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Can a 940-page bill be "beautiful"?

Beauty is in the eye of beholder, who is probably not the bleary-eyed person responsible for reviewing all 940 pages of this law. 

As you can imagine, we are still analyzing the details of this recently enacted law, but here are the highlights.

We will keep you updated as additional information becomes available and as we take a closer look at provisions that are likely to impact wine industry taxpayers. 

Business Income Tax

Domestic Research and Development (R&D) (beginning January 1, 2025)

  • The bill allows Domestic R&D expenses to be fully expensed in the year in which they were incurred. 
  • The bill also has provisions for taking the R&D credit, and retroactively correcting 2022 - 2024 returns.  It offers two different methods of applying for relief.  Full details as to exactly how to go about applying for the relief have not been provided. 

Depreciation & Investment Incentives (for taxable years beginning January 1, 2025)

  • Section 179 expensing limits are increased beginning in 2025 to $2.5 million (from $1.25 million) with a new phase-out threshold of $4 million (previously $3.13 million), both indexed for inflation.
  • 100% bonus depreciation is allowed in the first year of purchased qualified production property, which is generally nonresidential real property that is used in an integral part of qualified production activity. (Must have been acquired and placed in service on or after January 19, 2025.)

Interest Deduction (taxable years beginning January 1, 2025)

  • For those businesses whose average annual gross receipts exceed $30 million, the interest deduction is limited to 30% of EBITDA (earnings before interest, taxes, depreciation, and amortization) versus 30% of EBIT under prior law. 
  • Small businesses, including sole proprietors filing Sch C,  whose average annual gross receipts are $30 million or less (adjusted for inflation) are not subject to a reduction in their deductible business interest expense. 

Employer Childcare Credit (for amounts paid or incurred after December 31, 2025)

  • The standard credit for qualifying expenses incurred by the employer will increase from 25% to 40% and the annual cap on these expenses will increase to $500,000 for larger employers.  (Note: Eligible small business can receive a 50% credit with a $600,000 cap. )

Estate and Individual Income Tax Provisions

Click here to learn more about these changes. 

Statutory Debt Limit

  • Increased by $5 Trillion.