This week, more committees in the House of Representatives marked up their portions of the reconciliation package, also known as The Big Beautiful Bill. AGC breaks it down for contractors.
Tax:
- Extends and raises the Qualified Business Income (QBI) Deduction – Permanently extends and raises the 199A deduction to 23% of qualified business income. Effective top rate on pass-through entities’ profits falls roughly four points. AGC has advocated for this change.
- Increases Estate Tax Exemption and Makes It Permanent – Estate tax exemption increased to $15 million (inflation-indexed) and made permanent—easing succession planning for family-owned contractors. AGC has advocated for this change.
- Deduction of R&D Costs – Allows businesses to immediately deduct 100% of qualified domestic research and development (R&D) expenditures, retroactive to 2022 and through 2029. This temporarily reverses the TCJA rule that required amortizing R&D costs over five years. AGC has advocated for this change.
Energy and Environment:
- Repeals and Rescinds Unobligated Funding – Rescinds unobligated funding for clean heavy-duty vehicles, diesel emission reductions, greenhouse gas reduction fund, greenhouse gas corporate reporting, environmental product declaration assistance, and low-embodied carbon labeling for construction materials among other grants and programs.
- Phases Out Renewable Energy Tax Credits – Begins the phase out of most clean energy investment and production tax credits, ending them completely by 2032. These credits are currently driving demand for solar, wind, geothermal, and battery storage construction.
Workforce:
- Expands Pell Grant Eligibility: Expands eligibility to short-term, high-quality, workforce-aligned programs. AGC has advocated for this change.
- Expands 529 Plan Uses: Expands qualified expenses under 529 savings plans to cover postsecondary training and credentialing.
So, what’s next?
The bill is still being pieced together by committees. It could still change before it even goes to the House floor for a vote. If it passes, it is probable that the Senate will have changes to the bill, sending it back over to the House. As always, we will keep you updated on the latest.
For additional information, please contact Alex Etchen, Deniz Mustafa, or Jim Young.