Budget & Taxes (Tax Credits)

HR 1080, the "No Solar Panels on Fertile Farmland Act of 2025," amends federal tax codes to exclude solar energy projects on "prime farmland" from key clean energy tax credits. The bill defines "prime farmland" using the USDA's standard (7 CFR §657.5) and removes eligibility for residential solar credits (Section 25D), production credits (Section 45), investment credits (Section 48), and clean electricity credits (Sections 48E and 45Y) for projects on such land. This directly affects solar developers and property owners seeking these tax incentives for installations on designated prime farmland. The policy change applies to projects placed in service after the bill's enactment date.

This bill creates a new tax deduction for cash tips received by workers in specific service occupations that traditionally accepted tips before 2024 (like servers, barbers, and beauticians). It allows a deduction of up to $25,000 per year for qualified tips included on employer statements, but excludes employees who earned over a certain threshold ($220,000 in 2023) from the same employer the previous year. The deduction applies to taxable years beginning after December 2024 and is designed to reduce taxable income for eligible workers. It directly affects service industry workers in qualifying tip-dependent jobs who receive cash tips, not the general public.

This bill creates a toll credit for vehicles crossing specific bridges and tunnels before entering Manhattan's congestion zone. It requires the Transportation Secretary to certify that drivers using the Holland Tunnel, Lincoln Tunnel, or George Washington Bridge receive a credit equal to their bridge/tunnel toll when paying the congestion toll. The bill also adds a federal tax credit for taxpayers who pay congestion tolls before entering the zone, preventing double benefits with other deductions. It directly affects drivers using those crossings, the Metropolitan Transportation Authority (for grant eligibility), and taxpayers who pay these tolls. The policy change takes effect when congestion tolls begin and applies to tax years after enactment.

This bill excludes up to $20,000 in tips from taxable income for workers in hospitality, food service, and cosmetology who rely on tips as part of their wages. It applies to tips received after December 31, 2024, and ends for tips received after December 31, 2029. The excluded tips still count toward qualifying for the child tax credit and earned income credit, but not for other tax deductions or credits. The IRS must adjust withholding procedures to reflect this exclusion starting in 2025.

HR 817, the Educational Choice for Children Act of 2025, creates a new tax credit allowing individuals to claim up to 10% of their adjusted gross income (capped at $5,000) for charitable contributions to scholarship granting organizations. These organizations provide education scholarships to eligible students from households with income not exceeding 300% of the area median gross income, covering qualified expenses like tuition, curriculum materials, and educational therapies. The bill establishes strict requirements for scholarship organizations, including verifying household income, conducting annual audits, and distributing scholarships to multiple students without government control. It also prohibits government entities from mandating or controlling scholarship organizations or excluding private or religious schools from receiving scholarship funds, while exempting scholarship amounts from taxable income for recipients. The tax credit is limited to $5 billion annually for 2025-2028, allocated on a first-come, first-serve basis.

Restoring Establishment Deductions and Uplifting Competition to Ease Food Prices Act or the REDUCE Food Prices Act This bill establishes a new tax credit for certain food retail businesses. The bill also increases bonus depreciation, the qualified business income (QBI) tax deduction, the rehabilitation tax credit (also known as the historic preservation tax credit), and the work opportunity tax credit (WOTC) for the businesses. The bill establishes a new tax credit (as part of the general business tax credit) in the amount of 15% of certain capital investments by a qualified small food retail business in the first three years of operation. The bill defines a qualified small food retail business as a private or closely-held company, a partnership, or a sole proprietorship (1) with annual average gross receipts of $200 million or less for the three tax years preceding the current tax year, (2) with at least 70% of its annual average gross receipts attributable to the retail sale of food or produce, and (3) located in a low-competition area. The bill also increases bonus depreciation percentages for certain property placed into service by a qualified small food retail business, the QBI tax deduction for qualified small food retail business, the rehabilitation tax credit for qualified rehabilitation expenses incurred by a qualified small food retail business, and the WOTC for wages paid by a qualified small food retail business to eligible workers.

The STAR Act of 2025 adds a 25% tax credit for qualified semiconductor design expenses incurred by U.S. companies. It directly affects businesses conducting semiconductor design in the United States, covering both in-house costs (like wages and supplies for U.S. design work) and contracted design services. The credit excludes duplicating existing products, cosmetic design, or activities unrelated to performance or reliability improvements. This incentive expires for design expenses paid after December 31, 2036.

HR 996 extends and enhances a tax credit for employers that provide paid family and medical leave to employees. The bill gives eligible employers two options for claiming the credit: either a percentage of wages paid to employees on leave or a percentage of premiums paid for an insurance policy covering such leave (calculated as if leave were always available). It clarifies that state or local government-paid leave counts toward an employer’s leave provision but not toward the credit amount, and prevents double benefits by disallowing deductions for expenses used to claim the credit. The Small Business Administration and Internal Revenue Service must conduct outreach to help employers understand and access this credit.

This bill increases the tax credit for energy-efficient home improvements by doubling the dollar limit from $2,000 to $4,000. It specifically applies to heat pumps, heat pump water heaters, biomass stoves, and biomass boilers purchased for home use. The change takes effect for tax years beginning after December 31, 2024. Homeowners making these eligible upgrades will receive a higher tax credit, directly reducing their federal tax liability.

The America First Act (HR 746) would restrict access to numerous federal benefits and programs for certain non-citizens by requiring citizenship verification and denying eligibility to individuals with specific immigration statuses. It affects programs including Medicaid, Medicare, Head Start, WIC, school meals, housing assistance, tax credits, and community development funds by denying benefits to people granted parole, temporary protected status (TPS), deferred action (including DACA), asylum, or who are unlawfully present. The bill also reduces funding for schools in "sanctuary jurisdictions" and limits refugee resettlement for certain Haitian immigrants. It mandates that federal agencies verify immigration status before providing benefits and prohibits use of federal funds for services to certain non-citizens.