This provision allows businesses to deduct a large percentage of the cost of eligible assets in the year they are placed in service, rather than depreciating them over a longer period. For instance, a company purchasing new equipment might be able to immediately deduct a significant portion of the purchase price, reducing their taxable income for that year.
The accelerated deduction offers a substantial incentive for capital investment, potentially stimulating economic growth and job creation. Its enactment provided businesses with increased cash flow, enabling them to reinvest in their operations, expand facilities, or upgrade technology. The policy’s implementation marked a notable shift in depreciation rules, impacting businesses across various sectors.
