Washington Report (June 2025)

Tax/Budget Reconciliation

On Monday evening, the Senate Finance Committee unveiled its portion of the budget reconciliation bill. Finance is the panel that is in charge of fashioning the tax provisions in the comprehensive measure. The text tracks largely along the lines of what we were expecting, with a few deviations. Provisions in the text of concern to WIA are the following—

• 100 percent bonus deprecation/full expensing: As expected the bill not only restores this tax benefit allowing businesses to immediately expense 100 percent of capital investments in machinery and equipment but makes this provision permanent. Recall that the House-passed bill only extends full expensing for 5 years.
• Research & Development (R&D) Credit: The Senate’s text restores this tax benefit that expired in 2022, which up until that year, allowed businesses to fully write off their R&D costs in the same year in which those costs were incurred. As with full expensing, the Senate also opted to make this benefit permanent. The House-passed bill only extended it for 5 years.
• Section 199A: The Senate Finance Committee’s text, like the House, makes the 20 percent deduction for S-Corporations and other pass-through structures permanent. However, the House opted to bump this number up to 23 percent. The Senate holds it at 20 percent.
• Section 179: Like the House, 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 Senate mirrors the House approach in restoring 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: Like the House, the Senate bill permanently increases basic estate and gift tax exemption amount and the generation-skipping transfer tax exemption to $15 million.
• State and Local Tax (SALT) Deduction: The Senate opted to keep the current $10,000 cap on the SALT deduction, deviating from the House approach which raised it to $40,000.

Senate leaders hope to have the combined budget reconciliation package on the Senate floor next week to align with their goal of passing the bill through the upper chamber before the July 4 recess. That deadline seems like a stretch goal at this point however, as several GOP Senators have voiced concern with various provisions. Leadership also would prefer to avoid a formal conference committee with the House and so negotiations over the SALT issue and others will be front and center in the coming days. Senate Republicans do not like the House approach toSALT, but the handful of GOP lawmakers in the House from high SALT states have indicated that the $40,000 cap is nonnegotiable. 

European Union Deforestation Regulation (EUDR)

Earlier this month, staff from the Departments of Agriculture, Commerce and the U.S. Trade Representative hosted a roundtable to discuss forestry and forest product sector value chain concerns around compliance with the European Union Deforestation Regulation (EUDR). The discussion focused on a number of areas, particularly the inability for U.S. producers to meet EUDR’s strict geolocation requirements. The EUDR requires any wood or pulp and paper company selling into the EU market to identify down to the exact parcel where timber to make those products is harvested. Wood products manufacturers have been advocating with the Administration that this is a non-tariff trade barrier which needs to be addressed in the context of the ongoing trade negotiations with the European Union. WIA will keep you apprised of developments.

Trade

On June 3, the White House announced that it would raise tariffs on imports of steel and aluminum and derivative products to 50 percent beginning June 4 for all countries except the UK. The White House announcement may be found here. Estimates are that this action will result in $50 billion in tariff costs, effectively doubling the estimated impact of tariffs announced in March.

In other trade news earlier this month, President Trump announced that his negotiating team had reached a tentative deal with China on trade between the two countries. According to the Administration, tariffs on imports from China would be locked in at 55 percent, while China would impose a 10 percent tariff on U.S. goods entering the Chinese marketplace.

WIA Members Descend on Washington

Next week, a group of executives from WIA member companies will decamp to Washington, D.C. to advocate in support of our sector’s public policy priorities. Trade and tariffs will be top of mind, as will the tax bill which may be on the Senate floor the day our group is on Capitol Hill. We will also be discussing workforce challenges and the need for action on workforce development. Finally, we have some Farm Bill programs that we will be discussing with Members of Congress and their staff. The group will be divided into three teams and will have about 30 meetings over the course of the day on June 25.

If you have specific issues you would like raised next week, please let WIA staff know.