H.R.1113 - Race Horse Cost Recovery Act of 2025 (119th Congress)
Summary
H.R.1113, the Race Horse Cost Recovery Act of 2025, proposes amending the Internal Revenue Code of 1986 to allow a 3-year recovery period for all racehorses. Currently, the recovery period for racehorses may be longer, depending on their age and use. The bill aims to apply this change to property placed in service after December 31, 2022.
The bill was introduced in the House of Representatives by Mr. Barr and Mr. McGarvey and referred to the Committee on Ways and Means.
The intended effect is to provide a tax benefit to racehorse owners by accelerating depreciation deductions.
Expected Effects
The primary effect of this bill would be to reduce the taxable income of racehorse owners in the short term. This is achieved through accelerated depreciation. This could incentivize investment in racehorses.
However, it would also reduce government tax revenue. The change in depreciation rules could lead to some economic distortion, favoring investment in racehorses over other assets.
Ultimately, the bill's impact depends on the scale of the racehorse industry and the magnitude of the tax savings.
Potential Benefits
- Increased Investment: The shorter recovery period could encourage more investment in racehorses.
- Simplified Tax Compliance: A uniform 3-year recovery period simplifies tax calculations for racehorse owners.
- Potential Economic Stimulus: Increased investment in the racehorse industry could lead to some economic stimulus in related sectors.
- Improved Cash Flow: Accelerated depreciation provides racehorse owners with improved cash flow in the early years of ownership.
- Alignment with Other Assets: The bill could align the depreciation period for racehorses with other assets, creating consistency.
Most Benefited Areas:
Potential Disadvantages
- Reduced Tax Revenue: The accelerated depreciation would reduce federal tax revenue.
- Potential for Abuse: The shorter recovery period could be exploited for tax avoidance purposes.
- Economic Distortion: The tax benefit could distort investment decisions, favoring racehorses over other potentially more productive assets.
- Complexity for Some: While simplifying for some, it may add complexity to the overall tax code.
- Limited Impact: The benefits are concentrated in a specific industry, limiting the overall economic impact.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to be constitutionally permissible under Article I, Section 8, Clause 1, which grants Congress the power to lay and collect taxes, duties, imposts, and excises. The bill involves a modification to the tax code, which falls under this power.
There are no apparent violations of individual rights or freedoms guaranteed by the Bill of Rights.
However, the bill's focus on a specific industry raises questions about whether it promotes the general welfare, as stated in the Preamble of the Constitution.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).