Sponsor
The bill offers targeted tax breaks to domestic manufacturers to encourage onshoring and investment, but it reduces federal revenue, adds compliance complexity, and primarily benefits business owners more than workers.
Owners of qualifying domestic manufacturing pass-throughs (domestic manufacturers) get a larger QBI deduction (30% rate and a 100% wage/owner limitation), lowering taxable income and increasing after-tax profits for those owners.
U.S. manufacturers that allocate ≥20% of COGS to U.S. labor/overhead are incentivized to onshore production, which can support manufacturing jobs and local economies.
Domestic manufacturing firms become more attractive to investment, potentially boosting capital expenditures and creating additional jobs in affected sectors.
All taxpayers face larger federal deficits or reduced public spending because widening deductions for qualifying businesses lowers federal tax revenue.
Taxpayers, government contractors, and the IRS will incur added compliance costs and complexity from new definitions, allocation rules, and forthcoming Treasury regulations required to implement the changes.
Higher-income owners of qualifying pass-throughs are likely to capture the bulk of the benefit, concentrating gains among owners rather than rank-and-file workers.
Based on analysis of 2 sections of legislative text.
Creates an enhanced QBI deduction for qualifying domestic manufacturers: increases the deduction rate to 30% and raises the wage-limit to 100%, with domestic-content tests.
Representative · R-WV
Official title: To amend the Internal Revenue Code of 1986 to enhance the qualified business income deduction for domestic manufacturers, and for other purposes.
Introduced May 12, 2026 by Carol Devine Miller · Last progress May 12, 2026
Creates an enhanced qualified business income (QBI) tax deduction for "qualified domestic manufacturers," boosting the deduction rate and loosening wage-based limits for eligible small businesses that manufacture tangible goods in the U.S. It also defines who counts as a qualified domestic manufacturer and directs Treasury to write implementing regulations. The changes increase the QBI deduction rate from 20% to 30% for qualifying taxpayers, raise the wage/owner-portion limit from 50% to 100% for those taxpayers, and adjust how taxable income is computed for purposes of the provision. The rules apply to taxable years beginning after December 31, 2025.