Two Tax Bills that Benefit the Roofing Industry

As many people know, the roofing industry is a massive network of professionals who support the housing, education, healthcare, and infrastructure systems of our nation. This $100 billion sector employs almost 1 million workers. But while those numbers seem big, the industry is really comprised of thousands of small businesses. These companies face many challenges, including juggling projects, facing increased costs, hiring and retaining workers, and making payroll.

Currently, lawmakers are considering two pieces of legislation that could assist roofing companies and other small businesses in managing their finances.

The Main Street Tax Certainty Act

In July 2023, the Main Street Tax Certainty Act (H.R. 4721) was introduced by Congressman Lloyd Smucker (PA-11). This legislation would permanently extend Internal Revenue Code Section 199A, which is set to expire after December 31, 2025. Section 199A, adopted as part of the 2017 Tax Cuts and Jobs Act, allows for a 20 percent deduction of qualified business income for pass-through businesses. Most small businesses are considered pass-throughs, and this deduction is a way to promote tax code equity between small, Main Street businesses and larger corporations. The bipartisan Main Street Tax Certainty Act is cosponsored by 92 members of Congress.

Passing this legislation would ensure that this vital tax provision remains permanent. If the provision were to expire, many roofing companies and other small businesses would be forced to pay much higher taxes, which would put them in jeopardy. Main Street businesses are critical to the U.S. economy, and those structured as pass-throughs make up 95 percent of all companies and employ the majority of private-sector workers.

More than 160 organizations — including Associated Builders and Contractors, the National Roofing Contractors Association, the American Building Materials Alliance, the National Federation of Independent Businesses, the S Corporation Association, the National Association of Manufacturers, and the U.S. Chamber of Commerce — support the Main Street Tax Certainty Act.

The American Innovation and R&D Competitiveness Act

In April 2023, Representatives Ron Estes (R-Kansas) and John Larson (D-Connecticut) reintroduced the American Innovation and R&D Competitiveness Act (H.R. 2673/S. 866). They were joined by Representatives Jodey Arrington (R-Texas), Suzan DelBene (D-Washington), Darin LaHood (R-Illinois), Jimmy Panetta (D-California), and 56 other cosponsors. This legislation would permanently restore businesses’ ability to deduct their research and development expenses immediately. It would repeal a section of the Tax Cuts and Jobs Act (TCJA) requiring the five-year amortization of R&D expensing, which went into effect in 2022.

The American Innovation and R&D Competitiveness Act has bipartisan support, and by passing it, Congress would allow the U.S. tax code to fully support innovation, a major strength and key contributor to U.S. job creation and economic growth.

Prior to the reversal of 2022, for nearly 70 years, the tax code had supported the magnitude of research and development by allowing companies to deduct their R&D expenses within the same year. Failing to correct this reversal will be detrimental to businesses and hinder innovation.

Final Thoughts

Paying high taxes can often be debilitating for roofing companies and other small businesses. If you support the rationale behind these two tax bills, take the time to contact your lawmakers and let them know how these pieces of legislation could impact your business. If they hear your stories, they may be more likely to champion these bills and push them through.

Author’s note: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

About the author: Trent Cotney is a partner and Construction Practice Group Leader at the law firm of Adams and Reese LLP and NRCA General Counsel. For more information, call (866) 303-5868 or email [email protected].