Issue

Qualified Improvement Property (QIP)

Franchise business owners should be able to afford to renovate their locations

Business renovation

Senator Pat Toomey (R - PA) and Senator Doug Jones (D-AL) recently introduced the Restoring Investments in Improvements Act, a bipartisan bill which would allow businesses to immediately deduct costs for renovations as opposed to the current 39-year depreciation period for businesses’ qualified improvement property (QIP). Representatives Jimmy Panetta (D-CA) and Jackie Walorski (R-IN) have also introduced a companion bill in the House of Representatives. The legislation would ensure franchise business owners are able to make renovations and further investment in their locations, spurring economic growth in communities across the country. 

Unfortunately, under current law, the depreciation period (the period during which a certain cost for a business is allocated) for QIP was mistakenly raised to 39 years, an extension that poses a significant economic burden on franchise small business owners. This 39-year depreciation does not reflect the reality that to remain competitive and attract customers, these businesses must renovate and improve their structures far more frequently than every four decades.

Importantly, QIP impacts a wide array of common business improvements, not just major renovations. General work like installing tile floors, new lighting systems, sprinkler systems, and other interior improvements also fall within the category of QIP. Such a high depreciation period means any remodels, renovations or just general up-keep increasingly can become cost-prohibitive to franchise small business owners already facing a heavy tax burden. 

By allowing for immediate depreciation on the costs of eligible remodels, renovations, and improvements, this bill will improve the bottom-lines of thousands of franchise businesses throughout the United States. Please take action and urge your Senators and Representatives to co-sponsor this critical piece of legislation!