On July 1, 2025, the U.S. Senate advanced the “One Big Beautiful Bill Act” with a narrow 51–50 vote, with Vice President JD Vance casting the decisive tie-breaking vote. The vote followed more than 20 hours of negotiations and amendments, marking a significant step forward for the sweeping tax and spending legislation.
The bill now returns to the House where lawmakers must reconcile differences between the two versions before a final vote. Several House Republicans have expressed concerns over the Senate’s changes, particularly deeper Medicaid cuts and a larger projected deficit, warning that the revised bill could struggle to gain support from both Republican conservatives and vulnerable moderates.
This legislation spans more than 900 pages, with numerous amendments and last-minute changes made during the final hours of Senate debate. Aldrich will continue to monitor developments and provide timely updates as more details emerge, and the bill moves through the reconciliation process.
Senate Bill: Individual Tax Provisions
For individuals, the Senate-passed bill proposes a range of tax relief measures aimed at middle- and upper-income households. of the key changes include:
- Tax Rates and Brackets: The 2017 Tax Cuts and Jobs Act (TCJA) rates are made permanent, with additional inflation adjustments for certain brackets.
- SALT Deduction Cap: Temporarily increased to $40,000 through 2029, then reverts to $10,000 in 2030. A phase-down applies for taxpayers with modified adjusted gross income (MAGI) over $500,000.
- Tips and Overtime: Introduces deductions for tip income (up to $25,000) and overtime pay (up to $12,500), both phased out for higher-income earners.
- Standard Deduction: Permanently increased to $15,750 (single), $23,625 (head of household), and $31,500 (married filing jointly), adjusted for inflation.
- Senior Deduction: Introduces a $6,000 deduction for individuals aged 65 and older, with phase-outs starting at $75,000 MAGI ($150,000 for joint filers).
- Child Tax Credit: Increased to $2,200 per child, indexed for inflation.
- Estate and Gift Tax Exemption: Permanently increased to $15 million for single filers ($30 million for married couples), adjusted for inflation.
Senate Bill: Private Company Provisions
For private companies and their owners, the Senate bill offers a suite of provisions intended to stimulate investment, innovation, and domestic production. Key aspects of the Senate Bill include:
- Pass-Through Deduction (Section 199A): Made permanent, with expanded phase-in ranges for specified service trades or businesses (SSTBs).
- Bonus Depreciation: 100% bonus depreciation made permanent.
- Section 179 Expensing: Increased limit to $2.5 million, with a phase-out threshold at $4 million, both indexed for inflation.
- R&D Deduction: Full expensing for domestic research and experimentation expenditures made permanent under new Section 174A.
- Business Interest Limitation: Reverts to an EBITDA-based limitation, made permanent.
- SALT Workarounds for Pass-Throughs: Preserves the use of pass-through entity taxes (PTETs) for all pass-through entities.
- Incentives for Small Manufacturers and Domestic Production: Introduces a 100% depreciation for qualified production property and increases the advanced manufacturing investment credit rate from 25% to 35%.
- Business Loss Carryforwards: Disallows the conversion of excess business losses to net operating losses (NOLs), making the limitation permanent.
- Employee Retention Credit (ERC) Enforcement Measures: Imposes due diligence requirements for ERC promoters, with penalties for non-compliance, and prevents the IRS from issuing additional unpaid claims unless filed by January 31, 2024.
Side-by-Side Comparison: Current Law vs. House and Senate Bills
With both the House and Senate passing their own versions of the tax package, the legislative process now moves to the reconciliation phase—where lawmakers must bridge the gap between competing provisions. While the two bills share common goals, such as making the Tax Cuts and Jobs Act (TCJA) tax cuts permanent and encouraging domestic investment, they diverge on several key details. The chart below compares current law to what each chamber has proposed, highlighting the areas of alignment and the critical differences that negotiators must resolve before a final version can be enacted.
Comparison: Individual Tax Provisions
Provision | Current Law | House Bill | Senate Bill |
Tax Rates and Brackets | TCJA rates expire after 2025 | Makes TCJA rates permanent | Makes TCJA rates permanent with inflation indexing |
SALT Deduction Cap | $10,000 cap | Raises to $40,000 (2025–2029) with phase-down for high earners | Raises to $40,000 (2025–2029); reverts with phase-down for high earners |
Tips Income Deduction | Taxable | Full deduction through 2028; phased out based on income | Deductible up to $25,000 per return through 2028; phased out based on income |
Overtime Income Deduction | Taxable | Fully deductible through 2028; phased out based on income | Deductible up to $12,500 for single and $25,000 for joint filer, through 2028; phased out based on income |
Standard Deduction | $15,000 (single), $30,000 (MFJ) | Permanently increased to $16,000 (single), $32,000 (MFJ) with inflation adjustments | Permanently increased to $15,750 (single), $31,500 (MFJ) w/ inflation adjustments |
Senior Deduction | Additional standard deduction for 65+ | Adds $4,000 temporary deduction from 2025-2028 (age not defined); phased out at higher incomes | Adds $6,000 deduction for individuals aged 65+; phased out at higher incomes |
Itemized Deduction Limitation | No limitation | Creates a limitation for high income earners that caps the benefit at $0.32 per dollar vs the current $0.37
| Limits the benefit at $0.35 per dollar |
Child Tax Credit | $2,000 per child | Increases to $2,500 (2025–2028), then reverts | Permanent $2,200 per child; indexed for inflation |
Estate & Gift Tax Exemption | $13.61M (2024) | Raised to $15M with inflation adjustment | Same as House |
Comparison: Business Tax Provisions
Provision | Current Law | House Bill | Senate-Passed Bill |
Pass-Through Deduction (199A) | Expires after 2025 | Made permanent with increased deduction to 23% | Made permanent with no change percentage and increased availability for certain small businesses |
Bonus Depreciation | Phasing down to 40% in 2025 | 100% bonus through 2029 | 100% bonus depreciation made permanent |
Section 179 Expensing | $1.22M limit; $3.04M phaseout (2024) | Increased to $2.5M; phaseout at $4M | Same as House; both indexed for inflation |
R&D Deduction | 5-year amortization | Restored full deduction for domestic R&D for 5 years | Full expensing for domestic R&D made permanent under Section 174A with acceleration available for some previously capitalized costs |
Business Interest Limitation | EBIT-based | Reverts to EBITDA-based; 2025-2029 | Reverts to EBITDA-based permanently |
SALT Workarounds for Pass-Throughs | PTETs allowed | Eliminates for certain service businesses | Preserves PTETs for all pass-through entities |
Production Real Property Incentives | Generally depreciated over 39 years | Introduces 100% expensing for certain real property used in manufacturing | Same as House |
Business Loss Carryforwards | Convert to NOLs | Made permanent; disallows conversion to NOLs | Made permanent. Expanded to estates and trusts. |
Section 1202 | 5 year holding period for exclusion | No Change | Provides new incentives for three and four year holding periods and expands eligibility and the amount of gain that can be excluded |
ERC Enforcement | Open claims processing | Introduces promoter due diligence rules | Same as House plus cutoff for unpaid ERC claims filed after Jan 31, 2024 |
Disclosure
Tax planning and tax preparation services are provided by Aldrich CPAs + Advisors LLP, an affiliate of Aldrich Wealth LP. The tax information offered by Aldrich Wealth is general in nature and provided for informational purposes only and should not be construed as legal or tax advice. Tax advice and preparation is offered through Aldrich Advisors + CPAs. Always consult an attorney or tax professional regarding your specific legal or tax situation.
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