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Manufacturers face a tax cliff in 2025, but there is still time for Congress to prevent devastating tax increases. By acting before the end of next year, legislators can preserve the 2017 tax reform and ensure manufacturers can continue creating jobs and driving economic growth across the country.

What’s going on: As part of Manufacturing Wins, the NAM’s 2025 tax campaign, the NAM asked Rep. Lloyd Smucker (R-PA) for a download on what Congress is doing to prevent “tax Armageddon” for manufacturers.

• Smucker, chair of the House Committee on Ways and Means’ recently formed Main Street Tax Team, is a champion of the Section 199A pass-through deduction, one of the manufacturing-critical provisions set to expire at the end of 2025.
• Pass-throughs are companies whose owners pay tax on the business’s income on their personal tax returns—and most small and medium-sized manufacturers are organized as pass-through entities.
• The loss of the pass-through deduction and an accompanying increase in individual tax rates—both scheduled for the end of 2025—would be a one-two punch for small manufacturers.

Below is the written interview.

NAM: Congress is facing a Tax Armageddon next year, as crucial provisions from 2017’s Tax Cuts and Jobs Act are set to expire. As the leader of the Ways and Means Main Street Tax Team, what is your focus moving into next year’s debate?

Smucker: The Main Street Tax Team is tasked with examining the areas of the tax code that impact main street businesses. Looking ahead to what parts of the code are set to expire in 2025, one of the most important provisions our team is focused on is extending the Section 199A deduction for pass-through businesses. This 20% deduction was enacted as a part of the Tax Cuts and Jobs Act and helped create tax parity for millions of American businesses with their larger corporate competitors while incentivizing reinvestment back into their business and employees.

If Congress does not act, Section 199A will expire at the end of 2025 and main street businesses could face a 43.4% tax rate. Our tax team is working to build awareness of the pending tax hike if Section 199A expires, while laying the groundwork for making this important provision permanent by hearing directly from businesses the impact this deduction has had on their ability to grow and increase productivity.

Read the full interview here.