H.R. 8755: Enhanced Small Business Growth Act of 2026

This bill, titled the Enhanced Small Business Growth Act of 2026, proposes changes to the Internal Revenue Code to provide additional tax benefits for domestic manufacturers. The main focus of the bill is to enhance the qualified business income deduction for these manufacturers, which could provide them with a larger tax break when calculating their taxable income.

Key Provisions of the Bill

• Increased Qualified Business Income Deduction: The bill suggests amending Section 199A of the Internal Revenue Code to increase the qualified business income deduction for qualifying domestic manufacturers. Specifically:
  • The deduction percentage would increase from 20 percent to 30 percent for eligible domestic manufacturers.
  • Additionally, the portion of the deduction allowed based on wages would expand from 50 percent to 100 percent.
• Definition of Qualified Domestic Manufacturer: To be eligible for this enhanced deduction, a business must qualify as a "qualified domestic manufacturer." This is defined as a business where at least 85 percent of its qualified business income must come from domestic manufacturing activities.
• Requirements for Qualified Manufacturing Activities: The bill specifies that to be considered a qualified domestic manufacturing trade or business, the enterprise must:
  • Manufacture tangible property.
  • Have at least 20 percent of its costs related to labor and overhead incurred within the United States.
• Changes to Taxable Income Computation: The bill modifies how taxable income is calculated. The computation will no longer take into account certain deductions and limitations currently in place, such as those imposed by Section 68 or those concerning charitable contributions under Section 170 for taxpayers who choose to itemize deductions.
• Effective Date: The proposed changes would take effect for taxable years beginning after December 31, 2025.

Purpose of the Bill

The Enhanced Small Business Growth Act of 2026 aims to support domestic manufacturing by providing financial incentives through tax deductions. The hope is that by increasing these deductions, the bill will encourage investment in manufacturing, promote job growth, and strengthen the U.S. manufacturing sector overall.

Relevant Companies

• GE (General Electric): As a major player in manufacturing, GE could benefit significantly from the enhanced deductions, potentially increasing their after-tax profitability on U.S. manufacturing operations.
• MMM (3M Company): With a substantial manufacturing base in the U.S., 3M may also see advantages from increased deductions, potentially reducing their tax liabilities.
• BA (Boeing): Boeing, primarily engaged in aerospace manufacturing in the U.S., could be impacted positively by the enhanced deductions that would bolster their tax position related to domestic manufacturing.