SMCA Legislative Update - July 2025

Federal: Big Beautiful Bill Signed Into Law

On July 4, Congress passed and the President signed the highly anticipated H.R. 1—nicknamed the "Big Beautiful Bill"—delivering sweeping tax incentives and budget measures that will benefit SMACNA contractors and their clients for years to come. Highlights include:

• Bonus Depreciation Restored (100%) – Deduct the full cost of qualifying property in the year placed in service.

• Expanded Section 179 Expensing – Up to $2.5M in property/equipment purchases can be instantly expensed.

• Section 179D Deduction – Claim up to $5.00/sq ft for energy-efficient upgrades (available through 2026).

• Advanced Manufacturing Credit – Increased to 35% for qualified projects, including chip plants.

• R&D Deductions & Credits – Immediate expensing of domestic R&D costs (retroactive to 2022) and enhanced Section 41 credit.

• Permanent Section 199A Deduction – Pass-through businesses can continue claiming the 20% deduction with expanded income thresholds.

• Estate Tax & SALT Cap Adjustments – Increased exemption and temporary $40,000 SALT cap until 2030.

Source: SMACNA Federal Legislative Office, July 8, 2025

Local: Philadelphia Legislative Highlights

FY26 City Budget Approved
Philadelphia City Council passed a $6.82B FY26 budget with modest reductions in BIRT and Wage Tax rates, but eliminated the $100K BIRT exemption. The Chamber expressed disappointment in the limited ambition of these changes.

• BIRT NI: Decreases gradually from 5.81% to 2.8% by 2038

• Gross Receipts Tax: Phase-out by 2039

• Wage Tax: Reduced incrementally for both residents and non-residents through 2029

• Housing: $800M for H.O.M.E. initiative

• Infrastructure: Increased investment in SEPTA, paving, ADA upgrades

• Public Safety: Funding for Forensic Center, vacant lot cleanup, parks

Council Bills to Watch:

• Fair Chance Hiring Law (Bill #250373): Amended but held until fall. Still contains areas of concern around retaliation provisions and assessment structure.

• Retirement Savings Program (Bill #250651): Creates a city-facilitated IRA option for private-sector workers without access to employer-sponsored plans. No employer contribution required.

• Private Security Officer Training (Bill #250646): Mandates 40-hour training with annual refreshers. Certified nonprofit providers only. Vote expected in fall.

• Housing Screening Fairness (Lozada): Draft legislation regulating use of criminal history in rental applications. Stakeholder feedback ongoing.

Council is now in recess and will reconvene on September 11, 2025.

Source: Chamber of Commerce for Greater Philadelphia, June 27, 2025

State: Harrisburg Budget and Legislative Activity

State Budget Still in Negotiation
With the July 1 deadline missed, budget talks continue. Major debates center on:

• $2.5B increase in Medicaid spending

• $567M payment toward school funding equity (court-mandated)

• Limited revenue options with cannabis and skills games on the table

Transit Crisis: SEPTA Budget Adopted
Without legislative action, SEPTA faces service cuts of up to 45% beginning this fall. The Chamber urges immediate contact with lawmakers to support transit funding.

Key Bills Passed by House:

• HB 506 – Childcare Staff Bonuses: Establishes retention/recruitment bonuses (no funding allocated yet)

• HB 1610 – Omnibus Tax Package: Includes overtime tax relief, CNIT rate phase-down, and 199A conformity (Senate unlikely to pass as-is)

• HB 1364 – Multimodal Transportation Bill: Authorizes $293M for transit and $42M for road/bridge bonds

Key Legislation for Union Construction Employers:

• HB 1319 – Mechanics’ Lien Amendment: Adds lien rights for equipment rental firms (House Appropriations Committee)

• SB 527 – Sterling Act Reform: Limits Philadelphia wage tax on non-resident remote workers (passed Senate, in House Finance Committee)

• HB 846 – Prevailing Wage Custom Fabrication: Clarifies rates for off-site fabricated materials (now in Senate Labor Committee)

• HB 1018 – Steel Procurement: Tightens U.S.-steel requirements for publicly funded projects

• SB 72 / HB 276 – Worker Misclassification Enforcement: Expands penalties and creates cross-agency task force

Source: SMACNA of PA, July 2025; PA General Assembly Legislative Tracker

Upcoming Hearings & Meetings

• PA House Transportation Committee: July 8

• UCC Review Council Meeting: July 31

• Prevailing Wage Appeals Board (Virtual): July 11 at 10 a.m. (Call-in: 267-332-8737 | Conf. ID: 170 406 512#)