On May 22, the U.S. House of Representatives passed its budget reconciliation bill, H.R. 1, the “One, Big, Beautiful Bill Act,” in a 215-214-1 vote. 

Ahead of the vote, ABC sent a Key Vote letter expressing strong support for the bill that provides critical tax relief to contractors. Among the many essential reforms in the package, ABC particularly supports:

• Making the Small Business Deduction Permanent and Stronger: The bill provides the pass-through sector crucial relief via introduction of a boosted 23% deduction for qualified business income. Locking in the higher deduction under Section 199A will not only prevent a significant tax hike in 2026, but it will also ensure that ABC members—most of whom are pass-through businesses—can reinvest in their companies, expand their workforce and take on new projects without fear of future tax hikes.

• Permanent Estate Tax Relief: The bill preserves and protects family businesses from destructive estate taxes and keeps jobs, skills and ownership here at home, allowing contractors to pass on the businesses they built to the next generation. 

• Restoration of 100% Bonus Depreciation: Renewing previously expired immediate expensing via 100% bonus depreciation is a powerful incentive for businesses to invest in new equipment and technologies. This policy was based on the understanding that allowing immediate expensing of capital investments would encourage businesses to modernize their operations, increase productivity and, ultimately, drive economic growth. It was particularly aimed at capital-intensive industries like construction, where equipment investments can be substantial.

• Revived Expensing of R&D Costs: This provision permanently allows taxpayers to immediately deduct domestic research or experimental expenditures paid or incurred in taxable years beginning after Dec. 31, 2024. Additionally, small business taxpayers with average annual gross receipts of $31 million or less will generally be permitted to apply this change retroactively to taxable years beginning after Dec. 31, 2021. Furthermore, all taxpayers that made domestic research or experimental expenditures after Dec. 31, 2021, and before Jan. 1, 2025, will be permitted to elect to accelerate the remaining deductions for such expenditures over a one- or two-year period.

• Continuation of Simplified Tax Code: The bill permanently extends the larger standard deduction and the alternative minimum tax threshold that were set to expire. These two provisions have greatly simplified the tax code for millions of taxpayers, including construction workers and job creators. 

• No Tax on Overtime for American Workers: By exempting overtime pay from federal income tax, the bill delivers direct, meaningful tax relief to the hardworking men and women in the merit shop construction trades—rewarding those who put in the extra hours to get the job done, support their families and keep America building.

• Expanded 529 Accounts for Skilled Trades Training: By expanding 529 savings accounts to cover training programs and credentials in the skilled trades, the bill supports the next generation of craft professionals—ensuring more young Americans can pursue rewarding careers in construction without crushing debt.

• Relief From Overregulation and Red Tape: From the inclusion of the ABC-supported REINS Act to reducing 1099 reporting burdens to improving Opportunity Zones, this bill cuts unnecessary red tape and unlocks new growth in communities that need it most.

• Expedited Environmental Reviews: By paying 125% of the estimated cost to prepare or supervise the preparation of an environmental assessment or environmental impact statement, a project sponsor would receive a deadline of six months for completing an EA and 12 months for completing an EIS along with protection from judicial and administrative reviews. 

The House leadership’s Managers Amendment added last-minute changes to the legislation ahead of floor consideration, including:

• Lifting of the state and local tax deduction cap to $40,000 for individuals making under $500,000. 
• The accelerated phasing out of certain IRA clean energy credits by 2028.

The House-passed bill now heads to the U.S. Senate, where it is likely to be amended. Given the bill’s privilege under reconciliation rules, the Senate will only need a simple majority to approve their version bill. Both chambers will have to pass the same bill in order to send it to the president’s desk.