and buildings created substantial growth. It’s time to make that provision permanent with the ALIGN Act,” said Risch.
“Business expenses are not business profits, so they should not be taxed as profits,” said Lankford. “The 2017 tax law encouraged more economic activity from our US manufacturers by allowing them to depreciate their capital and equipment during the year it was purchased instead of over years and years of tax returns. But that provision started phasing out at the end of 2022. High inflation and high costs for everything from gasoline to construction materials will continue to plague our economy unless we immediately pass my bill to allow businesses to invest in their employees and business future. Let’s get this passed and signed into law to help our vital US manufacturing sector and other US industries continue to create high-paying jobs.”
Risch and Lankford are joined in introducing the bill by Senators Marco Rubio (R-Fla.), John Barrasso (R-Wyo.), Mike Braun (R-Ind.), Marsha Blackburn (R-Tenn.), Todd Young (R-Ind.), Steve Daines (R-Mont.), and John Boozman (R-Ark.).
The bill is supported by the National Association of Manufacturers, USTelecom, and a coalition that includes the National Taxpayers Union, 60 Plus Association, American Consumer Institute, Americans for Prosperity, Americans for Tax Reform, and Association of Mature American Citizens Action, Center for a Free Economy, Center for Freedom and Prosperity, Center for Individual Freedom, Consumer Action for a Strong Economy, Council for Citizens Against Government Waste, Independent Women’s Voice, Institute for Liberty, and Taxpayers Protection Alliance.
Background
Bonus depreciation has been in the tax code for more than 20 years and helps drive our global competitiveness. The 2017 Tax Cuts and Jobs Act (TCJA) expanded the practice to allow a businesses to immediately expense 100 percent of the cost of eligible property with a class life of 20 years of less. Under current law, the benefits began to phase out at the end of 2022. Specifically, property placed in service in the following years will see: 2023 – 80 percent expensing, 2024 – 60 percent expensing, 2025 – 40 percent expensing, and 2026 – 20 percent expensing. The ALIGN Act makes permanent full and immediate expensing for the same property as allowed in TCJA. The ALIGHN Act encourages businesses to grow and compete by fully aligning their expensing during the same year of investing in new equipment, technology, and their qualified property.
