A Guide for the Business Community and the General Public

📘 Summary:

Tax experts have reviewed the House Ways and Means Committee’s tax reform bill. The legislation brings important changes (and some missed opportunities) for manufacturers and business taxpayers.

🔧 Key Provisions for Businesses & Manufacturers

🏭 Qualified Production Property Deduction

What is it?
A 100% depreciation allowance (immediate full tax write-off) for property used in manufacturing, production, or refining in the U.S.

✅ Applies to: Buildings, plants, and equipment used in qualified production.
📉 Goal: Lower a manufacturer’s effective tax rate — potentially below 15%.

💬 Expert Insight:
“This is basically 100% expensing for a new building or plant.” – Josh Odintz, Holland & Knight
“This brings us closer to the vision of a 15% effective tax rate.” – Jay Timmons, NAM

⚠️ Heads-up: Mixed-use buildings (e.g., part-office, part-manufacturing) may require cost segregation studies to split qualified vs. non-qualified portions.

🧾 Bonus Depreciation (Code Sec. 168(k))

Background: The 2017 Tax Cuts and Jobs Act (TCJA) allowed 100% first-year depreciation, phasing out by 2027.

New Proposal:
🔁 Restores 100% bonus depreciation for assets placed in service between January 19, 2025 and January 1, 2030.

📊 Benefit: Accelerates tax savings, encouraging investment in new equipment.2024)

🧪 R&E Expenses: Research & Development

🔬 Domestic R&E Deduction (Code Sec. 174)

TCJA change: Forced companies to spread R&E deductions over 5 years (15 for foreign R&D).

House Bill Fix:
🛑 Suspends capitalization for domestic R&E from 2025 to 2029.

⚠️ Caution: Foreign R&D expenses remain subject to the 15-year amortization rule.

💬 “Businesses are going to be delighted… but foreign research remains stuck.” – Dustin Stamper, BDO USAn.

💼 Interest Deduction Limits (Code Sec. 163(j))

✅What Changed in 2022?

• Switched from using EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
• To EBIT (Excludes depreciation and amortization)

📉 This reduced allowable interest deductions for many companies.House Bill Reinstatement:
🔁 Brings back EBITDA-based limit for 2025–2029 — more favorable for businesses.

📉 The “Three Sisters” Extenders (Not Permanently Addressed)

EBonus Depreciation – extended, not made permanent

R&E Expense Deduction – domestic relief only, temporary

Business Interest Deduction (EBITDA) – temporary restoration

💬 “There was hope for permanent fixes… we got 5-year extensions instead.” – Josh Odintz

❌ What’s Missing?

🚫 No cap introduced on C-SALT (state & local business tax deductions)
🚫 No hike in stock buyback excise tax

💬 What’s Next?

🧾 Markup & Reconciliation Process

• House version is a “skinnier bill” costing $3.8 trillion over 10 years, below the $4.5T cap.
• Senate likely to introduce a different version with varying tax priorities.

🔁 Final version will emerge from a reconciliation between House and Senate.📢 Senate Finance Chair Mike Crapo wants permanent TCJA extensions.

🔮 Why This Matters

“As several TCJA provisions near expiration, the stakes are high.”
— Jessica Jeane, Baker Tilly

📈 The decisions made today will shape U.S. tax policy and business strategy for years.

📌 Takeaways for Business Owners

🏛️ Final Words

This bill marks a significant — but temporary — shift in U.S. tax policy for businesses. While it provides welcomed relief, long-term stability remains elusive.

Stay alert for updates as the Senate crafts its version. Consult a tax advisor to prepare for implementation or adjustments.📢 Stay informed. Stay compliant. Stay competitive.