Tax breaks for contractors hang in the balance after House budget vote
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With the House’s narrow passage of its FY 2025 budget resolution on April 9, lawmakers have cleared the path for comprehensive negotiations over tax provisions and federal spending priorities. For HVACR contractors, the outcome of these debates could shape the tax code for years to come, including the future of small business deductions and energy efficiency incentives that help drive demand and reduce costs for consumers.
As tax and spending negotiations move forward, ACCA is working to ensure lawmakers understand what’s at stake for contractors. From small business protections like 199A to pro-efficiency policies that fuel our industry’s growth, we’ll continue advocating for a tax code that works for contractors, homeowners, and the broader economy.
You can do your part by participating in our tax policy action alert to let your members of Congress know why they should protect 199A and energy efficiency tax incentives.
The budget resolution serves as a blueprint for extending key provisions of the 2017 Tax Cuts and Jobs Act, including Section 199A, the 20% deduction for pass-through entities like S-corporations and LLCs. If Congress does not act by the end of 2025, this deduction will expire, resulting in a significant tax increase for many small and family-owned contracting businesses. Given the tight margins and rising costs, losing Section 199A could mean less reinvestment, slower hiring, and reduced competitiveness with larger corporations.
Also on the table are several energy efficiency tax incentives, including Sections 25C, 25D, 45L, and 179D, which support high-efficiency HVACR equipment installation, residential and commercial energy performance, and consumer adoption of renewable technologies like solar power. These incentives promote energy savings and directly support contractor sales and project pipelines. While the budget resolution does not provide legislative details, it enables Republicans to use reconciliation to advance tax reform along party lines, potentially reshaping or eliminating these credits.
The House-passed budget would also extend the federal debt ceiling and calls for at least $4 billion in spending cuts, while leaving room for much deeper reductions. Some Senate Republicans have signaled interest in going further, which could put additional strain on workforce training programs, healthcare subsidies, or rebates tied to energy efficiency improvements, all of which directly affect the HVACR workforce and customers.
If you have any questions or concerns, you can contact ACCA’s government relations team by email at govt@acca.org.
Posted In: Government, Taxes
