Latest news with #taxbreaks
Yahoo
13 hours ago
- Business
- Yahoo
Factories, Data Centers Will Get A Boost From The 'One Big, Beautiful Bill'
The manufacturing sector is set to get a big boost from President Donald Trump's 'One Big, Beautiful Bill,' which is likely to spur new waves of investment, especially in sectors like AI and biotechnology. The sprawling budget bill introduces a series of tax deductions and credits for businesses, especially those that invest in research and development (R&D), AI buildouts, and domestic factory construction. 'Likely beneficiaries of the law include industrial machinery manufacturers, heating and ventilation system providers, pharmaceutical innovators, semiconductor companies and major technology firms,' wrote Matt Hochstetler, equity portfolio manager at Capital Group. Bigger Up-Front Tax Breaks to Create Cash Flow One of the bill's main provisions benefiting manufacturing is a change to how quickly companies can claim tax breaks on investments in equipment, facilities, and production lines. The bill now lets companies deduct 100% of their investment in 'qualified production property' in the year it's paid for instead of spreading the deduction over several years. 'This measure could become a powerful tailwind for free cash flow and spur fresh waves of investment across multiple sectors, assuming overall debt levels don't drive interest rates too high,' Hochstetler wrote. Because both the factory itself and the machinery inside can be deducted immediately, some analysts said this could incentivize companies to build more of their supply chains in the U.S. 'This 'reshoring super-deduction' dramatically lowers the after-tax cost of domestic investment. This should encourage the onshoring of supply chains and manufacturing capacity and create more jobs for Americans,' wrote Brownstone Research Senior Analyst Nick Rokke. AI Will Be A Big Winner The bill offers immediate deductions for investments made into research and development, including retroactively from 2022. The bill also boosts the tax credit for semiconductor production to 35% from 25% previously. Together, these changes could provide a boon for AI production in the U.S., especially amid a surge in data center construction by companies like Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), and Meta Platforms (META). 'With new data center costs reaching into the tens of billions of dollars, the short-term tax savings are enormous,' Rokke wrote. 'This change alone frees up billions in cash flow for the hyperscalers. And that cash will almost certainly be reinvested into even more compute infrastructure.' Smaller Factories Get a Leg Up Another provision that could benefit manufacturers is the restoration of deductions based on earnings before interest, taxes, depreciation, and amortization, or EBITDA. The Association of Manufacturing Technology (AMT) said this would allow for greater deductibility of interest expenses related to financing investments, acquisitions and expansions. The group also pointed to higher expensing limits for small businesses, which it said would allow for larger equipment purchases. 'This change dramatically increases the ability of small manufacturers to invest upfront in critical assets, leveling the playing field against larger competitors,' wrote Amber Thomas, AMT vice president of advocacy. An increase in the estate tax exemption is another benefit for small business owners, AMT pointed out. That provision could help family-owned manufacturing businesses pass on ownership without facing burdensome taxes. Read the original article on Investopedia Sign in to access your portfolio
Gizmodo
2 days ago
- Automotive
- Gizmodo
Mercedes-Benz's Latest Decision Signals Trouble Ahead for EVs
