Congress passed important tax incentives for horse owners—including a key provision that extends three-year tax depreciation for all racehorses through 2016—on Dec. 18 as part of comprehensive budget and tax legislation.

The Protecting Americans from Tax Hikes (PATH) Act of 2015 maintains the three-year recovery period for racehorse purchases that has been a top legislative priority for the National Thoroughbred Racing Association (NTRA) since the provision’s initial enactment as part of the 2008 Farm Bill. Most recently, the NTRA secured inclusion of three-year depreciation in the 2014 tax extenders package that expired at the end of 2014.

“The NTRA applauds the efforts of Congress in recognizing the important role of three-year depreciation for purchasers of young racehorses,” said NTRA President and CEO Alex Waldrop. “Owners and breeders can now invest with confidence knowing that this important tax incentive will be available for at least the next two years.”

The provision allows taxpayers to depreciate, on a three-year schedule, racehorses 24 months of age and younger when purchased and placed into service, as opposed to a seven-year schedule. The accelerated schedule better reflects the length of a typical racehorse’s career and is more equitable for owners.

The PATH Act also retroactively extends two other provisions that spur investment in racehorses and depreciable farm equipment.

“Bonus depreciation” will remain set at 50% and can be used by business owners who purchase and place in service qualified new depreciable property; yearlings that an owner purchases and