tl;dr
A tax policy change under the Trump administration has fueled a surge in luxury purchases, with high-net-worth individuals leveraging the One Big Beautiful Bill Act (OBBBA) to turn expensive items like racehorses and yachts into strategic tax deductions.
The record-breaking $531.5 million in sales at the Keeneland September Yearling Sale in 2025 has sparked intrigue, with analysts pointing to a less obvious factor behind the surge: a tax policy change that has transformed luxury purchases into strategic financial moves. The One Big Beautiful Bill Act (OBBBA), enacted under the Trump administration, restored a 100% bonus depreciation rule, allowing businesses to immediately deduct the full cost of eligible assets—ranging from private jets to racehorses—on their taxes. This provision has created a ripple effect, reshaping how high-net-worth individuals allocate capital.
The bonus depreciation rule, initially introduced in 2017 under the Tax Cuts and Jobs Act, allowed businesses to deduct 100% of eligible asset costs in the year of purchase, with the rate gradually phasing down until 2027. The OBBBA made this policy permanent, creating a powerful incentive for taxpayers to invest in tangible assets. For instance, a $200,000 Mercedes G-Wagon could result in a $80,000 tax savings for someone in the 40% marginal bracket, even if only $20,000 was paid upfront. This dynamic has led to a surge in demand for items that might otherwise be seen as indulgences, including thoroughbreds, yachts, and luxury vehicles.
However, the rule comes with a caveat: assets must be used for business purposes at least 50% of the time. This has prompted some buyers to reclassify personal purchases as business investments. A private jet, for example, must be tied to corporate travel, while a racehorse needs to demonstrate its utility in breeding, racing, or training. Financial advisors caution that the IRS has intensified scrutiny of such transactions, particularly for high-value items. “Bonus depreciation doesn’t make the tax code Santa Claus,” said Mark Stancato, a financial advisor. “It’s a front-loaded deduction with long-term implications—if your purchase isn’t genuinely business-oriented, you risk audits and penalties.”
The impact of this policy extends beyond individual taxpayers. It has influenced broader market trends, with luxury sectors experiencing a boom as wealthy investors seek to maximize tax savings. Yet, experts emphasize that the strategy is not without risks. “This isn’t a loophole for lifestyle purchases,” noted Matthew Chancey, a certified financial planner. “It’s a tool for businesses that can justify the expense.”
As the line between personal and corporate spending blurs, the OBBBA’s legacy underscores the complex interplay between tax policy and wealth management. While the rule offers substantial benefits, it also demands careful planning and documentation to navigate the evolving landscape of tax regulations. For now, the world’s most expensive racehorses and yachts continue to command attention—not just as symbols of status, but as strategic investments in a tax-advantaged landscape.