Local racing facilities are the hub for the drag racing culture. It’s easy to forget that these tracks are small businesses that face tight margins in today’s modern economy. Part of the financial picture are the taxes these facilities need to pay, and the motorsports tax incentive is a key ingredient in how these tracks function.

Why Tracks Need Tax Help

The motorsports tax incentive provides tracks with the ability to accelerate depreciation over a seven year period for any of its long-term investments that are used to improve the property. So, think of things like track surface work, paving projects, replacing or improving grandstands, and upgrading bathrooms. These are all important areas that are expensive projects to undertake for any facility.

The problem is, the tax credit for projects like these is going to expire in 2025, and the Specialty Equipment Market Association (SEMA) is behind a big push to make it a permanent option for racing facilities.

“If this tax credit is allowed to expire, property owners lose any certainty on how to classify their property or know the scope of their expense qualifications. If the IRS were to dispute a business’s filings, litigation becomes the only solution for racetrack owners. Most small, family-owned businesses do not have the resources to employ lawyers and accountants to intervene in this instance. This won’t be necessary if Congress passes the Motorsports Fairness and Permanency Act this year,” says SEMA’s Karen Bailey-Chapman, Senior Vice President – Public and Government Affairs.

Benefits Of The Motorsports Fairness and Permanency Act

Unfortunately, most of the big upgrades and maintenance items race tracks need aren’t cheap. When a facility can reinvest money back into itself, the overall experience is improved for spectators and racers.

“Under the previous model that existed until 2004, facilities worked on a depreciation schedule that ranged from 14 to 39 years. Costs took longer to recover, and businesses had to navigate challenging cash flow issues. Imagine you purchase $100,000 in equipment for your race track. Under the 39-year model, you can only deduct $2,500 in the first year. Under the Motorsports Fairness and Permanency Act’s seven-year timeline, you, as a track owner, can deduct over $14,000 each year. By making the seven-year schedule permanent, motorsports entertainment businesses will have more cash on hand earlier, deduct more from the onset, and have more flexibility,” Bailey-Chapman says.

If you want to help push H.R. 2231, the Motorsports Fairness and Permanency Act of 2025, through, you can visit the SEMA Action Network here. You can also find out who represents you in Congress on the SEMA website, and you can ask them to support the Motorsports Fairness and Permanency Act of 2025.