As the saying goes (with a slight modification): Nothing is certain except death and taxes – and the fact that the complicated American tax code will get more complicated.

Indeed, changes in taxing policy stand to affect what some businesses in the promotional products industry and at least certain of their clients pay in taxes for 2022, 2023 and beyond. Here’s a look at what’s in play.

1. Immediate Expensing of Capital Investments Is Ending
Tax reform dating to 2017 allowed businesses to completely expense capital investments on hardware like equipment and more for the tax year in which the investments were made. Now, however, this 100% immediate “bonus depreciation,” as it’s been called, will begin fading away. This year, businesses can only expense 80% of their capital investments. The other 20% has to depreciate over time.

Going forward, the percentage of capital investment that can be instantly expensed will continue to decline annually until disappearing after 2026. The reform that allowed for 100% expensing was designed to begin sunsetting in this manner. Still, advocates had hoped Congress would extend the full expensing; the federal legislators have not.

Proponents of the 100% immediate expensing allowance say it encourages company leaders to invest more in their businesses and is thus good for the economy. Detractors have criticized it as a corporate giveaway.

2. A New Corporate Minimum Tax & Stock Buyback Tax Take Effect
These taxes come into play in 2023. They were established by the Inflation Reduction Act that Congress passed last year.

Part of the act requires that publicly traded companies that buy back their shares pay a tax of 1% on the fair market value of the shares they have repurchased. The federal government is applying the tax specifically to total shares repurchased offset by the number of shares issued in a year. Buybacks that total less than $1 million annually won’t be taxed.

Meanwhile, a new 15% corporate minimum tax is being applied to companies that report financial-statement profits averaging at least $1 billion over three years. As a result of the levy, the average effective tax rate on corporate income will reportedly jump from 18.7% to 19.3%. The Tax Foundation, a nonprofit think tank, has said that industries that include mining and real estate could be among the hardest hit by this tax change.

Some promo executives have said the new corporate minimum tax and stock buyback tax could hurt the bottom lines of end-clients and result in them spending less on branded merchandise.

“The minimum tax will definitely make an impact to Fortune 100 companies that currently spend a lot of money on promotional products,” said Dilip Bhavnani, chief operating officer at Top 40 supplier Sunscope (asi/90075) and a member of Counselor’s Power 50 list of promo’s most influential people. “Will they look to cut spending in other areas to make up for these additional tax payments? If so, will they cut promo spend? My belief is that we will see a mixed bag, with some firms not making any changes and some making reductions.”

$313 billion
The amount the 15% corporate minimum tax is expected to raise over the next 10 years.

3. Bigger Companies Won’t Be Able To Deduct as Much of Their Interest Expenses
When companies take on debt, they typically pay interest on it. Tax law allows businesses to deduct those interest payments on their tax returns. However, starting for the tax year 2022, the amount of net business interest expense that companies can deduct has been reduced because firms are prohibited from adding back depreciation and amortization expenses in the calculation of adjustable taxable income (ATI).

A cap on net interest expense as a share of earnings came into play under the Tax Cuts and Jobs Act of 2017. It limited business interest expense to 30% of adjustable taxable income – but allowed the ATI calculation to include earnings before deductions for interest, taxes, depreciation and amortization.

With a stricter cap implemented in 2022, removing depreciation and amortization from the calculation, businesses doing their taxes over the next couple of months for last year could see a lower ATI and subsequently less of a business interest expense deduction than they would have experienced under the old formula, tax experts say.

“The change could cost corporations billions of dollars, added up across all the companies that will be affected,” The Washington Post reported.

On the bright side, there is a notable exception for America’s smaller businesses. Essentially, entities that have average gross receipts of $27 million or less for the three most recent tax years (and that are not tax shelters) are exempt from the 30% cap – and also then any of the changes in how it’s calculated.

4. Research & Development Expenses Must Now Be Deducted Over Multiple Years
Previously, companies could deduct the full amount of the R&D expenses they incurred in a year in that year’s tax return. No more. Starting in 2022 tax returns, companies have to spread the deduction out over a period of five years for domestic spending and 15 years for international spending. The 2017 tax reform established this change to counterbalance, to a degree, tax breaks the bill provided corporations.

Not surprisingly, major businesses across industries opposed the change and hoped Congress would extend the full R&D expense deduction, which had been in place since 1954. As with immediate capital expensing, Congress did not do so – a move that critics say will hurt more than just companies’ bottom lines.

“This change will cost well-paying jobs and reduce future innovation-directed R&D,” read a letter businesses, including 3M, parent company of Top 40 promo supplier 3M Promotional Markets (asi/91240), sent to Congress. “Requiring the amortization of research expenses will reduce R&D spending and lead to a loss of more than 20,000 R&D jobs in the first five years with the number of lost jobs rising to nearly 60,000 over the following five years. Moreover, when accounting for the spillover effect from R&D spending, nearly three times as many jobs will be affected.”