New legislation could make bonus depreciation on farm equipment permanent. U.S. Senator Pat Roberts (R-Kansas) says his bill will encourage investments and economic growth by making permanent a fifty percent depreciation bonus on new equipment and property purchases. This would allow businesses to deduct half the cost of new purchases immediately, freeing up money for reinvestment to help them grow.

“This legislation will provide much needed certainty in the tax code so businesses can better plan investments that create more jobs and growth in our communities.” said Roberts. “Bonus depreciation has been extended and expired many times, and it is time we make this permanent to give businesses more predictability in an already overly complex tax code.”

The legislation amends the U.S. tax code to permanently allow businesses to deduct 50 percent of qualified purchased property immediately. Bonus depreciation was first enacted in 2002 and has been extended and allowed to expire multiple times. A permanent increase in depreciation allowances is critical to encouraging more economic growth. More generous depreciation deductions reduce the after-tax cost of investing, encouraging higher levels of investment spending by businesses.

The measure has several other components purported to encourage business investment. First, it expands the definition of qualifying property under bonus depreciation to include retail and restaurant improvements. Second, the legislation will allow businesses to claim unused Corporate Alternative Minimum Tax credits and use these credits for capital investment.