House Passes the "One Big Beautiful Bill"
The House of Representatives passed the “One Big Beautiful Bill” on May 22nd in a party line vote after the Republicans negotiated several changes to the original drafting. While leadership in the House has urged the Senate to pass the measure with limited changes, the Senate has continually voiced their concerns over several of the House provisions. The bill has made significant progress this week in the House but there is still a lot of work to be done before the deadline set by the White House of July 4th.
Below represent the key adjustments to the bill allowing the package to advance from Matt McKinney, Senior Director of Tax Accounting Methods & Credits:
SALT Cap Adjustments
The SALT Cap as written in the new bill allows for an increase up to $40,000 of deductions with a phase down for taxpayers earning more than $500,000.
Energy Provisions
The bill as adjusted phases out certain clean energy tax credits more quickly than the original draft. The ITC and PTC credits under Sections 48E and 45Y will now effectively end with projects not placed in service by the end of 2028. These projects will also have to have begun construction by 60 days after the enactment of the final bill.
Sunset Date Announced: The 45L credit would no longer be available for homes acquired after December 31, 2025. However, there is a grace period: homes for which construction begins before May 12, 2025 would have until December 31, 2026 to qualify.
Other Provisions
The bill adjusted certain international provisions including the FDII deduction and the GILTI inclusion deduction. The BEAT tax rate was also adjusted in the final amendments.
The key business changes in the original House draft of the bill are left unchanged for the immediate expensing of research and experimentation costs and the return to 100% bonus depreciation. These provisions are broadly supported by both the House and Senate.
The Senate has expressed concerns about the bill passed by the House in the areas of the SALT Cap along with certain provisions that are left temporary. The backdrop to any adjustments made in the Senate will be the impact on the deficit as there are members in both houses that have concerns about the total cost of the reconciliation package. Taxpayers will need to watch as the Senate will begin the process of taking up the House bill when they return from the current recess.
