100% Bonus Depreciation Is Here to Stay—And It’s a Power Play for the Horse Racing Industry
Photo by Rachel Bissonette.
The passage of the One Big Beautiful Bill Act (OBBBA) is more than a tax policy update—it’s a strategic opportunity for investors looking at the Thoroughbred industry with fresh eyes.
At a time when capital efficiency matters more than ever, OBBBA makes 100% bonus depreciation permanent, retroactive to January 20, 2025. That means racehorse trainers, owners, breeders, and farm operators can now deduct the full cost of key investments—horses, barns, tech, equipment—in the same year those investments are made.
No drawn-out depreciation schedules. No delayed ROI. Just immediate financial flexibility.
For current industry players, this is a meaningful incentive to reinvest. For those outside the industry—especially investors in agriculture, real estate, or high-capital ventures—it makes the racing and breeding space more accessible, attractive, and aligned with broader investment strategies.
WHY THIS MATTERS FOR NEW CAPITAL
The Thoroughbred industry has always required upfront investment and a long view. But until now, the tax structure didn’t reflect the risk profile. With this change, racing is finally being treated like other serious asset-based businesses—where smart tax planning can accelerate growth and offset exposure.
The removal of restrictive language around Section 461(l)—which would have limited the ability to carry forward excess business losses—is just as critical. That language was struck from the final bill, ensuring owners and breeders can actually claim and retain the full benefits of this incentive without caps or clawbacks.
WHAT THIS UNLOCKS
Program expansion: Breeders can grow their operations and enter new tiers of the market.
Infrastructure upgrades: Farms and racing operations can justify capital improvements.
Tech adoption: New tools—AI stall monitors, RFID tracking, performance analytics—become easier to integrate with upfront cost savings.
Outside investment: Private equity, family offices, and new partners can see a clearer path to profitability and faster returns.
A SIGN OF MOMENTUM
While the bill doesn’t yet address the wagering side of the industry—specifically tax fairness for horseplayers—it signals something important: the federal government is recognizing the economic value and job-creating potential of the Thoroughbred sector.
That opens the door for more industry-aligned reforms, and for broader collaboration between racing professionals and the business world.
FINAL TAKEAWAY