Following Senate and House approval of the “One Big Beautiful Bill” the President signed the measure in a White House ceremony on July 4th. The legislation implements the President’s domestic policy priorities by extending and enhancing the 2017 tax cuts, increases initiatives to enhance border security, increases investments in defense programs and targets reductions in other Federal programs.
The following is a summary of the provisions that have a direct impact on LICA members businesses and on the construction market:
• Passthrough Deduction: Makes permanent and expands the 20% Sec. 199A qualified business income (QBI) deduction for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships.
• Bonus Depreciation: Makes bonus depreciation permanent and increases it to 100% for qualified new and used assets acquired after January 19, 2025.
• Expensing Limits Increased: Sec. 179 expensing limit increased to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with annual inflation adjustments going forward.
• R&D Deduction: Permanently allows the immediate deduction of domestic research and experimentation expenses (retroactive to 2022 for eligible small businesses).
• Estate Tax: Permanently increases the federal gift and estate tax exemption amount to $15 million for individuals and $30 million for married couples beginning in 2026, with annual inflation adjustments going forward.
• Overtime Pay Deduction: For 2025–2028, creates a new deduction of up to $12,500 for single filers or $25,000 for joint filers for qualified overtime pay, subject to income-based phaseouts.
• Ends Clean Energy Incentives: Eliminates clean energy tax incentives, such as the alternative fuel vehicle refueling property credit and the Sec. 179D deduction for energy-efficient commercial buildings after June 30, 2026 — but eliminates the qualified commercial clean vehicle credit after Sept. 30, 2025.
• Border wall, Detention Center Funding: $170 billion for border and immigration crackdown, including $46 billion for Mexico border wall and other fortifications, including at maritime crossings. More than $70 billion would go to building and maintaining detention centers to house and transport families of deportees.
• Farm Programs: Conservation programs will see a long-term boost in funding but that benefit comes at a cost: for the coming fiscal year there will be significantly less money available for program applicants than there otherwise would have been. Unobligated Inflation Reduction Act funding previously expected to be available in fiscal 2025 and 2026 for the Agricultural Conservation Easement Program, the Regional Conservation Partnership Program, the Environmental Quality Incentives Program and the Conservation Stewardship Program has been rescinded to be folded into the permanent farm bill baseline. Because of congressional budget rules, that change should guarantee somewhat higher funding levels for these programs over the coming decade and beyond. But it will also likely mean fewer producers will get funding for their projects in FY26 compared to what they could have gotten under IRA.
• Bio Fuels Credit Extended: The 45Z clean fuels credit would be extended two years, from 2027 to 2029, The 40A credit for biodiesel plants that produce less than 60 million gallons a year also would be extended and increased. Eligible producers would get an extra 20 cents per gallon on the first 15 million gallons.
• Aviation Fuel Credit Cut: The credit value for sustainable aviation fuel would be cut from $1.75 a gallon to $1, the same rate as for biomass-based diesel.