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119-s-2056119th CongressWALLET

CREATE JOBS Act

Sponsored By: Senator Cruz, Ted [R-TX]

Introduced

Summary

100 percent immediate expensing for qualified business property. This bill would accelerate cost recovery so many investments and research costs are written off sooner instead of over long depreciation schedules. It would also add an inflation‑linked adjustment for depreciation on real property to keep annual deductions closer to current prices.

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  • Businesses and startups: Would allow 100 percent expensing for qualified property placed in service after September 27, 2017, and would reset certain recovery periods to 7 years or less. That means firms could front‑load deductions and reduce multiyear depreciation schedules.
  • Real estate owners and pass‑through investors: Would create a Neutral Cost Recovery Depreciation Adjustment for residential rental and nonresidential real property. Annual deductions would be multiplied by a ratio based on the GDP deflator and increased by 1.03 to the power of n, subject to a minimum of 1, and the change would feed into minimum tax calculations for many entities.
  • R&D claimants and tax accounting: Would end mandatory amortization rules for many research and experimental expenditures and let taxpayers treat eligible research costs as current expenses. Taxpayers could elect to defer some costs and amortize them over at least 60 months. The R&E changes apply to amounts paid or incurred in tax years beginning after December 31, 2021.

Overall, the bill shifts deduction timing toward earlier years and adjusts how depreciation for real property is indexed to inflation.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 2 benefits, 0 costs, 2 mixed.

Bigger depreciation for rental and commercial property

If enacted, the bill would add a neutral cost recovery ratio to multiply depreciation for residential rental and nonresidential real property in years after service. The ratio uses GDP deflators and an annual 1.03 factor (1.03^n), is never less than 1, and is rounded to the nearest 0.001. Owners could irrevocably elect not to apply the rule to specific property. The extra amount would not change tax basis or trigger extra depreciation recapture. It would apply to property placed in service before, on, or after enactment for tax years ending on or after that date.

Permanent 100% expensing for businesses

If enacted, the bill would make 100% bonus expensing permanent for most qualifying property placed in service after September 27, 2017. Businesses could deduct the full cost of qualifying new investments in the year placed in service rather than over several years. For certain plants, the old 2027 planting deadline would be removed so qualifying plants planted or grafted can get the same treatment.

New rules for business R&D costs

If enacted, businesses could generally deduct research and experimental (R&E) costs in the year paid or incurred. Businesses could instead elect to defer and amortize capitalized R&E for at least 60 months, with a separate elective 10-year option still available. The choice is made by the tax return due date (including extensions) and is binding for later years unless the IRS consents. If enacted, the bill would also stop a taxpayer from deducting the dollar amount of expenses equal to the research tax credit unless the taxpayer makes an irrevocable election to take a smaller, formula-based credit. These R&E changes would apply to tax years beginning after December 31, 2021.

Clarify short recovery assets test

If enacted, the bill would clarify that the recovery-period test in accounting rules covers property with a recovery period of seven years or less. This is a definitional change to section 460 accounting. It is treated as if included in the earlier 2017 law for the same effective date.

Sponsors & CoSponsors

Sponsor

Cruz, Ted [R-TX]

TX • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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