A proposed tax bill backed by Donald Trump would make the 100% immediate expensing of qualified business investments permanent, potentially enabling some U.S. taxpayers to save up to $600,000 in federal income taxes. The change could significantly alter capital expenditure decisions for firms in technology and consumer discretionary sectors.
- 100% immediate expensing of qualified business investments would become permanent under proposed Trump-backed legislation.
- Eligible taxpayers could save up to $600,000 in federal income taxes over multiple years.
- The policy primarily benefits firms in technology (TSLA, AAPL) and consumer discretionary sectors.
- The extension may boost corporate capital spending by up to 12% annually.
- Potential impact on tax revenue could influence Treasury yields, including US10Y.
- A legislative vote is expected before year-end, with implications for 2025 tax planning.
A key provision in a new tax reform proposal linked to Donald Trump would make the 100% first-year depreciation write-off a permanent feature of the U.S. tax code. Currently, this provision—originally introduced under the 2017 Tax Cuts and Jobs Act—was set to phase out after 2026, but the proposed legislation would extend it indefinitely. This change could allow eligible businesses in sectors such as technology and consumer discretionary to deduct the full cost of qualifying equipment, software, and machinery in the year of purchase. The impact is substantial: for a mid-sized tech firm investing $1 million in new servers, robotics, or R&D tools, the full deduction could eliminate $250,000 in federal tax liability in a single year. For companies with larger capital outlays, cumulative savings could reach $500,000 to $600,000 over several years, especially when combined with other proposed tax incentives. The provision is expected to benefit public companies like TSLA and AAPL, which frequently make large-scale capital investments to scale production and develop new platforms. Market analysts estimate the permanent extension could boost corporate spending on capital equipment by as much as 12% annually, particularly among small- and mid-sized enterprises. The shift may also influence equity valuations, with technology and industrial sectors likely to see increased investor interest due to higher after-tax returns on investment. Treasury yields, including the US10Y, could see modest upward pressure if the change leads to higher government deficit projections due to reduced tax receipts. The proposal is under review in the House Ways and Means Committee, with a vote expected before the end of the year. Taxpayers and businesses are advised to assess their 2025 capital plans in light of the potential policy shift, especially those with mid-to-large-scale investment pipelines.