HR 8755
Enhanced Small Business Growth Act of 2026
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Bill overview
The Enhanced Small Business Growth Act of 2026 aims to support domestic manufacturers by increasing the qualified business income (QBI) deduction. Specifically, it raises the deduction rate from 20% to 30% for qualified domestic manufacturers and allows for a 100% deduction of certain expenses. The bill also modifies how taxable income is calculated for these manufacturers, removing certain deductions and limitations.
Key provisions
- Increases the QBI deduction rate for qualified domestic manufacturers from 20% to 30%.
- Allows for a 100% deduction of labor and overhead expenses related to the production of tangible property within the United States.
- Defines ‘qualified domestic manufacturer’ based on a minimum percentage of QBI derived from manufacturing and specific cost of goods sold requirements.
- Modifies the taxable income calculation for qualified domestic manufacturers, removing certain deductions.
Who is affected
- Domestic manufacturers
- Small businesses
- Taxpayers
- Tax professionals
- The manufacturing sector
Notable changes
- Increases the QBI deduction for a specific category of businesses.
- Introduces a requirement for manufacturers to meet specific criteria regarding labor and overhead expenses.
- Alters the method of calculating taxable income for manufacturers.
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119th CONGRESS — 2d Session
H. R. 8755
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to enhance the qualified business income deduction for domestic manufacturers, and for other purposes.
This Act may be cited as the Enhanced Small Business Growth Act of 2026
.
In the case of any qualified domestic manufacturer—
subsections (a)(2) and (b)(2)(A) shall each be applied by substituting 30 percent
for 20 percent
, and
subsection (b)(2)(B)(i) shall be applied by substituting 100 percent
for 50 percent
.
For purposes of this subsection—
The term qualified domestic manufacturer means, with respect to any taxable year, any taxpayer with respect to whom at least 85 percent of the combined qualified business income amount for such taxable year is derived from a qualified domestic manufacturing trade or business.
The term qualified domestic manufacturing trade or business means any qualified trade or business—
which manufactures tangible property, and
with respect to which at least 20 percent of the cost of goods sold for the taxable year that are allocable to qualified gross receipts are attributable to labor and overhead expenses incurred within the United States (determined under regulations prescribed by the Secretary).
The term qualified gross receipts means, with respect to any taxable year, the gross receipts of the taxpayer during such taxable year which are derived from any lease, rental, license, sale, exchange, or other disposition of any tangible property referred to in clause (i)(I).
The Secretary shall prescribe such regulations as are necessary to carry out the purposes of this subsection.
Section 199A(e)(1) of such Code is amended by striking shall be computed
and all that follows, and inserting the following:
without regard to section 68,
without regard to any deduction allowable under this section, and
in the case of a taxpayer who, with respect to any taxable year, elects to itemize deductions for such taxable year, without regard to any deduction allowable under section 170.
The amendments made by this section shall apply with respect to taxable years beginning after December 31, 2025.