We are likely to see this story repeat itself, with only the names at the top changing. Mercedes-Benz's latest announcement does not bode well for the future of electric vehicles in the United States, especially as federal tax breaks are set to expire. On September 30, the federal incentives introduced under the Biden administration to support EV adoption will officially disappear. These tax credits were designed to offset the higher cost of EVs compared to gas-powered vehicles. But with the clock ticking, automakers are beginning to react. One of the most significant moves comes from Mercedes-Benz, which will temporarily suspend production of its EQE and EQS electric models—across all variants, including SUVs and sedans—starting September 1. The company has also closed order banks for these vehicles and notified U.S. dealers accordingly. 'Vehicles scheduled for production prior to September 1 will continue to be produced,' a spokesperson told 'This announcement applies only [to] U.S. vehicle orders of these models.' The company didn't immediately respond to a request for comment from Gizmodo. Industry observers say the move isn't a one-off. This decision is likely to be repeated, with the difference that the name at the top will be different, one expert noted. As the tax break expiration nears, Mercedes' decision is being seen as a canary in the coal mine. The EQS SUV and EQE SUV have been manufactured in Tuscaloosa, Alabama, since 2022. Their sedan counterparts are produced in Germany and exported to the U.S. None of the sedan models qualified for the $7,500 EV tax credit—unless leased—due to the U.S. sourcing requirements in the Inflation Reduction Act. Pricing ranges from $78,000 to $135,000 depending on the variant and model year. The 2025 EQS 450 SUV starts at $105,250. Mercedes' announcement closely follows the passage of 'One Big Beautiful Bill,' a sweeping law signed by President Trump on July 4. The bill eliminates the $7,500 federal tax credit for new EV purchases and also removes the $4,000 credit for used EVs. Experts warn the rollback of these incentives could significantly dampen demand for electric vehicles, especially luxury models with high price tags. EV sales already fell 6.3% in Q2 compared to the same period in 2024. Some analysts expect a brief rebound in Q3 as consumers rush to buy before the September 30 deadline. But beyond that, the outlook remains cloudy. EV supporters on social media were quick to express concern over Mercedes' decision. 'Major pause signals deeper EV headwinds,' commented one user on X (formerly Twitter). 'Benz electric cars are already uncompetitive and losing money, and a $7500 tax credit would make it even worse, so I think that's why they made that decision,' another user added. For a third, 'Another sign of where EVs are headed in the US thanks to the current administration. It's unfortunately going to be downhill from here for American EV enthusiasts.' Another sign of where EVs are headed in the US thanks to the current administration. It's unfortunately going to be downhill from here for American EV enthusiasts. — Watts (@Dabb_mt) July 18, 2025Others predicted this is just the beginning. 'Wonder how many other companies will make similar announcements soon before EV incentives are gone. @grok have other auto makers paused EV production and how will that affect Tesla?' Wonder how many other companies will make similar announcements soon before ev incentives are gone. @grok have other auto makers paused ev production and how will that affect Tesla ? — MrRandom (@MrRandumizer) July 18, 2025Closing the order books and suspending production signals more than just a pause. It suggests a recalibration. Whether driven by strategic repositioning, supply chain issues, or shrinking demand, Mercedes-Benz's retreat from the U.S. EV market may reflect broader industry fears about what happens when the subsidies stop and reality kicks in. This is a warning shot for the entire EV industry. Mercedes-Benz pulling the plug on key electric models ahead of the September 30 tax credit expiration shows what happens when the $7,500 cliff gets too close. EVs are still too expensive for the average buyer, and without federal support, demand could crater. If Washington doesn't step in with a new plan, we're not looking at a slowdown. We're looking at a stall.
Forbes
3 days ago
- Business
- Forbes
Go Back To The Office, But Bring Your Own Snacks. Blame Congress.
