Three Things to Know: June 20th

This week's information compiled by your SC Chamber team includes: 
U.S. Senate Releases Changes to Reconciliation Megabill, Uncertainty Leads to the Pausing of Clean Energy Projects Across the U.S., Job Market Especially Tough for Young Americans According to Data

 1. U.S. Senate Releases Changes to Reconciliation Megabill

On Monday, the U.S. Senate Committee on Finance released significant changes to the House-passed “One Big Beautiful Bill Act”, a mega bill that addresses multiple areas of tax, immigration, energy, and defense policy that is a top priority of President Donald Trump and the Republican-controlled Congress.

As passed by the House, the bill contains several business priorities, including:

• Permanently extending provisions of the 2017 Tax Cuts and Jobs Act (TCJA) that were set to expire at the end of this year.
• Maintaining the 21% corporate tax rate.
• Expanding the 199A small business deduction to 23% and making it permanent, increasing the amount of business income that business owners with sole proprietorships, partnerships, and S corporations can deduct from their federal returns.
• Reducing the paperwork burden for small businesses and workers by increasing the 1099-MISC threshold to $2,000.
• Strengthening the employer-provided childcare credit and boosting childcare assistance.

Some of the notable pro-business changes made by the Senate Finance Committee include:

• Renewing and making permanent 100% immediate expensing for domestic research and development (R&D) expenses. The House version would eventually phase this out.
• Restoring and making permanent 100% bonus depreciation on capital investments. The House version would eventually phase this out.
• Maintaining the state and local tax (SALT) deduction cap workaround for pass-through entities (PTEs) used by specified service trades and businesses (SSTBs). The House version would eliminate the workarounds, which would disproportionately impact small businesses and professional service providers.
• Slowing the rollback of clean energy tax incentives from the Inflation Reduction Act, allowing projects to “commence construction” by 2028 to still receive a portion of clean energy investment and production tax credits.
• Extending technology-neutral production and investment tax credits for geothermal, hydropower, and nuclear to projects that begin construction by 2033.
• Renewing transferability, allowing energy project sponsors to transfer their credits to a third party.

These pro-business changes were met with positive reactions from business groups like the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM).

Other notable changes made by the Senate Finance Committee include:

• Scaling back new tax breaks for tips and overtime, limiting the deduction for tips to $25,000 and overtime to $12,500.
• Lowering the cap on individual state and local tax deductions (SALT) to $10,000 from $40,000, as included in the House version. This will be a major sticking point between the House and Senate.
• A smaller increase in the Child Tax Credit to $2,200 per child instead of $2,500 per child as in the House version.
• Lowering the Medicaid provider tax to 3.5%, unlike the House version, which put into place a moratorium on states’ ability to increase the provider tax above 6%. Advocates warn that this will negatively impact rural hospitals across the country. The bill also includes additional cuts to state Medicaid funding and work requirements.
• A $5 trillion increase in the federal debt limit compared to $4 trillion in the House version.

This is a fluid situation as the bill must be reviewed by the Senate Parliamentarian before likely coming to the floor of the Senate next week in order to meet President Trump's July 4th deadline for passage. The major sticking points between the House and Senate versions will likely be over clean energy tax credits, the SALT cap, Medicaid, and the debt limit.

2. Uncertainty Leads to the Pausing of Clean Energy Projects Across the U.S.

Uncertainty caused by global trade concerns and the potential rollback of federal clean energy tax credits has led to businesses cancelling, downsizing, or pausing nearly $14 billion worth of clean energy, battery, and electric vehicle (EV) related projects across the country since January of this year, impacting 10,000 jobs according to a study released last month by E2.

The Southeastern United States has been one of the biggest beneficiaries of clean energy, battery, and electric vehicle (EV) related investments since the 2022 passage of the Inflation Reduction Act (IRA) with over 160 projects announced to the tune of over $65 billion and more than 58,000 new jobs, with Georgia, North Carolina, South Carolina seeing the largest investments. South Carolina alone has seen over $14 billion invested in these types of projects since 2022, creating over 14,000 jobs.

However, the recent uncertainty has led to the cancellation, downsizing, or pause of 14 clean energy, battery, and electric vehicle (EV) related projects in the Southeastern United States totaling nearly $8 billion and jeopardizing over 4,500 jobs, with Georgia and South Carolina being hit harder than other states in the region. For example, since January, the cancellations, downsizing, or pause of projects in South Carolina have totaled $2.1 billion, jeopardizing over 1,500 jobs.

With uncertainty surrounding the passage of the aforementioned tax, immigration, energy, and defense-related reconciliation mega bill working through Congress, along with continued multi-country trade negotiations, businesses must engage with their federal policymakers. The SC Chamber’s annual Washington Night serves as the perfect opportunity for South Carolina businesses to voice their opinions, hear directly from their members of Congress, and influence federal policy that can help their business thrive. Register today!

More info on the cancellation, downsizing, or pausing of clean energy-related projects across the country can be found here.

3. Job Market Especially Tough for Young Americans According to Data

Young people, especially those aged 20 to 24, are attempting to enter the workforce amid a particularly challenging job market. Despite the labor market holding steady and layoffs remaining low, the unemployment rate for recent college and high school graduates stands at 6.6% - the highest non-COVID level for this age group in a decade. In comparison, the national unemployment average is 4%, while the rate for individuals aged 35 to 44 is just 2.2%.

A slowdown in hiring is largely to blame for this discrepancy, as those already employed are generally not being laid off. However, for young people seeking their first full-time job, employers are hesitant to take a chance on individuals with limited work experience, with entry-level hiring having fallen by 17% since April 2019.

In South Carolina, however, plenty of opportunities exist with over 123,000 job openings in April, according to data from the Bureau of Labor Statistics (BLS). Jobseekers in South Carolina can check out the FindYourFuture.sc.gov website to find more information on the jobs available across the state and how to attain them.