Cover image courtesy of The Image Is Everything

A sweeping new U.S. tax bill - colloquially dubbed Trump’s “Big Beautiful Bill” - is set to deliver a seismic boost to the American thoroughbred industry. Tucked within the 1,116-page legislation is a provision that would restore 100 per cent bonus depreciation for racehorses purchased and placed into service - allowing owners to write off the full value of a horse in the first year.

In effect, this would allow an owner who buys a $1 million yearling to immediately write off the entire $1 million in the year it’s acquired, rather than just $400,000 under the current rules. That change alone could inject fresh investment into the yearling market and ripple across the entire thoroughbred ecosystem.

“If you’re looking to upgrade your stock, this is a great way to take advantage of a tax law,” leading U.S. bloodstock agent David Ingordo told TDN America. “It will incentivise people to buy, because you can write off 100 per cent in the first year. That’s huge. I expect a lot of budgets to increase because of this.”

The bill, which passed the House last week, is now headed to the Senate - where there is speculation the 100 per cent depreciation measure could be made permanent. For an industry so deeply reliant on liquidity, confidence, and long-term investment, permanence could be the real gamechanger.

But the bigger question for the southern hemisphere is: what can Australia learn from it?

“More backbone” for Australian breeding

For Australian breeder and racehorse owner Tony Tighe - who also happens to be a leading Sydney accountant - the implications go well beyond American borders.

“This is the kind of forward-thinking tax policy Australia should be looking at closely,” Tighe says. “The industry here is operated by many long-running rural families, and that’s only sustainable when sensible tax incentives are in place. Without them, it’s difficult to secure the industry’s future for the next generation.”

Australia’s thoroughbred sector is a significant contributor to the economy and rural employment, yet Tighe warns that rising input costs, extreme weather events, and reduced certainty around tax settings all threaten its long-term health.

“Any improved write-off in depreciation gives more backbone to the industry,” he explains. “It allows breeding operations to keep battling rising operational costs - and survive abnormal weather events like floods and droughts that are becoming more common.”

Tighe also highlights a crucial point often missed in public tax debates: the government doesn’t lose out.

“The Government actually wins more by having a bigger pool of horses traded throughout their lives,” he says. “They enjoy the GST derived from a strong marketplace of thoroughbreds. Stronger tax depreciation supports industry sustainability - and in turn, more secure GST revenue for government.”

In other words, the benefit is cyclical. Support investment with targeted tax relief, and the resulting industry growth pays dividends right back to the treasury.

Growing the next generation

Perhaps most importantly, Tighe believes tax reform can help solve one of the industry's most pressing issues: attracting new, long-term participants to invest in both racing and breeding.

“Like the racing industry, the breeding sector needs to get more new participants involved - and to keep them there,” he says. “Long-term tax incentives like improved depreciation ensure younger people can afford to join and stay in the industry.”

It's a message echoed in the U.S., where industry advocates are urging lawmakers to make the 100 per cent deduction permanent, citing not just owner confidence, but the overall viability of a sport that relies on continual reinvestment.

While Australian bloodstock sales continue to deliver strong headline figures, Tighe cautions that these results can mask deeper structural challenges. Rising operational costs are squeezing small breeders, creating pressure points that threaten long-term sustainability - shown through Australia’s national foal crop which continues its downward trend, year after year.

Table: Data from Racing Australia Fact Book 2013/14 and 2023/24, 2024 season data from Australian Stud Book

Tighe warns that without proactive policy measures to reduce barriers and support reinvestment, the industry may struggle to maintain any momentum.

“We need to stop thinking that strong sale prices at the top end mean everything is healthy underneath,” he says. “If we don’t act now to support affordability, we risk losing the next generation of breeders before they’ve had a chance to begin.”

“We should absolutely be watching what’s happening in the U.S.,” Tighe says. “If they’re creating an environment where owners and breeders are empowered to reinvest - and we’re not - we risk being left behind.”

Australia has always punched above its weight in global thoroughbred breeding. But staying ahead may require more than great horses - it may also demand great policy.