Business Tax Provisions Added to GOP Tax Bill

What happened: Several House committees the week of May 11 passed their respective parts of the Republican tax and reconciliation bill, including several business tax priorities for the transportation construction industry. This builds on April 30 action by the House Transportation & Infrastructure Committee, which advanced a new registration fee for electric and hybrid vehicles dedicated to the Highway Trust Fund.

Business tax changes moved forward as part of the Ways and Means Committee title of the measure. Notable provisions include:

• Bonus depreciation: If enacted, would allow 100 percent bonus depreciation of property and equipment placed into service between Jan. 19, 2025 and Dec. 31, 2029.
• R&D: Companies can either deduct domestic research and development (R&D) costs or capitalize and recover expenses over 10 years. The expenses would have to be paid from Jan. 1, 2025 through Dec. 31, 2029.
• Accelerated depreciation for factories: Allows 100 percent expensing of construction for new factories, up from 10 percent amortization, and certain improvements to existing facilities. Construction must begin between Jan. 19, 2025 and Jan. 1, 2029 and be placed into service by Dec. 31, 2033.

Why it matters: The bonus depreciation provision began phasing out in 2023 and is currently at 40 percent, while the R&D credit shifted to an amortization schedule in 2022.

ARTBA May 14 led a letter to House Speaker Mike Johnson (R-La.) encouraging inclusion of the electric and hybrid fees in any final bill that comes to the floor.

What’s next: The Budget Committee must approve the entire measure before it heads to the House floor. However, the bill does not have enough votes at this time to advance out of committee. Republican leaders pledged to work through the weekend to iron out differences between far-right conservatives and party moderates to ensure passage of the bill before Memorial Day.