The CREATE JOBS Act makes three major changes to federal tax law aimed at encouraging business investment and research. First, it makes "full expensing" permanent, allowing businesses to immediately deduct 100 percent of the cost of qualified property and equipment when purchased, rather than deducting the cost gradually over multiple years through depreciation. Second, it establishes a "neutral cost recovery" adjustment for real estate (residential rental and commercial buildings), which ties depreciation deductions to inflation rates to ensure the value of these deductions doesn't erode over time. Third, it eliminates the requirement that research and experimental expenditures be amortized (deducted gradually) over 60 months, allowing companies to deduct these research costs immediately as business expenses. These changes take effect retroactively to 2017 for equipment and 2022 for research expenses, and apply to all future tax years. The legislation is intended to reduce the tax burden on businesses and startups to encourage job creation and economic growth.
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