The One Big Beautiful Bill Act is a sweeping 400-page tax and budget reconciliation proposal. The House passed its version on May 22, 2025, and the Senate Finance Committee released its version on June 16, 2025. Both versions seek to permanently extend or modify expiring provisions of the Tax Cuts and Jobs Act (TCJA) of 2017, while eliminating many green energy credits from the Inflation Reduction Act.
Below is a structured comparison of the House and Senate versions:
Comparison Chart: House vs. Senate Versions
|
Provision
|
House Version | Senate Version |
Standard Deduction |
Permanent extension + temporary increases (2025–2028) + $4,000 for seniors |
Permanent extension + built-in increase starting 2026; no senior-specific boost |
SALT Deduction |
Raises cap to $40,000 for 2025, phasing up to 2033 | Keeps cap at $10,000; limits SALT workarounds |
Child Tax Credit |
$2,500 (2025–2028), then indexed; |
$2,200 indexed; no cap on refundable portion |
Estate Tax Exemption |
Increases to $15M, inflation-indexed | Same as House |
Tip Income Deduction |
Full deduction allowed (no cap) through 2028 | Deduction capped at $25,000, phased out above $150k/$300k AGI |
Overtime Income Deduction |
No cap, through 2028 | Capped at $12,500, phased out above $100k/$200k AGI |
Trump Accounts for Newborns |
$1,000 seeded, tax-favored accounts | Same as House |
Automobile Loan Interest Deduction |
Up to $10,000, through 2028 | Same as House |
Itemized Deduction Limitation (Pease) |
Reinstated for 37% bracket | Same as House |
Qualified Business Income (199A) Deduction |
Made permanent; increases to 23% | Made permanent; remains at 20% |
Bonus Depreciation |
100% through 2029 + special allowance for ag/chemical property | 100% made permanent; no special allowance |
R&D Expense Deduction |
Restores deduction 2025–2029 | Makes deduction permanent; allows small biz retroactive to 2022 |
International Tax Rates (FDII, GILTI, BEAT) |
FDII: 36.5%, GILTI: 49.2%, BEAT: 10.1% | FDII: 33.34%, GILTI: 40%, BEAT: 14%; adds CFC income/FTC changes |
Green Energy Credits |
Phase out or terminate after 2025–2026 | Terminates same credits but many as soon as 90 days after enactment |
IRS Direct File |
Terminates program in 30 days; mandates AI use for fraud detection | Also terminates Direct File; no AI mandate |
ERC Fraud Penalty |
Up to $200,000 (removed later by rule) | $1,000 per violation; no cumulative cap |
Key Shared Goals
- Permanently extend many TCJA provisions.
- Include new tax breaks for tips and overtime income.
- Terminate or reduce green energy tax credits.
- Increase estate tax exemption to $15 million.
- Extend or enhance business-friendly provisions (bonus depreciation, 199A deduction, Opportunity Zones).
- Raise the debt ceiling.
Key Points of Disagreement
- SALT Deduction: A major sticking point; House offers significant relief, Senate retains TCJA cap.
- Child Tax Credit Refundability: Senate offers a more generous approach (no cap).
- Green Energy Timeline: Senate’s cuts take effect sooner, especially for consumer-focused credits.
- Use of AI in IRS: House mandates AI; Senate omits this.
- 199A Deduction: House expands to 23%; Senate keeps at 20%.
- R&D Expenses: Senate’s retroactive provision benefits small businesses more.
The One Big Beautiful Bill Act represents the most substantial tax overhaul effort since the original TCJA. While both the House and Senate versions align on the core goal of extending tax cuts and reducing green energy incentives, they diverge significantly on key provisions—most notably the SALT deduction cap, child tax credit refundability, and timing of green energy credit phaseouts.
With a tight legislative timeline and narrow GOP majorities in both chambers, reconciling these differences will be critical. Negotiations will need to balance policy priorities, fiscal constraints, and political optics, especially with the debt ceiling fast approaching. Whether the July 4 goal is met remains uncertain—but the outcome will have lasting implications for both individual and business taxpayers.
Please contact WFY here for questions on how you or your business may be impacted from ‘The One Big Beautiful Bill’ Act. You can sign-up for our newsletter here to receive more updates.
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