Big Beautiful Tax Benefits for the Printing and Packaging Industry
Politics aside, and ignoring policy trade-offs regarding income taxes, spending, and the national debt, the One Big Beautiful Bill Act became law effective July 4, 2025. The following highlights the notable tax provisions for manufacturing businesses within the Printing and Packaging Industry and their owners.
Beneficial Business Tax Provisions:
- Full and Permanent Expensing for Certain Business Property:
- 100% bonus depreciation for property acquired and placed in service after January 19, 2025
- Includes “Qualified Production Property” (nonresidential real property used for production activities) constructed beginning January 19, 2025 through January 1, 2029, and in-service July 5, 2025 through January 1, 2031
- Production activities defined as manufacturing space (not admin, sales, or parking)
Commentary: Allowing immediate deductibility for capital expenditures (Cap-Ex) is a significant tax benefit for any business, especially capital intensive industries like Printing and Packaging. The deduction is for all equipment, computers, IT, AI, furniture etc., regardless if used for manufacturing or administrative use. Accelerating depreciation deductions for Cap-Ex is not new but the current depreciation period was over five to seven years, and acceleration provisions were expiring.
Immediate deductions for non-residential real property (buildings and improvements) are available, though are narrowed to manufacturing space. Commercial property write-offs were normally over 15 or 39 years, so this is a clear incentive for investment in manufacturing facilities.
- 20% Qualified Business Income (QBI) Deduction for S-Corps and other Pass-through Entities is made permanent in 2025
Commentary: The majority of small and mid-size businesses are established as S-Corporations or other pass-through entities (PTEs) whereby income tax on business income is paid on the owners’ tax return(s), and at the owners’ tax rate. This 20% deduction provides a portion of tax equivalence to C-Corporations. The top PTE rate is thus 30% (37% top individual rate less 20%). The C-corporation federal tax rate is a flat 21%.
Since this deduction was set to expire, the uncertainty of income tax planning is eliminated (for now).
- Research and Development Expenditures (R&D Credit):
- Full expensing beginning after January 1, 2025
- If a Small Business with revenue of $31 mil or less, expensing is retroactive to 2022
- All businesses with capitalized expenditures from 2022 to 2024 can elect to accelerate remaining deductions over one or two years
- Foreign research costs are still amortized over 15 years
Commentary: The R&D tax credit has been a substantial tax benefit for U.S. manufacturers for many years. Though, when utilizing the tax credit in recent years, R&D expenditures were required to be capitalized and written off over five years. Now the expenditures can be expensed in the year incurred, AND capitalized expenditures remaining from prior years can be expensed this year or over this year and next.
This is a major “thank you” for being a U.S. manufacturer (and an owner of a Printing or Packaging company).
Other Business Tax Provisions:
- Limitation on Business Interest:
- EBITDA limitation reinstated in 2025 {allows for larger loss deductions}
- Business Meals for 2026:
- Permanently allows deduction for 50% of the cost of meals provided at the convenience of employer
- Charitable Deduction for Businesses:
- Can only deduct charitable contributions in excess of 1% of adjusted taxable income (limited at 10%)
- Carryforward amount under 1% floor if contributions exceed the 10% ATI limit
- Beginning in 2026
- 1099-K Reporting for Third-Party Settlements:
- Greater than $20k on more than 200 separate transactions
- Retroactive to 2022
- 1099 Reporting for Businesses and Individuals (1099-NEC and 1099-MISC):
- Reporting threshold from $600 to $2,000
- Beginning 2026
Estate and Gift Tax Provisions:
- Lifetime Exemption becomes permanent in 2026 at $30 mil Joint/$15 mil Single, indexed for inflation
Commentary: This exemption was currently at $28 mil joint and $14 mil single, though was scheduled to revert to $7 mil on Jan 1, 2026. The uncertainty of planning for family business succession and wealth transfers has been eliminated (for now).
Beneficial Individual Tax Provisions:
- Current tax brackets become permanent in 2025
Commentary: The top tax bracket was scheduled to revert back to 40%. Now it is capped at 37%, thus eliminating uncertainty in tax planning (for now).