I ncreasingly, companies have been asking (or demanding) that employees return to the office, claiming that it fosters a stronger company culture and enhances productivity. To woo employees back, or to make sure they're not angry/hangry when ordered back, companies have been expanding perks such as on-site gyms, childcare facilities, and, of course, free food and beverages. Beginning January 1, the food part will be more expensive for employers, meaning more of them could revert to B.Y.O.S (Bring Your Own Snacks). Congressional Republicans, who extended so many other tax breaks (and added some new ones) in the One Big Beautiful Bill Act (OBBBA) President Donald Trump signed on July 4th, decided they would allow a current deduction for employers who provide meals and snacks to expire—except that is, for certain employees, such as those working in restaurants and in Alaskan fishing vessels and fish processing facilities. (No, we're not making it up. The fishy part was one of the concessions Alaska Senator Lisa Murkowski extracted from her Republican colleagues for her crucial support.) Before Trump's first term tax cuts—the 2017 Tax Cuts and Jobs Act (TCJA)—employers who provided meals for their employees—and the employees who benefited from them—were entitled to tax breaks under one of two sections of the tax code. Under section 119 of the tax code, employees are not taxed on on-site meals provided by employers for the employer's convenience. For tax purposes, whether meals are for the convenience of the employer depends on all the facts and circumstances, but typically means that there's a substantial business reason other than to provide the employee with additional pay (the exclusion doesn't apply to cash allowances instead of meals). So feeding employees who would otherwise be gone too long at distant lunch spots would be deductible for the employer and not taxed to the worker. Even if the meals couldn't be considered for the employer's convenience, they might still be tax-favored under Section 132(e) of the tax code as a de minimis fringe benefit—something so small or inconsequential as to not be worthy of attention. For tax purposes, it means something that has so little value that accounting for it would be unreasonable or administratively impracticable. Typically, this includes items such as coffee, doughnuts, or soft drinks, as well as occasional meals provided to allow employees to work overtime (although how coffee could be considered so inconsequential as not to be worthy of attention is a mystery to me). The de minimis exclusion also applied in most cases to restaurants' staff meals—the kind you see in The Bear . (Technically, it's deductible if the facility's annual revenue equals or exceeds its direct operating costs. Direct operating costs include the cost of food, beverages, and labor costs for cooks and waitstaff, and others who provide services primarily on the premises.) Note that the meals that qualified for the convenience of the employer and the food provided under the de minimis fringe benefit weren't (and still won't be) taxable to the employees. That was a win-win, since employees were not taxed on the perk and employers got a deduction. Trump 1.0: TCJA The TCJA made several changes to the tax treatment of meals and entertainment expenses. Entertainment expenses were disallowed. Plus, that 2017 law created section 274(o), which, beginning in 2026, disallows 100% of the deduction for expenses for food or beverages provided to employees, as well as expenses for the operation of certain eating facilities for employees. As part of the Congressional pattern of frontloading tax goodies and backloading tax pain, the TCJA provided that through 2025, 50% of the cost of on-site employee meals would be deductible (provided it was for the employer's convenience). And, although de minimis snacks aren't considered meals, they were also 50% deductible under the TCJA rules. Trump 2.0: The One Big Beautiful Bill Act The new tax law extended many expiring tax provision in TCJA, but did not extend the rules that had temporarily allowed deductions for snacks and employer convenience perks. Both are now set to expire at the end of the year, which means that U.S. companies that provide snacks, coffee, or on-site meals at the office will no longer receive a tax deduction for doing so. You might think that it was just an oops—that Congress forgot that the provision might expire. But that's not the case. OBBBA didn't roll back the provision for all industries—two notable exceptions have been carved out. One exception applies to very specific businesses—those on a fishing vessel, fish processing vessel, or fish tender vessel, or at a facility for the processing of fish for commercial use or consumption located in the U.S. north of 50 degrees north latitude, and is not located in a metropolitan statistical area. It might not surprise you to learn that the only state north of 50 degrees north latitude is Alaska. Notably, the lobster industry wasn't similarly spared; Sen. Susan Collins (R-Maine) was a no vote on OBBBA. A second exception applies to establishments that sell food and beverages to customers and also provide meals to their employees—in other words, restaurants. The restaurant industry can continue deducting employee meal expenses for kitchen and waitstaff. As for everybody else? Businesses outside of the Alaskan fishing industry and restaurants