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Washington Watch

Welcome to the First Session of the 119th Congress.

Members of Congress are here in D.C. this week in their sprint to their next break—Memorial Day. Key committees begin consideration on Tuesday of their portions of the budget reconciliation package. The trifecta—the House Agriculture, Energy and Commerce and Ways & Means—begin their markups on Tuesday. Regarding Ways & Means, we should see additional text this afternoon on what that panel intends to do with expired and expiring tax benefits enacted by the Tax Cuts and Jobs Act of 2017. A skinny version of the package was released late Friday. In that text, the Section 199A deduction for S-Corporations and pass throughs was increased to 22 percent. We are being told that the key tax benefits in the TCJA that our sector relies on—100 percent bonus depreciation, the R&D tax credit and the Section 199A deduction—will be made permanent in the committee bill to be unveiled. The timing for the Hardwood Federation Fly-In to D.C. is excellent as over 70 members of the industry will be in town to weigh in on these important negotations.

U.S. House of Representatives - Schedule for the week of May 12, 2025

  • The House is in session.

U.S. Senate - Schedule for the week of May 12, 2025

  • The Senate is in session.

 

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Cheat Sheet

May 16, 2025 

A Special Friday Edition of the Cheat Sheet

The Cheat Sheet is a bit delayed this week as we catch up from Fly-In 2025.  Over 70 hardwood industry leaders traveled to Washington, D.C. and met with close to 130 Congressional offices on Wednesday, May 14.  Members of the Hardwood Federation Board of Directors came in a day early to meet with officials from the White House, Commerce, and the U.S. Trade Representative.  Stay tuned for more about the Fly-In, but for now a few pictures of our days in D.C!


Members of the HF Board of Directors at the White House

Congressman Jack Berman (R-MI) with Luke Brogger, Quality Hardwoods; Jim Hourdequin, Lyme Timber; Stehpanie Owen, NWFA; and Jason Gobel, NWH.

Congressman Chris Pappas (D-NH) with Jim Hourdequin, Ashley Johnson, NHLA and Ben Pierce, Holt and Bugby.

Tax Moves Forward…Then Stalls

On Wednesday, the House Ways & Means Committee concluded a markup of its portion of the budget reconciliation bill. The measure was reported out on a party-line vote of 26-19.

Key business tax benefit provisions are included in the bill. They are:

  • 100% Bonus Deprecation/Full Expensing: Language allows taxpayers to immediately expense 100 percent of capital investments in machinery and equipment made on or after January 20, 2025, and before January 1, 2030. House GOP leaders entered the reconciliation process hoping to extend this benefit permanently but opted for a 5-year extension based on cost concerns. We understand there is a strong appetite in the Senate to modify this provision to make it permanent.
  • Research & Development (R&D) Credit: The provision allows taxpayers to fully write off their R&D costs in the same year in which those costs are incurred. Recall, this benefit expired in 2022. The bill makes the R&D credit retroactive to January 1, 2025, and extends it through December 31, 2030. Again, the Senate is interested in making this benefit permanent.
  • Section 199A:  The 20 percent deduction for S-Corporations and other pass-through structures expires at the end of this year. This benefit would not only be made permanent, but it is also increased to 23 percent.
  • Section 179: The proposal increases the maximum amount a business may write off certain expenses to $2.5 million and increases the phaseout threshold amount to $4 million.
  • EBITDA: The bill restores EBITDA as the measure for calculating business interest expense. The current standard established by TCJA is EBIT, which is not as generous and serves to make  companies less competitive, particularly in a high-interest rate environment.
  • Estate and Gift Tax Exemption: The basic estate and gift tax exemption amount and the generation-skipping transfer tax exemption would be permanently increased to $15 million. The Tax Cuts and Jobs Act of 2017 (TCJA) had temporarily increased it to $10 million (adjusted for inflation), but that increase is expiring next year. The $15 million exemption amount would be indexed for inflation after 2025.
  • State and Local Tax (SALT) Deduction: Language in the bill raises the SALT deduction cap from $10,000 to $30,000.

This bill and legislation reported by other House committees has been rolled up into a comprehensive 1116-page measure that the House Budget Committee considered this morning.  Unfortunately, disagreements related to  SALT and Medicaid provisions and the defection of key Republicans led to a 16-21 defeat of the bill.  The Budget Committee will reconvene next week to ponder next steps. 

Timber Harvest Boost Also Included in the Tax Bill

Included in the House Natural Resources Committee’s portion of the budget reconciliation package are provisions that direct both the U.S. Forest Service and the Bureau of Land Management to boost timber harvesting on lands these entities oversee by 25 percent over 2024 levels. The Federation will be advocating for retention of this language as the bill moves forward in the budget reconciliation process.



Thoughts on the Cheat Sheet? Let us know at Hardwood.Federation@hardwoodfederation.com

 





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