Articles / May 27, 2025

Future Forward (Powered by ACEC): The Tax Debate: A Pivotal Moment

Powered by:

The 2017 Tax Cuts and Jobs Act (TCJA) ushered in substantial changes to the American tax code, promoting economic growth and providing businesses with the tools needed to invest, expand and innovate. It has been a catalyst for the engineering industry’s stratospheric growth in recent years, which, in turn, has supported millions of direct and indirect jobs and injected billions of dollars into the overall U.S. economy. To paraphrase an often-misquoted line: what’s good for engineering is good for America.

Several key provisions of TCJA—including the 20 percent tax deduction for passthrough businesses and lower individual tax rates—are scheduled to sunset at the end of 2025. The engineering industry also is still fighting to restore essential deductions for research and development (R&D) expenses. Without action by Congress, the expiration of key parts of TCJA threatens to undermine the momentum that has propelled the U.S. economy—and the engineering industry—forward.

Read the Research

The ACEC Research Institute and Rockport Analytics recently concluded a comprehensive study on the impact TCJA has had on the engineering and design services sector. Not surprisingly, the authors found that the legislation created tremendous opportunity for our industry, and that by extending and enhancing TCJA provisions the engineering and design industry could generate an additional $108 billion in revenue between 2026 and 2029, supporting nearly 2 million jobs. Conversely, allowing key provisions to expire could result in 391,000 fewer jobs and $14 billion less in wages during the same period.

Tax incentives for engineering firms are more than just fiscal policy: they’re strategic investments in America’s future. Innovation is the lifeblood of America’s engineering industry and the beating heart of the American economy. And for this spirit of innovation to truly flourish, the government must create an environment that empowers businesses to pursue progress by encouraging risk-taking and rewarding ingenuity.

Central to fostering this innovation is the deductibility of R&D expenses and the continuation of the R&D tax credit. These provisions incentivize firms to invest in new systems and solutions that improve project outcomes and bolster America’s global competitiveness. Without the ability to fully deduct R&D expenses, firms are facing disincentives to innovate, slowing the pace of technological advancement and infrastructure improvement. The engineering industry needs Congress to restore R&D deductibility.

An Engineering Investment

The debate over tax policy can be polarizing at times, but there’s no denying the reality that TCJA was an investment—not a “giveaway.” The law enabled firms to hire and retain talent, invest in technology, and engage in the types of moonshot R&D that has the potential to save lives and better communities.

And that’s the case we’re making to Congress, which is debating the tax bill as I write this column. As the authors of the ACEC Research Institute study argue, extending the provisions of TCJA has broad benefits, both economic and human. The study found that firms primarily allocated their additional revenue from tax savings to “investments in people,” including increased wages, benefits and hiring. At a time when we’re experiencing an enormous talent-pool shortage, these investments are critical. It’s also important to remember that allowing TCJA provisions to expire would have a disproportionate impact on small firms, especially sole proprietorships, which are particularly vulnerable to tax increases.

By extending key provisions of the TCJA, Congress can ensure that America’s engineering firms continue to design the future with boldness and ingenuity. Engineering firms are not just building infrastructure—they’re building the foundation for America’s future from housing to clean water to safe roadways to manufacturing plant floors to hospitals and schools. With smart tax policy, engineering firms will continue to lead, innovate and inspire for generations to come.