House passes FY25 budget: What contractors need to know
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In a closely watched vote, the House of Representatives passed its fiscal year 2025 budget resolution Tuesday night, setting the stage for tax and spending decisions that could directly impact HVACR contractors. While this resolution does not become law, it serves as a blueprint for federal priorities and an important first step toward advancing reconciliation legislation—a process that allows Congress to enact major tax and spending policies with a simple majority vote in the Senate, bypassing the 60-vote filibuster threshold.
A key point of debate among Republicans has been whether to pursue one or two reconciliation bills this Congress. Most House Republicans favored a single package including as many policy priorities as possible, while Senate Republicans and members of the House Freedom Caucus pushed for two—one focused on energy and immigration and another on tax and spending reforms. It’s worth noting that President Trump also publicly spoke in favor of the ‘one bill’ approach, which now appears most likely. The legislation passed by a razor-thin margin of 215 to 217, defying expectations that Speaker Mike Johnson lacked the votes to move it forward. This resolution is just the opening volley in what is expected to be a long and contentious budget process.
Potential impacts on contractors
One of the most significant aspects of this budget resolution is its inclusion of reconciliation instructions. The resolution authorizes the House Ways and Means Committee to increase the deficit by up to $4.5 trillion over the next decade, likely aimed at extending the 2017 Tax Cuts and Jobs Act (TCJA). If extended, this would likely preserve the Section 199A deduction for S-corporations and other pass-through entities, which is set to expire at the end of 2025.
ACCA has engaged with members of the House Ways and Means and Senate Finance committees to advocate for BOTH an extension of 199A and the preservation of efficiency tax incentives like 25C, 179D, 45L, and 25D. Elimination of those efficiency incentives had been widely cited as potential “offsets” to pay for TCJA extensions. Allowing Ways and Means to increase the deficit by $4.5 trillion may reduce the pressure for such offsets, but your advocacy for these provisions is still essential.
In addition to taxes, the budget resolution directs the House Education and Workforce Committee to find $330 billion in spending reductions, which could impact workforce development programs, including federal CTE funding, apprenticeship initiatives, and workforce grants. While specific cuts have not yet been identified, ACCA will oppose any potential reductions in workforce training investments in the skilled trades, given the severe labor shortage in the HVACR industry.
The House Energy and Commerce Committee is also required to reduce the deficit by $880 billion. Potential cuts could affect energy efficiency tax credits and rebate programs under the Inflation Reduction Act (IRA). This includes incentives for high-efficiency HVACR systems, heat pumps, and home energy upgrades. It’s worth noting that Congress likely will not be able to rescind funding that has already been disbursed to states for these programs.
What’s next?
Now that the House has passed H.Con.Res. 14, the budget process moves into its next phase. While the resolution itself does not become law, it sets the stage for major tax and spending decisions in the months ahead. Here’s what to expect:
- Senate consideration: The Senate must draft and pass its own version of the budget resolution. If it differs from the House version, negotiations will be required to align the two.
- Reconciliation legislation: If Congress proceeds with reconciliation, key committees will begin drafting legislation based on the budget framework. These bills can bypass the Senate’s 60-vote filibuster threshold and pass with a simple majority. This will likely include significant policy priorities like extensions of TCJA tax cuts, as well as immigration and energy reform.
ACCA is closely monitoring the budget process and its potential impact on contractors. It is likely that tough choices will be necessary in allocating these spending cuts, so we need to hear from contractors like you on which programs and/or tax incentives are most important and how you would get creative in allocating cuts. Please comment online or attend the Town Hall Breakfast at ACCA 2025 near Austin, TX on Thursday, March 27th.
We will continue to provide updates and advocacy opportunities to make sure your voice is heard in Washington. For more details or to get involved, contact ACCA’s Government Relations team at govt@acca.org.
Posted In: Government, Taxes
