The United States House of Representatives has begun its review of President Donald Trump's "One Big Beautiful Bill," and if and when it passes, it will have implications for the Thoroughbred industry.
The Senate last week made revisions from what was originally brought before it, with some of the changes positive for the industry should they remain intact, while others are negatives.
Here is a look at three items of note:
Headlining the bill from the industry perspective is that 100% bonus depreciation would be made permanent.
Trump, during his first term as president, passed the Tax Cuts and Jobs Act of 2017. As part of the TCJA, it granted 100% bonus depreciation on qualifying purchases from roughly late September 2017 through Dec. 31, 2022. Every year since then, the bonus depreciation has been reduced by 20%. Qualifying purchases normally would see the depreciation deduction on the purchase price spread out over several years. Instead, 100% bonus depreciation allows for a full tax deduction in the year that the purchase is put into service.
Another potential positive is a change in the wording surrounding excess business losses. The bill initially stated that any excess business losses carry forward indefinitely until there is enough business income in future years to offset them. The new language reverts back to current law, which treats these business losses as a net operating loss.
The original language only allowed for taxpayers to use losses up to approximately $300,000 for individuals and $600,000 for joint filers. But they must have net business income for this to be applicable.
Since many in the Thoroughbred industry found their initial success elsewhere and have sold their businesses and possibly have retired, they fund their racing-related operations via investment interest, dividends, and capital gains. Because of this, the proposed bills would not allow them to take advantage of the deductions.
The revised bill makes the limitation on excess business losses of noncorporate taxpayers permanent. It was set to expire after 2028.
Another area for the industry to keep an eye on in the final form is wagering losses. The bill limits this to 90% of "the amount of such losses during such taxable year" and "shall be allowed only to the extent of the gains from such transactions during such taxable year." This would take effect for taxable years after Dec. 31, 2025.
President Trump has urged House members to pass the bill quickly so that he can hold a special ceremony celebrating the much-contested piece of legislation July 4.