Other Individual tax provisions
- Current standard deduction becomes permanent with the following increase:
- $31,500 Joint/$15,750 Single
- New “Senior” Deduction if over 65:
- $6,000 deduction though phaseout at $150k Joint/$75k Single
- Available 2025 through 2028
- Child Credit becomes permanent in 2025 with the following increases:
- $2,200/child ($1,700 refundable)
- Phaseout at $400k Joint/$200k Single
- Dependent Care Employer Plan:
- Exclusion from income of $5,000 is increased to $7,500 beginning 2026
- Child and Dependent Care Credit:
- Enhanced income thresholds beginning 2026
- 529 Education Plans:
- Additional eligible expenditures and expands distributions for elementary and secondary schools beginning after July 4th, 2025
- Itemized Deductions in 2026:
- If in 37% bracket, value of itemized deductions capped at 35% tax rate
- Educators and coaches: unreimbursed expenses for instructional activities now are included in itemized deductions (if work at least 900 hours). No $$ limit.
- Mortgage Interest deduction in 2025:
- Permanently capped at $750k indebtedness
- Excludes home equity loan interest
- Mortgage insurance premiums now included with interest in 2026
- Charitable Contributions in 2026
- New limit with a floor of .5% of total contributions
- Permanent deduction of $2k Joint/$1k Single, regardless if itemize
- Moving expenses permanently excluded in 2025 (except for active duty members of the Armed Forces and Intelligence Community that move pursuant to government orders)
- Gambling losses in 2025:
- Losses still only allowed up to gains, but now losses limited to 90% of the gains
- Tips: no tax up to $25k if denoted on W-2 or 1099
- Phaseout $300k Joint/$150k Single
- Available 2025 through 2028
- Overtime Pay: deduction up to $25k Joint/$12.5k Single if denoted on W-2
- Phaseout $300k Joint/$150k Single
- Available 2025 through 2028
- Car Loan Interest: deduction up to $10k if new, for personal use, and final assembly in U.S.
- Phaseout $200k Joint/$100k Single
- Available 2025 through 2028
- VIN must be reported
- State and Local Tax Itemized Deduction (SALT) Cap of $10k is extended to $40k from 2025 through 2029
- Phaseout by 30% from $500-$600k Joint/$250k-$350k Single
- Increased by 1% each year
- Reverts back to $10k in 2030
- No limits on state SALT Cap workarounds
Vehicle and Energy Credits:
- Clean Vehicle Credit of $7,500 expires on September 30, 2025
- Energy Efficient Home Improvement Credit of 30% of qualified expenses up to $1,200 expires on December 31, 2025
- Residential Clean Energy Credit of 30% for solar, wind, and geothermal expires on December 31, 2025
- Many more “Green New Deal” credits terminated
Commentary: This is a total U.S. policy reversal, eliminating virtually all tax incentives for Alternative, “Clean” or “Green” energy development and usage, both commercial and residential.
New TRUMP Tax-Exempt Investment Accounts for Children:
- Trump Investment Account:
- Similar to a traditional IRA, for children under the age of 18 with SSN
- Eligible to contribute up to $5k/year starting July 4th 2026 (12 months after OBBBA enactment)
- Contributions can come from parents, relatives, taxable entities, tax-exempts and personal foundations (exempt contributions don’t count toward limit)
- Investments only in diversified U.S. equity index funds
- Distributions:
- None until 18 years old
- Allowed distributions from ages 18 to 25 are taxed as capital gains
- Trump Investment Accounts for Newborns:
- S. citizens born from January 1, 2025 to December 31, 2028
- $1k contribution by U.S. Treasury
- Account to be opened by parents beginning 2026
About the Authors:
Bart Krupnick, CPA, CVA is a Principal at Compass US Accountants and Advisors in Annapolis, MD. Bart and Compass specialize in providing tax, audit, management advice, business valuation, and mergers/acquisition advisory services specific to the Printing and Packaging Industry. Kathleen Pruitt, CPA is a Senior Tax Advisor at Compass US Accountants and Advisors in Annapolis, MD.
