KPMG reports: Tax subtitle for “One Big Beautiful Bill”

The House of Representatives on May 22, 2025, passed H.R. 1 (House bill), the budget reconciliation bill known as the “One Big Beautiful Bill” (read TaxNewsFlash). On July 1, 2025, the Senate passed its version of H.R. 1 (Senate bill), which made various amendments to the bill, including changes to the tax subtitle that was included in the House bill (read TaxNewsFlash). On July 3, 2025, the House passed the Senate bill without amendment, and the bill was signed into law by President Trump on July 4, 2025. The descriptions of the provisions in the Senate bill below thus reflect the enacted provisions. 

The Joint Committee on Taxation (JCT) has provided a number of documents estimating the revenue effects of the various versions of the bill:

• JCX-26-25R, which estimates the revenue effects of the provisions of the Bill as passed by the House on May 22, 2025
• JCX-35-25, which estimates the Senate-approved bill using a present law baseline (the same baseline used for the estimates for the House bill provided above) that assumes that tax provisions of current law expire according to their terms
• JCX-34-25, which estimates the Senate-approved bill using a “current policy baseline” as adopted by the Senate, which assumes that tax policies currently in effect (such as the lower Tax Cuts and Jobs Act (TCJA) individual tax rates) are permanent and therefore extending those provisions has no revenue effect.

Both the House and Senate bills would generally make permanent the tax provisions of the TCJA. Both bills also would temporarily provide for tax benefits promised by the president for tip income, overtime pay, and auto loan interest, and introduce a host of revenue-raising provisions. However, the Senate bill differs from the House bill in several ways, as described below.

Among the important business provisions of the Senate bill are provisions that would:

• Reinstate and make permanent expensing of R&D costs, the higher EBITDA cap on the deduction for interest, and 100% bonus depreciation (the House bill would only extend these provisions for five years)
• Make permanent the section 199A deduction for passthrough business income (but at the current 20% rate instead of the higher 23% rate of the House bill)
• Renew and reform the Opportunity Zone program
• Add a 100% first-year depreciation deduction for real property used in a production activity (the House bill included a similar proposal)

Note that the House bill included a proposed retaliatory tax on certain foreign corporations under new section 899 that was removed in the Senate bill following the announcement of an agreement with the other G7 countries regarding the tax (read TaxNewsFlash).

The Senate bill also includes revenue-raising provisions that would:

• Repeal or phase out energy tax credits created by the Inflation Reduction Act (IRA) (though in some cases extending the credits further than the House bill)
• Make extensive reforms to the U.S. international tax regime, including to foreign-derived deduction eligible income (FDDEI), global intangible low-taxed income (GILT), and the base erosion anti-abuse tax (BEAT), and permanently extend the CFC look-through rule of 954(c)(6)
• Temporarily increase the $10,000 cap on the state and local tax (SALT) deduction to $40,000, with no significant changes to the treatment of passthrough entity taxes
• Impose a 1% tax on remittances to a recipient outside the United States (would have been 3.5% under the House bill)
• Increase taxes on college endowments (but at lower rates than those of the House bill and omitting a provision on private foundations)
• Bar the IRS from making payment on certain employee retention credit claims filed after January 31, 2024

For more information see “KPMG reports: Tax subtitle for “One Big Beautiful Bill”,” TaxNewsFlash, July 7, 2025. 

Special thanks to Mark J. Bade (CPA, GCMA, St. Louis, Missouri) for bringing this article to my attention.