What Does the Big Beautiful Bill Mean for Your Business?

Jon Melchi, the newly appointed president of the American Lighting Association (ALA) issued a Government Affairs Update to members last week that distilled the key points of the “One Big Beautiful Bill” (OBBB) that passed both the House and Senate as it relates to the lighting community.

Among the benefits that Melchi mentioned are tax relief for ALA businesses, improved equipment expensing provisions to incentivize lighting system upgrades, and closing the ‘de minimis loophole’ which has been a key priority for ALA.

Below, Melchi explains the key tax provisions in the mix, and notes the areas where ALA has partnered with other trade organizations to make the industries’ voices heard.

Estate Tax

Family-owned businesses already face challenges when transitioning to the next generation of leadership. The estate tax (often referred to as the “death tax”), makes this transition more difficult by imposing annual compliance costs associated with succession planning and hitting family businesses with a 40% tax upon the death of a business owner. Both the House and Senate bills increase the estate, gift, and generation-skipping tax exemptions to $15 million per individual and $30 million with spousal portability, indexed for inflation. Importantly, this change is made permanent, locking in these higher exemption levels so family businesses can plan for the next generation. Manufacturers and distributors are oftentimes highly illiquid and operate on thin margins. This structure creates estate tax concerns because in order to pay the estate tax, selling non-liquid assets which are integral to the business, oftentimes becomes the only option. Not many family businesses have the cash on hand to pay the government 40% of the value of their businesses at the turn of each generation. The increased estate tax exemption in the current House and Senate bills will protect more of our ALA family businesses from the threat of the death tax and provide greater parity in the tax treatment of private and public companies.

20% Deduction for Qualifying Business Income

The 2017 Tax Cuts and Jobs Act (TCJA) created a new 20% deduction for qualifying business income (QBI). This change, combined with lowering marginal tax rates across the board, is how Congress cut taxes for millions of small businesses during President Trump’s first term. This deduction is scheduled to be eliminated completely in December of this year if no legislation is passed to avert the coming expiration. The House version of OBBB locks in the small business deduction permanently and increases this deduction to 23 percent. The Senate’s bill locks in the small business deduction permanently at the current 20% rate. ALA recently joined a coalition letter with over 100 allied trade associations urging both the House and Senate to permanently increase the small business deduction to 23 percent.

179 Expensing and Bonus Depreciation

The ability for commercial building owners to immediately expense the cost of new lighting systems is a significant incentive within the tax code to upgrade equipment. Bonus depreciation has been phasing out since the enactment of the 2017 TCJA and currently stands at 40% versus 100% where it stood upon the passage of President Trump’s first-term tax legislation. The House’s OBBB language doubles the limit for section 179 expensing from $1.25 million to $2.5 million permanently and restores full bonus depreciation for five years. The Senate language doubles the limit for section 179 expensing from $1.25 million to $2.5 million permanently and restores full bonus depreciation permanently. ALA is pushing Congress for permanence in the final bill for both section 179 expensing and bonus depreciation, rather than temporary relief.

IRA Tax Credits

To finance the tax permanence in OBBB, both the House and Senate bills curb a number of tax credits passed under the Biden administration, including the 25C credit for residential upgrades and the 45X advanced manufacturing tax credit. The Senate bill also rolled back the 179D commercial buildings tax deduction, applying it only to projects that begin construction before June 2026, while the House left this deduction untouched. ALA has joined with a coalition of over 80 trade associations urging Congressional leadership to keep the 179D deduction in place. We will be working with our industry partners this year to extend and restore these tax incentives for energy-efficient upgrades.

Closing of “De Minimis Loophole”

Earlier this year, the administration increased the duty on de minimis to 120 percent for Chinese shipments and as a result of a May 12^th executive order on reciprocal tariffs, those duties now sit at 54 percent. As we have heard from members, China’s e-commerce giants have fully exploited this loophole in recent years, shipping orders directly to U.S. consumers duty and virtually inspection-free.

The House and Senate bills provide further protection on de minimis. In addition to closing the loophole on Chinese shipments, the bills also address circumvention concerns, as shippers reroute their orders through other countries to maintain the duty-free status. The House and Senate bills close the loophole on all countries, albeit with a significant runway of 2027 before the changes are enacted. ALA is pushing to accelerate the effective date of this provision while urging the administration to fully enforce the duties currently in place on Chinese de minimis shipments pursuant to the President’s executive order in May. [Editor’s Note: as of press time, the de minimis exemption that allows imports under $800 to enter the U.S. duty-free will end July 1, 2027. Click here for a more detailed explanation.]

Melchi encouraged members who would like to become more involved with the ALA’s government affairs committee or who would like to discuss the priorities of their companies to reach out to either himself (jon@alalighting.com) or the ALA’s government affairs consultant Palmer Schoening (Palmer@SchoeningStrategies.com).

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