Legislative Tax Updates
Updated 11.03.2025
The 119th Congress has introduced and enacted several tax-related measures that impact the equine industry and broader agricultural community. These updates aim to provide clarity, stability, and fairness for horse owners, breeders, and related businesses.
Equine-Specific Tax Legislation
The Race Horse Cost Recovery Act of 2025 (H.R. 1113), sponsored by Representative Andy Barr and co-sponsored by Representative Morgan McGarvey, permanently allows a three-year depreciation schedule for all racehorses, regardless of age at placement in service. This provision applies retroactively to horses placed in service after December 31, 2022. Similarly, the Racehorse Tax Parity Act (H.R. 1112), also introduced by Representative Barr and McGarvey, reduces the holding period for horses to qualify as Section 1231 assets to 12 months. This change aligns equine assets with other business property for long-term capital gains treatment and is effective for taxable years beginning after December 31, 2024.
Estate Tax Reform
The Death Tax Repeal Act of 2025, introduced in both the House and Senate, seeks to eliminate the federal estate tax and generation-skipping transfer tax. It retains the gift tax with a lifetime exemption of $10 million, indexed for inflation. Currently, the exemption stands at $13.99 million per individual in 2025. This measure is designed to ease the burden on family-owned farms and equine businesses, which often face liquidity challenges when paying estate taxes.
Major Tax Package – One Big Beautiful Bill Act
Signed into law on July 4, 2025, this sweeping legislation includes significant tax provisions for farmers and equine businesses. Key elements include permanent 100% bonus depreciation for qualified property placed in service after January 19, 2025, an increase in Section 179 expensing to $2.5 million with a $4 million phase-out threshold, and a permanent estate tax exemption of $15 million per person. The law also expands the Qualified Business Income Deduction for pass-through entities from 20% to 23% and raises the 1099 reporting threshold to $2,000, reducing compliance burdens for small businesses.
Other Notable Measures
Additional legislation includes the Permanent Tax Cuts for American Families Act, which makes TCJA standard deduction increases permanent, and the Make American Families and Workers Thrive Again Act, which permanently increases gift, estate, and GST exemptions to $15 million starting in 2026. The Supporting Innovation in Agriculture Act creates a 30% tax credit for investments in innovative agricultural technology, including precision agriculture tools. These measures collectively aim to strengthen the financial stability of agricultural and equine businesses while encouraging modernization and growth.