Reconciliation Bill Update
JULY 21, 2025
GEORGIA CHAMBER OF COMMERCE
Reconciliation Bill Update
Congress passed H.R. 1, One Big Beautiful Bill Act, marking what is likely to be the most sweeping legislative package of the year. The bill carries significant implications for Georgia’s business community in the areas of taxation, clean energy investment, healthcare, and artificial intelligence. In a rapidly evolving business environment, this update provides immediate information on sections of the bill most likely to impact Georgia businesses and empower our members with essential tools for informed decision making.
1. Business and Investment Tax Policy
The final legislation reaffirms federal support for capital investment, innovation, and domestic manufacturing, helping businesses—especially small businesses—across the state hire more Georgians, expand their operations, and make vital investments so we can sustain our economic success. The Georgia Chamber as well as our Business Climate Policy Committee and Small Business Policy Council have advocated for federal passage of many of the following pro-growth policies:
Permanent Individual and Business Rate Cuts: Provisions from the 2017 Tax Cuts and Jobs Act are made permanent, providing predictability for pass-through entities and individual taxpayers alike.
Immediate Expensing: Businesses may once again fully deduct qualified equipment and R&D investments in the year incurred, lowering the cost of innovation and modernization. For small businesses, this accelerates the return on critical investments, enabling faster growth and competitiveness while mitigating upfront costs.
Bonus Depreciation: Restores 100% bonus depreciation, enhancing cash flow for firms making long-term capital commitments. This is especially vital for small businesses that rely on timely cash flows to reinvest in operations, expand services, or upgrade outdated equipment.
Manufacturing Facility Deduction: Full and immediate depreciation deductibility now applies to the construction and expansion of production and refining facilities, a direct incentive for industrial growth.
Section 899 Exclusion: The final bill omits the proposed tax on foreign operations of U.S. multinationals, avoiding disruption for globally integrated Georgia companies.
2. Clean Energy Tax Reforms
Updates to the Inflation Reduction Act (IRA) mark a significant recalibration of federal clean energy policy. Key changes include:
Elimination of Consumer Tax Credits for Green Technologies: On September 30th, a $7,500 consumer tax credit for new electric vehicle purchases and a $4,000 consumer tax credit on used electric vehicles will end. Additionally, tax credits for homeowners incurring expenditures to install rooftop solar panels and other residential clean energy fixtures end on December 31, 2025.
Phasing Out of Production Tax Credits: Federal tax credits for wind and solar power expanded under the IRA will now be rapidly phased out. Wind and solar companies will only qualify for the Investment Tax Credit and Production Tax Credit if construction begins before July 6, 2026. If the projects are not under construction by that date, they must be operational by December 31, 2027. Tax credits for nuclear reactors, geothermal facilities, hydropower dams, and battery storage remain through 2033.
New Restrictions on Clean Energy Supply Chains: Solar panels, batteries, and other low-carbon technologies produced by companies sourcing components from China may be ineligible for tax credits. Companies are encouraged to review the final bill language and evaluate if their supply chain is compliant with new sourcing requirements.
3. Medicaid and Healthcare
Medicaid Cuts: Medicaid spending is projected to be reduced by roughly $1.1 trillion over the next decade. The majority of this reduction will come from two changes:
• The first would establish new work requirements for certain Medicaid beneficiaries ages 19 to 64, beginning in 2026, and is projected to decrease spending by $325 billion over a decade.
• The second source will come from a provision that caps and gradually reduces the Medicaid provider tax from 6% to 3.5%, projected to cut spending by $375 billion over a decade. The reductions in these provisions are likely to have significant negative impacts on rural hospitals and Georgia’s provider network.
Rural Health Support: Rural health providers may receive some support in the form of a $50 billion fund to assist rural hospitals. Rural health providers are encouraged to monitor the eligibility requirements and possible funding available through the fund.
4. Additional Changes
Artificial Intelligence Regulation: Language implementing a 10-year moratorium on states creating and enforcing legislation regulating AI was removed.
SNAP Program Modifications: Work requirements for able-bodied adults without dependents were tightened.
Farm Program Changes: Provisions in the bill increase reference prices for Agriculture Risk Coverage and Price Loss Coverage, increase premium support for crop insurance coverage, and provide an enhanced supplemental coverage option. These changes provide needed updates to financial assistance programs farmers rely on during bad years and uncertain market conditions.
