Mechanical Insulation Legislative Update - June 26, 2020

An update from Government Affairs Director Chip Gardiner:

Insulators Union - Government Affairs Director - Chip Gardiner

Since last November when we first secured mechanical insulation tax incentives into the House Ways and Means GREEN bill discussion draft, we have been optimistic that the Mechanical Insulation tax incentives would be included as part of a larger infrastructure bill that the U.S House of Representatives would consider and approve. Our optimism was further increased when the Joint Committee on Taxation contacted us to get information that they needed to complete their economic/budgetary analysis for the Mechanical Insulation tax incentives.

I am pleased to share with you that we are very close to the day when the House will consider the infrastructure legislation that contains the Mechanical Insulation tax incentives. The morning of June 22, the House Democratic leadership released the bill language for the infrastructure bill (H.R. 2), and our Mechanical Insulation tax incentives are included as Section 90442. Here is the summary for the Mechanical Insulation tax incentives:

Sec. 90442. Labor costs of installing mechanical insulation property. The provision provides a credit for up to 10% of the labor costs incurred by a taxpayer in installing mechanical insulation property into a mechanical system which was originally placed in service not less than 1 year before the date on which such mechanical insulation property is installed. The credit is available for costs paid starting in 2021 through the end of 2025.

In addition to the specific Mechanical Insulation tax incentives, there are many other provisions in H.R 2 (Moving Forward Act) that will generate work for the Insulators. They include energy efficiency funds for public buildings, schools and hospitals.

The U.S. House will consider H.R. 2 next week with final approval expected on Thursday, July 2.

While infrastructure (and clean energy) legislation often enjoys bipartisan support, H.R. 2 will be approved with minimal House Republican support, and do not expect the U.S. Senate to approve.

While this House Democratic Infrastructure bill contains good public policy, H.R 2 is also a political document that states what House Democrats would like to do next year with a Biden Administration and Democratic Senate.

We would like to thank Congresswoman Linda Sanchez (D-CA) and her staff for their leadership and superb work to get the mechanical insulation tax incentives included into the infrastructure bill.

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