What Are The Tax Components
Of The Senate Version Of The One Big Beautiful Bill?
The Senate version of the “One Big Beautiful Bill Act” (OBBBA) includes several tax-related provisions, building on the House-passed version while introducing distinct changes. Below is a summary of the key tax components based on available information:
Business Provisions
100% Bonus Depreciation: Reinstates full first-year bonus depreciation for qualified property (e.g., equipment, machinery) through 2029 (2030 for certain property), extending TCJA provisions.
Section 199A Deduction: Permanently extends the 23% deduction for qualified business income, boosting small businesses.
R&D and Equipment Expensing: Permanently allows immediate deductions for research and development costs and equipment investments, enhancing business tax relief.
Excess Business Loss Limitation: Makes permanent the TCJA’s limit on noncorporate taxpayers’ business losses ($313,000 for single filers, $626,000 for joint filers in 2025, inflation-adjusted), with a new rule including prior years’ losses in calculations.
Charitable Contribution Limits: Introduces a 1% floor on C corporation charitable contribution deductions.
Retaliatory Tax Measures: Increases U.S. taxes by up to 20% on entities from countries imposing “unfair” foreign taxes (e.g., digital services taxes), targeting foreign governments and firms.
Enhancement of Qualified Small Business Stock Exclusion: The Senate enhancements include increasing asset threshold to $100 million, broadening the definition of qualified trades or businesses to include select activities in technology-driven agriculture, increasing the exclusion cap to $15 million or 12 times the adjusted basis, and introducing standardized reporting forms and safe harbor provisions to streamline compliance and reduce audit risks.
Individual Provisions
Permanent Extension of 2017 Tax Cuts and Jobs Act (TCJA) Provisions: The Senate bill makes permanent the individual tax brackets (top rate of 37%, bottom rate of 10%), the doubled standard deduction, and other TCJA provisions like the $750,000 mortgage interest deduction cap. These were set to expire at the end of 2025.
State and Local Tax (SALT) Deduction Cap: The Senate proposes maintaining the SALT deduction cap at $10,000, a placeholder for ongoing negotiations, unlike the House’s $40,000 cap for taxpayers with modified adjusted gross income below $500,000. This discrepancy may lead to further debate as the House insists on a higher cap. Child Tax Credit (CTC): The Senate version increases the CTC to $2,200 per child and makes it permanent, lower than the House’s temporary $2,500 increase through 2028.
Car Loan Interest Deduction: Allows deductions for interest on loans for U.S.-made vehicles, aligning with the House but with income-based phase-outs.
Seniors’ Tax Deduction: A $6,000 tax deduction for seniors is proposed, more generous than the House’s $4,000 temporary deduction (2025–2028) for those 65 and older.
No Tax on Tips and Overtime: The bill eliminates taxes on tips and overtime pay, with caps of $25,000 for tips and $12,500 for overtime deductions, phased out for incomes above $150,000 (individuals) or $300,000 (joint filers). The House version has no explicit caps.
Trump Accounts: Proposes after-tax savings accounts for children up to $5,000 annually, with withdrawals at age 18 for qualified expenses (e.g., education, home down payments) taxed at capital gains rates.
Tax Credits
Energy Tax Credit Rollbacks: The Senate proposes a slower phase-out of clean energy credits compared to the House: Eliminates clean electricity production (45Y) and investment (48E) credits for projects starting construction 60 days after enactment or placed in service after 2028, except for advanced nuclear projects.
Phases out the advanced manufacturing credit (45X) for wind components after 2027 and other components after 2031.
Repeals the clean hydrogen production credit (45V) for facilities starting construction after 2025.
Extends the clean fuel production credit (45Z) to 2031.
Maintains transferability for some credits (e.g., 45U nuclear credit) through 2031, unlike the House’s earlier termination.
The Congressional Budget Office estimates the bill could add $2.4–$5.7 trillion to the national debt by 2034, depending on whether temporary provisions are extended. Negotiations, particularly on SALT and Medicaid cuts, will likely shape the final version.
For the latest updates or bill text, check https://www.congress.gov or https://www.finance.senate.gov.
Galleros Robinson will provide updates on this topic as things progress.
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The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.