Pell Grant Changes: The bill establishes a workforce Pell Grant program, expanding access to students pursuing workforce training programs that have over a 70% job placement rate and prepare students for high-demand careers. Additionally, for the purposes of Pell eligibility, small business and farm assets are excluded from Student Aid Index calculations.
Go Deeper
We’ve included additional details below to allow Georgia Chamber members and partners to gain a deeper understanding of how these issues could impact their businesses and communities.
Breaking Down Top Tax Changes
1. STANDARD DEDUCTION INCREASES
$31,500 for married couples filing jointly.
$23,625 for heads of household.
$15,750 for single filers.
Note: This simplifies filing but limits benefits for those previously using itemized deductions. Especially when higher earners (especially above $500,000) will face more limitations on itemized deductions (35% in value).
2. STATE AND LOCAL TAX (SALT) DEDUCTION CAPPED
Temporarily increases the cap on itemized deductions for SALT to $40,000 in 2025 and increases the cap by 1% through 2029, subject to a phaseout for taxpayers with incomes above $500,000, then reducing to a flat $10,000 afterwards.
This impacts hig her-income earners in high-tax states but is less impactful for most Georgians.
3. CHILD TAX CREDIT EXPANDED
Increased to $2,200 per child.
Phases o ut for incomes above $250,000 for single filers or $400,000 for joint filers.
4. CHANGES TO 529 COLLEGE SAVINGS
PLANS
Now covers expanded K–12 expenses, including SAT/ACT prep, dual enrollment fees, and school supplies for up to $20,000 per year, up from $10,000.
Expands financial planning flexibility for Georgia families.
5. ESTATE TAX THRESHOLD RAISED
Permanent exemption limit: $15 million per individual, $30 million for married couples. Designed to reduce burden on family-owned businesses and farms.
6. INTEREST DEDUCTION LIMITS
Deduction on personal car loan interest for up to $10,000 a year.
Mortgage interest on qualified residence limited to $750,000.
7. BUSINESS PROVISIONS
Pass-through income rules clarified. The Georgia Chamber is expecting the IRS to publish guidance in the future. Some business deductions narrowed (e.g., entertainment expenses).
R&D expensing made permanent, helping Georgia’s tech and manufacturing sectors.
Depreciation schedules simplified for capital investments.
What It Means for Georgia Businesses
OPPORTUNITIES:
Lower top rates may reduce tax burdens for many small to mid-sized businesses.
Permanent R&D expensing is a win for innovation-heavy sectors in Georgia.
Expanded 529 use gives employers a new way to talk about family benefits.
CONSIDERATIONS:
Some deductions are eliminated, especially for high earners or those with complex portfolios. Estate planning strategies may need to be reevaluated under the new $15M threshold.
Industry-Specific Impact
Small Businesses
Permanent 20% Pass-Through Deduction: The 20% Qualified Business Income deduction for pass-through entities (LLCs, S-corps, partnerships) is now permanent, averting a major tax hike on Main Street firms. This keeps small business tax rates low relative to C-corporations.
Higher Equipment Expensing Limits: The Section 179 expensing cap doubled from $1.25 million to $2.5 million, with the phase-out threshold raised from ~$3.1 million to $4 million in purchases. This allows Georgia small businesses to immediately write off more investments in trucks, machinery, and other depreciable assets instead of waiting years to recover those costs. The amounts will also be indexed for inflation going forward.
Full Bonus Depreciation Restored: 100% bonus depreciation (full expensing) for new business assets is reinstated permanently for property placed in service after January 19, 2025. Small businesses can fully deduct qualifying equipment purchases upfront, which boosts cash flow and encourages reinvestment in the business.
R&D and Simplified Accounting Relief: Companies with domestic R&D expenses can once again deduct 100% of domestic research costs in the year incurred, instead of amortizing over five years. This retroactive fix (back to 2022 for eligible firms with average annual gross receipts of $31 milllion or less) is a big win for innovative startups.
Other Small Business Benefits: The new law makes the Family Leave Credit (for offering paid family and medical leave) permanent and greatly expands the Employer-Provided Child Care Credit (up to $500k credit, or $600k for small businesses, at 40% and 50% of qualifying child care costs respectively) to help businesses support their workforce. These incentives can aid Georgia businesses in attracting and retaining employees.
