Friday, June 20, 2025
The Solid American Hardwood Tax Credit Act, presented on June 5 by U.S. Senator Cindy Hyde-Smith (R-Miss.), might help America’s beleaguered hardwood industry while also improving house energy efficiency. Through this proposed law, homeowners who buy solid hardwood goods made from deciduous trees that are grown and processed in the US would be eligible to get a federal tax credit.
By allowing individual taxpayers to claim solid hardwood goods manufactured in the United States as qualified home energy efficiency improvements under the Energy Efficient Home Improvement Credit, the Solid American Hardwood Tax Credit Act would supplement a House bill that was introduced in May. Credit would be available for any flooring, paneling, millwork, cabinet doors, cabinet facing, windows, or skylights manufactured and processed in the United States from deciduous trees. The National Hardwood Lumber Association is strongly supporting this Senate bill, which is a follow-up to a House version presented in May by Rep. Terri Sewell (D-Ala.) and House Agriculture Committee Chairman Glenn “GT” Thompson (R-Pa.).
Despite the forestry industry’s significance to the state’s economy, Mississippi’s hardwood industry has seen a dramatic decline nationwide. Over the past 26 years, the domestic hardwood-grade lumber market has shrunk from 6.5 billion board feet to fewer than 2 billion board feet. Imported hardwoods, which can have more harmful substances and carbon footprints than hardwoods cultivated in the US, are mostly to blame for this decline.
A costly bonus tax credit established in the Inflation Reduction Act (IRA) would be eliminated to offset the cost of the Solid American Hardwood Tax Credit Act, which would amend the Internal Revenue Code to qualify American hardwood products for the home improvement energy efficiency tax credits under Section 25c of the Internal Revenue Code. Only when union work standards are fulfilled can the IRA bonus credit offer larger incentives for carbon capture projects. Therefore, a clause that permits the federal government to choose winners and losers would be eliminated under the measure.
The Bill’s potential courses of action
The Solid American Hardwood Tax Credit Act proposes to:
Amend the Energy Efficient Home Improvement Credit under Section 25C of the Internal Revenue Code.
Allow individual taxpayers to claim a credit for purchases of qualified hardwood home products, including:
All must be made from American-grown and processed hardwood.
This move recognizes these products as legitimate energy efficiency improvements, potentially saving homeowners money while encouraging the use of domestically sourced, sustainable materials.
Reasons for its importance
The U.S. hardwood industry, particularly in states like Mississippi, has suffered a sharp decline over the past two decades. Domestic hardwood-grade lumber production has plummeted from 6.5 billion board feet to under 2 billion in the last 26 years—a staggering downturn fueled in part by imports that often include harmful chemicals and larger carbon footprints. “Mississippi’s sawmills and rural communities that depend on timber have been hit hard by the same economic challenges facing the entire industry. This bill is designed to support the domestic hardwood industry and the jobs it provides while making American-made hardwood products more affordable for families,” Hyde-Smith said.
A Transition to Environmentally Friendly and American-Made Materials
This legislation aligns with a March executive order from President Trump, which emphasized the need to expand American timber production and called for legislative action to strengthen forest management and reduce reliance on foreign wood products. Notably, the bill also proposes to offset its cost by repealing a bonus tax credit included in the Inflation Reduction Act (IRA). That bonus credit offers extra subsidies for carbon capture projects—but only if union labor requirements are met. Hyde-Smith argues this is a form of government overreach that “picks winners and losers” rather than creating a level playing field.
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