The ALIGN Act makes full expensing permanent for qualified property placed in service after September 27, 2017, and updates related sections of the Internal Revenue Code.
James Lankford
Senator
OK
The ALIGN Act makes full expensing permanent for qualified property placed in service after September 27, 2017, by amending Section 168(k) of the Internal Revenue Code of 1986. It also removes outdated clauses and updates references within Section 168(k) and amends Section 460(c)(6)(B) to clarify its application to property with a recovery period of 7 years or less. These changes are retroactive, as if included in Public Law 115-97.
ALIGN Act Makes Full Expensing Permanent, Boosting Business Investment
The Accelerate Long-term Investment Growth Now (ALIGN) Act aims to make a key tax break permanent: the ability for businesses to immediately deduct the full cost of equipment and other qualified property. Instead of depreciating these costs over several years, businesses can write off the entire expense in the year the property is put to use. This move is intended to incentivize companies to invest in their operations.
Unpacking the Tax Break
This bill directly amends Section 168(k) of the Internal Revenue Code, making the 100% "bonus depreciation" (aka full expensing) a permanent fixture. It also cleans up some outdated language in the tax code and clarifies that a specific rule (Section 460(c)(6)(B)) applies to property that's typically depreciated over seven years or less. All these changes are retroactive, effectively acting as if they were included in the 2017 tax law (Public Law 115-97) that initially introduced this expensing provision.
Real-World Ripple Effects
Imagine a local bakery wanting to upgrade its ovens. Under current law (without this bill), they'd have to spread the cost deduction over several years. With the ALIGN Act, they could deduct the entire cost of the new ovens in the year they buy them. This frees up cash flow, potentially allowing them to hire another employee, expand their offerings, or simply have more financial breathing room. This same logic applies to bigger businesses, too—think a construction company buying new machinery or a tech startup investing in servers. By making this tax break permanent, businesses have more certainty for long-term planning. They know the rules won't change, making them more likely to invest.
Potential Kinks in the System
While the goal is to boost investment, there are potential downsides. Some businesses might try to reclassify assets to take advantage of the full deduction, even if those assets don't truly qualify. Also, this change could disproportionately benefit larger corporations with significant capital to spend, potentially widening the gap between big and small businesses. It's also worth noting that because the immediate deduction is so large, the government might collect less tax revenue in the short term, which could have other knock-on effects.