Business Taxes
Senate releases draft of the “Big, Beautiful Bill”
The Senate released its draft version of the “Big, Beautiful Bill” on June 16. While this has not been passed by the Senate yet, when it does, the bill will need to be reconciled with the House bill before any final legislation emerges. Below, D+L Tax Principal Andrew Schmidt breaks down the key differences between the House and Senate versions of the bill.
Key Differences in House vs. Senate Versions of the Bill
Depreciation Provisions
Bonus Depreciation
- House: 100% expensing for qualifying property placed in service Jan. 19, 2025–Dec. 31, 2029
- Senate: Permanently restores full 100% expensing for equipment and depreciable assets, with no phase-out
Section 179 Expensing
- House: Raises cap to $2.5 million (phase-out at $4 million) for 2025–29, indexed for inflation
- Senate: Matches the $2.5 million/$4 million limits on a permanent, inflation-adjusted basis
Research & Experimental (R&E) Expensing (§ 174)
- House: Suspends amortization of domestic R&D costs for 2025–29, creating a temporary immediate-expensing regime
- Senate: Allows full, permanent expensing of domestic R&E costs; retains a 15-year amortization schedule for foreign R&E; adds an option to deduct unamortized R&E costs from prior years in one or two years
Qualified Business Income (§ 199A)
- House: Makes a 23% deduction permanent, expands eligibility and phase-out thresholds
- Senate: Retains a 20% deduction and adds a $400 minimum deduction
Business Interest Limitation (§ 163(j))
- House: Reverts to an EBITDA-based definition of Adjusted Taxable Income (adding back depreciation/amortization) for 2025–29
- Senate: Permanently restores the pre-2022 EBITDA-based ATI definition by removing the expiration date on the depreciation/amortization add-back
Energy Credits & Section 179D
Wind/Solar Credits
- House: Accelerates expiration of wind, solar, and storage credits to 2028, with strict project-start deadlines and a 2025 sunset for residential credits
- Senate: Phases out wind and solar credits over two years (elimination by 2028) while extending incentives for hydro, nuclear, and geothermal into the mid-2030s
Section 179D Deduction
- House: Retains the existing deduction for energy-efficient commercial buildings
- Senate: Repeals Section 179D for projects whose construction begins more than 12 months after enactment
SALT & Pass-Through Entity Tax (PTET)
- House: Raises the SALT cap to $40,000 (phases out above certain AGI thresholds) and limits PTET deductions for most service-based pass-throughs
- Senate: Keeps the individual SALT cap at $10,000; preserves PTET deductions but caps each owner’s benefit at their $10,000 SALT cap plus the greater of $40,000 (or $20,000 MFS) or 50% of PTET paid
Other Standalone Provisions
Child Tax Credit
- House: $2,500/child through 2028, then $2,000
- Senate: $2,200/child through 2028, indexed for inflation
Senior Deduction
- House: $4,000 for 65+ taxpayers (phases out at 4% of MAGI), expires after 2028
- Senate: $6,000 for 65+ taxpayers (phases out at 6% of MAGI) through 2028
Additional
- Both versions include provisions for no taxes on tip income and certain overtime income.
- Both versions increase the estate tax exemption to $15MM (indexed for inflation).
- Both versions extend the 2017 tax rate structure (top rate 37%) for individuals.
- Both versions include no change to the 21% corporate tax rate (directly).
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