Congress is working swiftly to enact the bipartisan, bicameral Tax Relief for American Families and Workers Act (H.R. 7024) to extend key tax provisions for American businesses and provide additional certainty to the construction industry. Included in the bill is the deduction for research and development and the extension of the 100% bonus depreciation, along with several other beneficial policies for small businesses and hardworking Americans. ABC supports this bipartisan effort to grow our economy and ensure America’s global competitiveness.

Of note: The new bill would also accelerate the filing deadline for backdated employee retention tax credit claims to Jan. 31, 2024, and apply disclosure requirements and penalties for businesses that submitted misleading or fraudulent claims for the ERTC. It is critical that those businesses that believe they qualify for the ERTC submit claims immediately if they wish to receive the credit. 

The construction industry benefits both directly and indirectly from the tax code’s robust historical preference for research and development. The combination of immediate cost recovery and incentives has allowed contractors to embrace innovative new tools, technologies and materials that continue to improve the efficiency, safety and sustainability of the construction process. In addition to innovations in project delivery, the tax treatment of R&D is also a driver of new construction, as new technologies spur investments in everything from advanced manufacturing facilities and energy generation to storage and more efficient buildings. Contractors have benefited from and come to count on the tax code’s reliable treatment of R&D expenses for more than half a century. Allowing for immediate R&D expensing leads to lower tax bills, less paperwork and easier compliance for contractors. 

Further, extending the 100% bonus depreciation will have a significant impact on the construction industry at a fraught time for the U.S. economy. For the past five years, construction businesses could expense or write off the purchase of tools, equipment and machinery during the same year in which they were purchased. Preserving this beneficial tax policy will be essential to guaranteeing the success of key construction projects funded by bipartisan congressional legislation, including the Infrastructure Investment and Jobs Act and the CHIPS Science Act. 

The bill also offers critical relief for more small businesses through the increase in expensing under section 179, increasing the maximum amount a taxpayer may expense from $1 million to $1.29 million for property placed in service starting in 2024. This increase in expensing will allow for improved cash flow, increased investment and a further reduction in the tax disparity between small and large businesses in the United States.