may be out of luck now, but Congress apparently thinks it's worth it. The Joint Committee on Taxation found that eliminating the deduction will raise $32.5 billion over the next decade. That might not seem like a lot of money in a law that includes tax cuts that will reduce federal revenues by $4.475 trillion between 2025 and 2034. But consider this: The $25,000 tax deduction for tips, which lasts only through 2028, costs just $32 billion. And here's the weird part, the cost of throwing holiday parties for employees will still be 100% deductible. As for business meals—if say, an employee is taking a potential client to dinner—that is now, and will still be, 50% deductible. Will Employers Care About A Deduction Lost? Food at the office can be a big draw for employees. A 2023 survey found that 80% of workers say catered meals encourage them to come into the office. And anyone who is a regular reader knows that the pull of free coffee and a snack can get me in the door. Plus, let's face it: Sometimes the little, consumable things make a big difference, with 98% of employees saying free meals at work made them feel appreciated. Nearly two-thirds of those who receive free meals say it helps them eat healthier food, and over half (55%) of those who don't receive free meals say they would feel less stressed if they did. For employers, the small act of providing food to busy employees goes a long way towards retention. The survey—which we should point out was sponsored by EZCater, which delivers food to workplaces—found that seven out of ten tax professionals said they'd be more likely to stay at their company if they received free meals during the busy season. On the employer side, investing in employees' meals benefits overall well-being, work performance, and, importantly, employee retention. How much difference will the loss of the tax deduction make? That remains to be seen, but no doubt some employers will be putting out the B.Y.O.S. sign. More from Forbes Forbes IRS Issues Guidance On New Deductions For Seniors, Tips, Overtime And Car Interest By Kelly Phillips Erb Forbes What The One Big Beautiful Bill Act Will Mean For You And Your Business By Kelly Phillips Erb Forbes Questions About The New Tax Bill? Taxgirl Has Answers By Kelly Phillips Erb Forbes This Barely Used Child Care Tax Break For Employers Just Got An Overhaul By Danielle Chemtob
Times
3 days ago
- Business
- Times
Sunday Times letters: Taxing the property-owning class
Regarding Matthew Syed's article 'The property-owning class should take a big hit. Yes, that includes me' (Jul 13), although I am part of the boomer generation that has benefited enormously from rising property prices since the 1970s, so, too, have our children and grandchildren. They have benefited from the Bank of Mum and Dad/Granny and Grandad. In the main, us oldies did not benefit from such munificence from our elders. My first rent was 67 per cent of my salary, a higher percentage than the average today. It made me determined to own my own home. I achieved that after working six evening jobs in addition to my main job. Then came property investments. Rather than tax breaks, what made buying property attractive was a steady additional income that could be saved while working (and invested in equities), while continuing to provide an income if I was ever out of work or decided to retire. Generally, the young eat out more often, go on holiday more often, buy takeaway coffees more often and expect a better work/life balance while expecting the government to help them out. Life is about choices. Victoria Mitchell Kingsclere, Hants
Fox News
4 days ago
- Business
- Fox News
Trump has now been in office for six months, for the second time. Here are the highlights
President Trump has been in office for six months, delivering on campaign promises, securing his "big beautiful bill" by his self-imposed deadline and taking decisive action on the world president was sworn into office Jan. 20, and the Trump administration has operated at warp speed since Day One. Key tenets of Trump's first 100 days included imposing harsh tariffs on Chinese imports, starting and continuing peace negotiations between Russia and Ukraine, and cracking down on border security amid a mass deportation initiative. The next chapter of the second Trump administration began, with the House of Representatives, as promised, passing Trump's "One Big Beautiful Bill," before Memorial Day, sending it to the Senate for weeks of negotiations. The Senate made its changes, approved the legislation and kicked it back to the House just in time for the lower chamber to pass the bill before Trump's self-imposed Fourth of July deadline. The president welcomed House and Senate Republican leadership to the White House July 4 for a signing ceremony on his landmark legislation, which included key provisions that would permanently establish individual and business tax breaks included in his 2017 Tax Cuts and Jobs Act, and incorporate new tax deductions to cut duties on tips and overtime pay. Trump's second administration has also focused on the new Department of Government Efficiency (DOGE), which was run by Elon Musk. DOGE proposed cuts to programs that the Trump administration chalked up to wasteful and excessive government spending. Congressional lawmakers prepped a rescissions package — a bill to codify those DOGE cuts into law. Congress passed that package by its deadline. Trump