Quad Cities Chamber leaders are lauding the new federal tax law signed recently by President Trump that made permanent the regional business organization’s “tax certainty” priorities.
The local chamber has advocated for years for the extension of those provisions and others designed to help small businesses and employers. The list can be found here. The pro-business tax legislation was supported by Iowa Senators Joni Ernst and Chuck Grassley and Iowa Representative Mariannette Miller-Meeks.
“Providing tax certainty for small businesses and local employers was our top priority,” Ryan Sempf, the chamber’s executive director of government affairs, said in a news release.
“This complex and wide-ranging bill accomplished those goals and provides additional expansion of pro-growth tax policy that will help to spur economic growth and investment in the Quad Cities region,” he added.
The chamber top priorities that became law were:
- Making permanent a 20% Qualified Business Income deduction, preventing an unprecedented tax increase on small businesses.
- Bonus depreciation: Provides for 100% depreciation on certain capital assets in year one.
- R&D Expensing: Reverts to pre-Tax Cuts & Jobs Act of 2017 expensing for research and development expenses by allowing full expenses in the year they are incurred.
- Interest Deduction Limitations: Permanently reinstates the calculation of Adjusted Taxable Income to align with Earnings Before Interest, Taxes, Depreciation and Amortization. It’s effective for taxable years after Dec. 31, 2024.
In addition to the chamber top priorities, the QC group said other changes with a positive business impact were included in the final bill.
Credits and deductions
Among them were:
- Allows taxpayers to apply 100% bonus depreciation for nonresidential real property in use as an integral part of a qualified production before Jan. 1, 2031.
- Increases Advanced Manufacturing Investment Credit to 35%, up from 25% for property in service after Dec. 31, 2025.
- Renews and enhancement of Opportunity Zone designations on a rolling 10-year basis. It also narrows the range of census tracts eligible for Opportunity Zone designation.
- Creates a deduction for tip income for individuals during 2025-2028 tax years for occupations that customarily receive tips. Expands FICA tip tax credit for a portion of employer-paid Social Security taxes for cash tips including beauty services.
- A new deduction for those who receive qualified overtime compensation during tax years 2025-2028. The deduction is limited to $12,500 for individuals and $25,000 for Married Filing Jointly. It would reduce by $100 for each $1,000 of modified adjusted gross income that exceeds $150,000 for individuals and $300,000 for married filing jointly.
Family, child care
- Increases Employer-Provided Child Care Credit to a maximum allowable credit of $500,000 from $150,000 and $600,000 for eligible small businesses.
- Extends and enhances Paid Family and Medical Leave Credit for taxable years after Dec. 31, 2025.
- Permanently increases the 9% State Housing Credit ceiling for Low-Income Housing Tax Credit by 12% after 2025. It also increases the availability of some 4% LIHTC projects by reducing the tax exempt bond financing threshold to 25% for bonds issued starting 2026.
- Increases the cap on state and local tax deductions to $40,000 through 2029. After that it will revert to $10,000 or $5,000 for married individuals filing separately.
- Adds a broad category of “postsecondary credentialing expenses” to tuition and other costs for post high school education programs. That includes vocational training.
- Permits an employer to maintain a tax-free Educational Assistance Program up to a limit of $5,250 per year. The act makes the change permanent and provides an annual inflation index after 2026.
