Manufacturers and small businesses look forward to big benefits in the reconciliation package. For the renewable energy sector, not so much.
After a months-long standoff on Capitol Hill, President Donald Trump’s One Big Beautiful Bill Act has successfully traversed through Congress and will go into law.
Observers say the reconciliation package will be positive for the financial markets because it will deliver certainty—something Wall Street always craves.
The legislation will be a victory for several sectors but also frustrating to a few industries.
Winners
Manufacturing and industrial firms are poised to be among the primary beneficiaries.
Bonus depreciation would provide a significant tax advantage, as companies are permitted to deduct all or part of the cost of equipment and property in the year it is put into service. While there was a discrepancy in the length of the bonus depreciation, lawmakers settled on a permanent 100 percent deduction for itemized expenses.
Companies are now permitted to expense 100 percent of their research and development costs permanently.
The Big Beautiful Bill will make it cheaper for semiconductor manufacturers to construct facilities in the United States. The legislation will raise tax credits for semiconductor firms to 35 percent from 25 percent. Various chipmakers, both domestic and international, would be eligible, including Intel, Micron, and Taiwan Semiconductor Manufacturing Company.
Improvements to the tax code and extending provisions of the 2017 Tax Cuts and Jobs Act will prove to be significant for the U.S. steel industry, says Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI).
“AISI welcomes final passage of this critical pro-growth legislation, which will promote capital investment and job creation in the American steel industry and across the manufacturing sector,” Dempsey said in a statement emailed to The Epoch Times.
Small businesses are the other beneficiaries. In addition to the expanded expensing provisions for capital investments, the bill makes the 20 percent income deduction for pass-through entities—where profits and losses flow directly to the owners—permanent. It also makes permanent and boosts the small business estate tax exemption to $15 million for individual filers and $30 million for joint filers.
Certainty is another significant component that the legislation will bring to the small business community.
“By making the Small Business Tax Deduction permanent, Congress has delivered the certainty that Main Street needs, freeing small business owners to continue to create jobs, grow their business and invest in their communities,” said Brad Close, president of the National Federation of Independent Business, in a statement.
Defense contractors also stand to gain from the bill, as the legislation increases defense spending by $150 billion to purchase additional missile defense systems, drones, and other equipment, thereby further modernizing the U.S. military.
Energy production by businesses in the fossil fuel industry will become easier. As part of the president’s efforts to boost domestic production, producers will experience an accelerated permitting process for crude oil and natural gas projects.
In the coal industry, for example, the advanced manufacturing tax credit will apply to metallurgical coal, which is used in the steelmaking process. However, this will be gradually phased out beginning in 2031.
Other energy firms can also receive beefed-up carbon capture tax credits to extract more oil and gas. Royalty cuts for oil, gas, and coal on federal lands will also potentially increase profits.
“This is the most important energy bill in a generation,” said Mike Sommers, president and CEO of the American Petroleum Institute, in a statement.
The legislation, Sommers says, will boost investment opportunities, open lease sales onshore and offshore, and ensure the United States remains competitive in global energy markets.
“We applaud President Trump and Congress on this historic legislation that cements American energy leadership for years to come and ushers in a new era of energy development,” he said.
Losers
The one industry that is poised to lose the most is the renewable energy sector.
By Andrew Moran
