What’s in H.R. 1, The New Tax Bill, and What It Means for SMACNA Contractors

by | Aug 28, 2025 | Uncategorized

The Congress just passed, and the President signed H.R. 1 into law. This budget and tax law is filled with significant updates and the extension of valued existing provisions for HVAC contractors, equipment suppling firms, building owners and real estate project developers. While tax policy isn’t simple, this bill does include many industry tax incentives most contractors will be familiar with from the 2017 Tax Cuts and Job Act (TCJA). Other incentives will be new, representing significant changes that could impact business growth over the next few years. We are pleased that the new law brings back several SMACNA-endorsed and advocated tax incentives and extends others, some of which were on the verge of ending. Below, is outlined what’s in the bill, why it matters and what each section could mean for your bottom line. 

Bill Highlights for SMACNA Contractors and Clients: 

  • Bonus Depreciation (100%) Restored – Deduct 100% of qualifying property costs in the year placed in service, including past projects, to boost cash flow and tax savings. 
  • Section 179 Expensing Expanded – Instantly expense up to $2.5 million in equipment or property purchases with new, higher limits and inflation adjustments. 
  • Section 179D Energy-Efficient Deduction – Claim up to $5.00 per square foot for energy upgrades in new builds and renovations. This applies to both private owners and public building designers. The bill keeps the incentive in place but only until the end of 2026 when it ends. 
  • The Advanced Manufacturing Investment Tax Credit is increased from 25% to 35% for technology-related projects, often Chip plants, started by the end of 2026.
  • Section 45L Home Energy Credit – The incentive survived efforts to kill it, so homeowners get $2,500 to $5,000 per unit for building energy-efficient single-family or multifamily housing until the end of 2026. 
  • Section 174/174A R&E Deduction Reinstated – Immediately deduct domestic R&D expenses instead of amortizing over five years, retroactive to 2022. 
  • Section 41 R&D Tax Credit Enhanced – Continue claiming 6% to 20% credit on qualified research while also deducting those same costs under Section 174A. 
  • Estate Tax Ceiling Raised – A permanent increase in the unified credit and GSTT exemption threshold from $10 million to $15 million per individual, indexed for inflation.
  • SALT Allowance – Temporarily increases in the SALT cap to $40,000 from $10,000 with limitations until 2030 when the $10,000 threshold returns.
  • The Section 199A deduction is made permanent at the deduction rate of 20%. Further, it limits the phase-in range for certain businesses by increasing the amount from $50,000 to $75,000 for non-joint tax returns and from $100,000 to $175,000 for joint returns.
  • Excess Business Losses – The new Act makes permanent the excess business loss limitation allowed to the amount of aggregate gross income or gain attributable to trades or businesses of the taxpayer plus a threshold amount indexed for inflation ($313,000).
  • Section 45U, Zero-Emission Nuclear Power PTC – Not modified; credit allowed through Dec. 31, 2032. 

SMACNA also appreciates the reconciliation process for demonstrating support for:

  • The deductibility of employer-sponsored health insurance.
  • Maintaining without changes the business state and local tax (SALT) deduction.
  • Sustaining current law concerning treatment of the tax-free status of municipal bonds.
While there is much our industry endorses in the H.R. 1 as passed by the Congress, we regret the final version included termination after 2025 or 2026 of the highly popular and valued IRA residential market tax credits (25C, 25D, 45L) and programs necessary to boost the important consumer-oriented contractor and HVAC equipment retrofit markets.