New Tax Law Extends 100% Bonus Depreciation through 2011

Obama/Congress tax compromise also provides 50% bonus depreciation for business capital investments in 2012 in addition to extending Bush-era tax cuts

On Dec. 17, President Obama signed into law legislation extending and expanding important tax provisions. The compromise proposal, The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (HR 4853), brokered by the White House and congressional Republicans cleared the House and Senate by wide bipartisan margins.

Among other things, the law:

  • Extends the 2001 and 2003 tax cuts for all taxpayers through 2012
  • Sets the estate tax exemption level at $5 million per person ($10 million per couple) with a top tax rate of 35 percent
  • Provides 100 percent depreciation bonus for equipment placed in service after Sept. 8, 2010, and through Dec. 31, 2011. For equipment placed in service after Dec. 31, 2011, and through Dec. 31, 2012, the bill provides for 50 percent depreciation bonus
  • Extends increased Sec. 179 expensing levels through 2012

Despite initial skepticism from critics, the widely held consensus is that the deal represents the best offer either side could hope to achieve without handing a tax increase to all taxpayers for Christmas.

AED had been pushing for several of the initiatives in the legislation. Top priorities included working with lawmakers to prevent a tax increase for all earners, temporarily resolve estate tax uncertainty, and extend and expand capital investment incentives. In fact, in the run-up to the final vote, AED led an ad-hoc coalition of construction industry groups in encouraging Congress to work in a bipartisan manner to promptly enact the compromise tax package.

For more information about the extension of the depreciation bonus and other important capital investment incentives in the new tax law, visit: