CREATE JOBS Act

The CREATE JOBS Act, S.2056, permanently amends Section 168(k) of the Internal Revenue Code of 1986 to set the 'applicable percentage' for bonus depreciation at 100% for qualified property placed in service after September 27, 2017. This means businesses can deduct the full cost of eligible new equipment and property in the year of purchase, rather than depreciating it over several years. This change reduces the immediate tax burden for companies making capital investments, directly increasing their free cash flow and incentivizing further investment in physical assets, technology, and infrastructure. The bill's effective date is retroactive, applying as if included in the 2017 Tax Cuts and Jobs Act, which initially set bonus depreciation at 100% before it began phasing down. This legislation creates a direct financial incentive for companies to accelerate and expand capital expenditures. The money trail flows directly into corporate balance sheets through reduced tax liabilities, which can then be reinvested into operations, expansion, or returned to shareholders. Companies that historically make large capital investments, such as manufacturers, logistics firms, and technology companies building data centers, are positioned to capture these tax savings. The mechanism is a permanent tax deduction, not a grant or direct appropriation, meaning the benefit is realized by any company making qualifying investments. Historically, bonus depreciation has been a significant driver of capital investment. When 100% bonus depreciation was enacted as part of the Tax Cuts and Jobs Act of 2017, corporate capital expenditures increased. For example, in the years following the 2017 act, companies like Caterpillar ($CAT) and Deere & Company ($DE) saw increased demand for heavy machinery. While direct stock price correlation is complex, the policy provided a tailwind for industrial and manufacturing sectors. The phase-down of bonus depreciation, which began in 2023, was anticipated to slow capital spending, making this permanent reinstatement a reversal of that trend and a strong positive for investment-heavy industries. Specific winners include companies with substantial capital expenditure programs. Manufacturing giants like Caterpillar ($CAT), Deere & Company ($DE), and General Electric ($GE) will benefit from reduced costs for new equipment and facilities. Technology companies investing heavily in data centers and infrastructure, such as Amazon ($AMZN) and Microsoft ($MSFT), will see significant tax savings. Real estate investment trusts (REITs) focused on industrial properties or data centers, like Prologis ($PLD) and Equinix ($EQIX), will benefit from increased demand for their assets as businesses expand. Transportation and logistics companies such as UPS ($UPS) and FedEx ($FDX) will also gain from accelerated depreciation on new fleets and facilities. Retailers like Home Depot ($HD) that invest in store upgrades and logistics infrastructure will also see benefits. There are no direct losers; all companies making qualifying capital investments benefit from this tax change. This bill has been introduced by Senator Cruz (R-TX) and referred to the Committee on Finance. The next step is committee consideration. Given the permanent nature and the broad economic incentive, it carries significant weight. If it passes committee, it moves to a Senate vote. The permanent reinstatement of 100% bonus depreciation would take effect immediately upon enactment, retroactively applying to property placed in service after September 27, 2017, providing immediate financial relief and incentive for businesses.