Members,
We wanted to update you on the latest developments in the ongoing reconciliation negotiations in Congress, particularly the proposed changes to federal tax policy that will have implications for the construction industry and our broader business community.
Below is a summary of major tax provisions currently under consideration, comparing existing law to proposals in the House-passed Build Back Better Act (OBBBA) and the Senate's latest draft:
Individual & Business Tax Provisions:
Individual Income Tax Rates
-TCJA-era lower brackets are set to expire after 2025. Both House and Senate proposals would make these permanent.
Estate Tax Exemption
-Currently set to drop from $13.99M to ~$7M per person in 2025. Both chambers propose raising the exemption to $15M, indexed to inflation.
Pass-Through (199A) Deduction
-The 20% deduction expires after 2025.
-House: Raises to 23%, made permanent
-Senate: Keeps at 20%, made permanent
Bonus Depreciation
-Scheduled to phase out by 2027.
-House: Restores 100% expensing through 2029
-Senate: Makes 100% expensing permanent
Expensing Cap for Equipment
-Current cap: $1.25M with a phase-out beginning at $3.13M
-House/Senate: Increases cap to $2.5M with phase-out starting at $4M, both indexed to inflation
Additional Tax Policy Provisions:
R&D Cost Recovery
-100% expensing through 2029, amortization begins 2030
-Senate: Permanent full expensing for domestic R&D; 15-year amortization for foreign R&D
SALT Deduction Cap
-House: Raises cap to $40K, permanent; phases out for higher incomes
-Senate: Retains current $10K cap; additional anti-avoidance provisions under negotiation
Overtime Premiums
-House: Fully deductible above-the-line
-Senate: Deduction up to $12.5K (2025–28); phased out above $150K/$300K AGI
EV/Hybrid Fees
-House: Adds annual federal fees ($250 EV / $100 hybrid) for Highway Trust Fund
-Senate: Fee structure unspecified; no federal fee included
Excess Business Loss Limitation
-Applies through 2028 under current law
-House/Senate: Makes permanent; requires prior-year disallowed losses to be retested annually
These evolving proposals could significantly impact AGC members, especially those operating as pass-through entities or investing in capital equipment and R&D. We’ll continue to monitor negotiations closely and advocate for provisions that support construction employers and the broader business climate.
Please reach out with any questions or concerns.
-Sean Schupack, Sr. Director of Government Affairs, Idaho AGC