Agriculture
Expensing for Farm Equipment: Georgia farmers benefit from the full expensing provisions just like any business. Tractors, combines, and other farm machinery now qualify for 100% immediate deduction under both the renewed bonus depreciation and the higher $2.5M Section 179 limit. Notably, the 100% bonus now explicitly includes agricultural plantings –e.g. new orchard trees or vines planted after January 19, 2025 qualify for first-year write-off.
Tax Relief for Farmland Transfers: A new provision encourages keeping land in agriculture. If a landowner sells farmland to a qualified farmer (an active farmer), they can elect to pay any capital gains tax in four annual installments instead of all at once. To use this, the seller must have farmed (or leased to a farmer) for at least 10 years prior, and the land must stay in farming for 10 years post-sale. This eases the tax burden on retiring farmers or families selling land to the next generation of farmers.
Lower Interest Rates on Farm Real Estate Loans: The law grants banks and Farm Credit institutions a 25% income exclusion on interest from loans secured by farm real estate, fishing property, or aquaculture facilities. In practice, this tax break for ag lenders can translate into lower interest costs for farmers and agribusinesses in Georgia seeking loans for land or facility purchases.
Co-op and Commodity Benefits: The 20% deduction for pass-through income was also made permanent for agricultural cooperatives and their farmer-members, preserving tax savings for many Georgia co-op patrons. Additionally, by raising the estate tax exemption (see Family Businesses section), the law makes it less likely that family farms will face estate taxes that force sale of farmland. This helps keep farms in the family.
Cuts to Green Energy Credits: (Note: Many Inflation Reduction Act subsidies were rolled back.) Credits for new clean fuel vehicles and farm energy improvements will wind down after 2025. Farmers considering solar panels, EV trucks, or other green investments should note the shorter window for federal credits. However, existing biofuel incentives (e.g. the biodiesel/renewable diesel credit) remain until 2029, now limited to domestic feedstocks.
Manufacturing
Full Capital Expensing Spurs Expansion: The tax bill makes full expensing of equipment permanent – a huge benefit for manufacturing. Rather than a five-year phase-out to 0% bonus depreciation, manufacturers can continue deducting 100% of new machinery and equipment costs in the first year. This significantly reduces after-tax costs for upgrading assembly lines or expanding capacity. Additionally, a temporary 100% depreciation for qualifying factory buildings was introduced: new production facilities constructed in the U.S. between 2025 and 2029 (and operational by 2031) can be immediately expensed as well. Georgia manufacturers investing in new plants or factory expansions can leverage this break to accelerate projects.
R&D Incentives and Advanced Manufacturing Credit: Reversing the TCJA’s R&D amortization is especially impactful for manufacturers with high research or product development costs (e.g. aerospace, automotive suppliers). Now, domestic R&D expenses are fully deductible each year. There’s also retroactive relief for 2022–2024 R&D spending for firms under a $31M average in gross receipts, potentially yielding refunds or lower taxes for Georgia companies that had to capitalize R&D in those years. Moreover, the law temporarily boosts the Advanced Manufacturing Investment Credit (for semiconductor and similar facilities) from 25% to 30% for projects starting in 2026. This one-year enhancement could benefit any semiconductor-related investments in Georgia’s growing high-tech manufacturing sector.
Stable
Corporate Tax
Rate
&
Profit Repatriation:
The 21% flat corporate tax rate for C-corporations – originally set in 2017 – is now explicitly permanent. Manufacturers no longer face uncertainty of a potential rate hike after 2025, encouraging long-term planning. (For context, without this law the top corporate rate could have reverted to the previous graduated corporate tax structure, increasing tax costs for virtually all corporations.) The act also
tweaked international tax rules (GILTI, FDII) to be more competitive globally, which helps multinational manufacturers based in Georgia by reducing taxes on foreign earnings and encouraging reinvestment of profits back home.
Financing and Other Benefits: Capital-intensive industries benefit from the law’s loosening of the business interest deduction limit. Starting in 2025, interest deductions are calculated on an EBITDA basis (adding back depreciation and amortization) instead of EBIT – effectively allowing companies to deduct a greater share of interest on loans for equipment or factory purchases. This change will help Georgia manufacturers finance growth with less tax penalty. Finally, manufacturers can still take advantage of the expanded Section 179 ($2.5M expensing) if they are smaller operations, and they enjoy the same permanence of the 20% pass-through deduction if organized as S-corps or partnerships.
