AGC tax priorities—expensing, bonus depreciation, and more—that would simplify tax compliance and improve cash flow advance in the House and hopefully set up negotiations with Senate before year-end.

On June 13, Republicans on the House Committee on Ways and Means (which has jurisdiction over the tax code) voted to “favorably report” two tax bills—the Small Business Jobs Act and the Build it in America Act—out of committee. The full House of Representatives is expected to vote on these bills sometime in the next few weeks.

Included in these bills were several AGC tax priorities, including provisions to:

• Postpone (through 2025) a rule that would force contractors to amortize their research and development costs over five years;
• Reinstate “100 percent bonus depreciation,” which allows construction firms to deduct the full cost of equipment in the year that it is purchased, rather than depreciated over time;
• Increase “Section 179 expensing” (also called small business expensing) from the current $1 million threshold, to $2.5 million;
• Increase the reporting threshold for issuing a 1099 informational return from the current $600 level, to $5,000

These provisions address some concerns from AGC members, and would simplify tax compliance and improve cash flow. However, to pay for the lost revenue associated with these provisions, the Build it in America Act would also either repeal, or scale back some incentives for the construction of new renewable energy generation. AGC has heard from a few member firms that have either started on, or are planning to work on projects that would benefit from the tax incentives that would be repealed in the legislation. It’s unclear if these projects would, or could, move forward absent these incentives.

House Ways and Means Chairman Jason Smith (R-Mo.) has indicated that this package of bills will be voted on by the full House of Representatives soon. While it is very unlikely to pass the Senate, much less be signed by the President, in its current form, passing these bills out of the House does begin a process for negotiating an agreement with Democrats by the end of the year.

If you have any questions, please contact Matthew Turkstra at (202) 547-4733, or [email protected].