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The Tax Foundation is the nation’s
leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and local
levels. We are a 501(c)(3) nonprofit
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Creative Commons CC-BY-NC 4.0
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Designer, Dan Carvajal
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The Fixtures Fix:
Correcting the Drafting Error Involving the
Expensing of Qualified Improvement Property
• The Tax Cuts and Jobs Act (TCJA) removed investment barriers by allowing
businesses to immediately deduct the cost of certain investments under a
provision called 100 percent bonus depreciation.
• However, seemingly due to legislative oversight, the law accidentally excluded
the category of improvement property investment from 100 percent bonus
depreciation. As a result, investments of this type face a higher tax burden
than under prior law.
• More restrictive cost recovery treatment for interior improvements to
buildings will increase costs and discourage companies from making these
types of investments.
• All business expenses should be immediately deductible, including the
amount that businesses spend on investment.
• Policymakers should work to ensure that cost recovery for qualified
improvement property (QIP) does not remain worse off due to technical
drafting errors, and that it is eligible for 100 percent bonus depreciation.
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Removing barriers to business investment in the United States was one of the central goals of the
Tax Cuts and Jobs Act (TCJA), enacted last December. One of the key provisions in the bill, known as
“100 percent bonus depreciation,” allows businesses to immediately deduct the cost of short-lived
investments—limiting the penalty that the federal tax code placed on businesses that make capital