Logistics & Supply Chain
Fleet Expansion – Immediate Write-offs: Logistics, transportation, and warehousing companies stand to gain from full expensing on new equipment. The ability to immediately deduct 100% of the cost of trucks, delivery vehicles, forklifts, warehouse automation systems, etc. is now permanent. This dramatically lowers the after-tax cost of modernizing fleets or expanding distribution centers in Georgia. Even for facilities, while warehouses used solely for storage don’t qualify as “production” property, any manufacturing or processing areas within logistics operations could potentially use the new 100% structures deduction.
Lower Cost of Capital: The restoration of a more lenient interest expense rule (using EBITDA) means logistics firms with financed equipment or infrastructure can deduct more interest expense each year. For trucking companies carrying loans on their tractors/trailers or freight operators with warehouse mortgages, this change will reduce taxable income and improve cash flow. Smaller operators also benefit from the higher $50M gross receipts threshold for cash accounting, simplifying their finances.
Incentives Affecting Transportation Sector: While mostly an owner-focused bill, there are a few consumer-facing perks that could indirectly impact Georgia’s supply chain industry. For instance, a temporary deduction for personal auto loan interest (up to $10,000 of interest for new cars assembled in the USA) is available to individuals from 2025–2028. This may stimulate auto sales (and thus auto manufacturing and transport demand) in the near term. Likewise, the new deduction for overtime pay (2025–2028) could encourage additional labor hours in trucking or warehousing during peak periods.
No New Fuel or Excise Taxes: The legislation is focused on income taxes and does not impose any new federal fuel taxes, trucking excise taxes, or other transportation fees. The main effects on logistics firms come from the tax relief measures above, which collectively aim to reduce operating costs and spur investment in capacity. Companies in Georgia’s freight corridors (road, rail, air, and port operations) should find the overall tax environment more favorable for expansion than it would have been absent this bill.
Boost for Startups and Investors (QSBS Gains): The act expands the benefits of Qualified Small Business Stock (QSBS) exclusion to inject more capital into innovative companies. For stock in qualified startups acquired after July 4, 2025, the lifetime capital gains exclusion cap rises from $10 million to $15 million (indexed for inflation). It also raises the company-size eligibility from $50M to $75M in assets. This means investors in Georgia tech startups have a higher ceiling of tax-free returns if the company succeeds, making it easier for entrepreneurs to attract funding.
R&D Tax Relief Fuels Innovation: Tech firms and R&D-intensive businesses benefit enormously from the restoration of full R&D expensing. Effective January 1, 2025, businesses can once again deduct 100% of domestic research and experimentation costs in the year incurred. Crucially, small companies (≤$31M five-year average in gross receipts) can retroactively apply this to 2022–2024 and recover taxes paid on previously amortized R&D. This change, championed by the tech industry, frees up cash for startups in Atlanta’s growing fintech and biotech scenes that were hurt by the old amortization rule. It removes a disincentive to invest in innovation, as noted by the U.S. Chamber: mandatory R&E amortization had “penalized investments by businesses in research-intensive industries – with disproportionate effects on smaller manufacturing and technology companies.”
Talent Attraction and Retention: While the law’s centerpiece is business tax relief, several measures can indirectly benefit the tech workforce. The Employer-Provided Child Care Credit enhancements (credit increased up to $500k or $600k for small businesses and covers 40 50% of costs respectively) incentivize Georgia tech companies to invest in on-site childcare or consortia for employees’ families. Additionally, making the Family and Medical Leave Credit permanent encourages offering paid leave, which can help smaller tech firms compete for talent by offsetting some cost. On the employee side, a new deduction for overtime pay (up to $12,500 single, $25k joint) and deduction for tips were introduced for 2025–2028. These are mostly aimed at service industry and hourly workers, but they reflect a broader effort to boost take-home pay – which could increase consumer demand for tech products and services.
Digital and Startup-Friendly Tax Code: Other changes will streamline operations for growing companies. The higher $50M accounting threshold means more mid-size tech firms can use cash accounting and avoid complex inventory capitalization rules. The SALT deduction cap increase to $40k (through 2029) may benefit founders or tech employees in high-tax jurisdictions (though it reverts later). Overall, the tax law leans pro-innovation: it improves after-tax returns on successful equity investments and reduces tax friction on R&D and expansion, which the Tax Foundation projects will “significantly improve incentives to invest in the American economy.”