:max_bytes(150000):strip_icc()/GettyImages-2227038022-6eb034cd391d4b66aa63ef6401d6a2cc.jpg "Racehorses, Yachts, Private Jets—The Wealthy Are Getting a Nice Tax Break, Thanks to Trump")
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Key Takeaways
- A bonus depreciation allows businesses to write off the full purchase price of eligible assets from their taxes in the first year of use.
- Eligible assets may include private jets, yachts, cars, and even racehorses—so long as they’re used for business at least 50% of the time.
The One Big Beautiful Bill Act (OBBBA) may be the reason a record amount of money was spent on big, beautiful racehorses at an auction earlier this month.
The Keeneland September Yearling Sale, the largest thoroughbred auction in the world, saw a record $531.5 million in sales, including more horses that sold for at least $1 million than ever before.
Why? Thanks to a change in the tax code enacted by the OBBBA, businesses can immediately write off 100% of the purchase price of eligible assets from their taxes. Those assets include heavy machinery, but also private jets, luxury cars, yachts, and, yes, even racehorses.
How Does This Rule Work?
The rule is known as bonus depreciation. In 2017, the Tax Cuts and Jobs Act implemented a 100% bonus depreciation rate but set the rate to steadily decrease by 20% per year starting in 2023 until its expiration in 2027. The OBBBA restored bonus depreciation to 100% and made it permanent.
Why This Matters to You
Tax rules like bonus depreciation can shift how the wealthy spend—and save—big money. Whether you’re a business owner, taxpayer, or just curious about why racehorses are suddenly hot investments, this policy could influence how millions in taxes are avoided or deferred.
Not only does it apply to outright purchases, the rule holds even if debt is used to finance the transaction. That allows high earners to access significant tax savings with relatively little money spent.
Matthew Chancey, a certified financial planner specializing in high-net-worth clients, explained it like this:
“If a [Mercedes] G-Wagon costs $200,000 and you put down 10%, or $20,000, and finance the remainder, you might be able to deduct $200,000 from your tax return,” Chancey told Investopedia. “If those dollars are in the highest marginal brackets, let’s say 40%, then you save 40% of $200,000, which is $80,000 in taxes while only actually putting $20,000 in cash down on the transaction.”
Bonus Depreciation Buys Must Be (At Least 50%) For Businesses
The catch is that owners must prove the assets they write off are used for business purposes at least 50% of the time. That private jet has to fly for business travel, and the thoroughbred can’t spend its days in a family stable.
“I tell clients: bonus depreciation doesn’t make the tax code Santa Claus,” said Mark Stancato, lead financial advisor at VIP Wealth Advisors. “It front-loads deductions but brings long-term strings. If you’re buying a jet or yacht purely for lifestyle, don’t expect the write-off to survive scrutiny. The IRS has already targeted business aircraft and high-dollar hobby activities, and it will continue to tighten its focus on these areas.”
The Bottom Line
The OBBBA restored bonus depreciation, letting businesses instantly deduct 100% of eligible asset costs. That includes racehorses, as long as buyers can prove they’re used for business at least half the time.