signed the package Friday, which blocks $8 billion in funding to the U.S. Agency for International Development (USAID) and $1 billion to the Corporation for Public Broadcasting for the remainder of the fiscal year. The dollars had been allocated by Congress for the duration of fiscal year for Musk, his "special government employee" window expired, and he returned to the private sector. Shortly after, Musk started a short-lived feud with the president, who chose not to prolong the tensions. Trump only hit his former ally briefly, and carried on with business as usual, leaving Musk to a lonely rant on social media. Meanwhile, on the world stage, the president ordered strikes on Iran's nuclear facilities. Trump's historic precision strikes on Iran's nuclear sites in June hit their targets and "destroyed" and "badly damaged" the facilities' critical infrastructure — an assessment agreed upon by Iran's Foreign Ministry, Israel and the United States. But Iranian Supreme Leader Ayatollah Ali Khamenei recently issued his latest threat against the U.S. and "its dog on a leash, the Zionist regime (Israel)," saying that Iran's attack on U.S. Al Udeid Air Base in Qatar was just the beginning of what Tehran could throw at Washington. He warned that "an even bigger blow could be inflicted on the U.S. and others." Iran has until the end of August to agree to a nuclear deal with the United States and its allies, Fox News has learned. Secretary of State Marco Rubio and the foreign ministers of France, Germany and the United Kingdom set the de facto deadline, according to three sources with knowledge of a call Wednesday among the officials. If Iran fails to agree to a deal, it would trigger the "snapback" mechanism that automatically reimposes all sanctions previously imposed by the United Nations Security Council. The sanctions were lifted under the 2015 Iran deal. In his first six months as president, Trump also signed a sweeping order blocking travel to the U.S. from nearly 20 countries identified as high-risk for terrorism, visa abuse and failure to share security information. The travel restrictions — announced under executive order 14161 — apply to nationals from 12 countries, including Afghanistan, Iran, Somalia, Libya and Yemen, all deemed "very high risk" due to terrorist activity, weak or hostile governments, and high visa overstay rates. Domestically, the president has focused efforts on securing the border, with border crossings at a record low. U.S. Customs and Border Protection reported the lowest number of border crossings in recorded history in June. Nationwide, there were 25,228 CBP encounters, the lowest monthly number the agency has recorded, including a "historical low" of 8,024 apprehensions. Encounters include legal ports of entry, whereas apprehensions are arrests of those coming into the United States illegally. As for tariffs, the Trump administration had leveled tariffs as high as 145% on Chinese goods following the president's reciprocal tariff plans in April, when China retaliated against the U.S. with tariffs of its own. China and the U.S. reached a preliminary trade agreement in May, which Trump said China violated in a Truth Social post at the end of May. An agreement was reached between the U.S. and China in June, which includes China supplying rare earth materials to the U.S., and that Trump will "work closely" with Chinese President Xi Jinping "to open up China to American Trade." "Full magnets, and any necessary rare earths, will be supplied, up front, by China," Trump said in June. "Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!). We are getting a total of 55% tariffs, China is getting 10%. Relationship is excellent!" The president also celebrated the U.S. Army's 250th birthday with a massive parade in Washington June 14 — kicking off a yearlong extravaganza leading up to America's 250th birthday. Outside the White House, Trump administration agencies have delivered on promises. The Department of Education unveiled plans to scale down its workforce, terminating nearly 1,400 Education Department employees. The Supreme Court upheld Trump's move. The Justice Department released the audio of former President Joe Biden's interview with former Special Counsel Robert Hur. Hur was investigating Biden for alleged improper retention of classified records. Congressional lawmakers had been demanding the audio of that interview be released since 2024, after the transcript of Biden's interview was littered with mistakes and revealed significant memory lapses. The Department of Justice also has started an investigation into Biden's pardons his final days in office to determine whether they are valid. Fox News Digital has learned the pardons, in his final weeks in office, were signed by autopen, with just one signed by hand — the pardon for his son Hunter. Trump has also directed Attorney General Pam Bondi to make public any relevant grand jury testimony relating to the Jeffrey Epstein case. Over at the FBI, CIA and the Office of the Director of National Intelligence, intelligence officials and political appointees are in the process of declassifying all records related to the Trump–Russia investigation, also known as "Crossfire Hurricane."Fox News Digital also exclusively reported that former FBI Director James Comey and former CIA Director John Brennan are under criminal investigation relating to their actions tied to the Trump–Russia probe.
