One Big Beautiful Bill Act

May 27, 2025

House version of the bill - What's Next?

One Big Beautiful Bill Act – House version

By now, it may be well known that on May 22, 2025, the House of Representatives passed H.R. 1, One Big Beautiful Bill Act, a sweeping $3.8 trillion reconciliation package that includes a broad array of tax provisions affecting individuals, businesses, and international taxpayers.

The bill was approved by the House with a 215-214 vote, after long days and into the early morning hours of May 22, 2025.

The One Big Beautiful Bill Act is not yet final and is subject to modifications by the Senate.

While the House version of the bill is expected to undergo revisions in the Senate, we want to highlight the key tax provisions of the House bill as currently drafted. Note that this is not an all-encompassing list of all tax provisions on the House bill, only key highlights.

Key tax provisions

Business tax provisions

Provisions	Highlights
Bonus Depreciation	Restores 100% expensing for qualified property placed in service from Jan. 19, 2025, through Dec. 31, 2029, primarily for non-residential real property.
Sec. 179 Expensing	Increases the maximum amount a business may expense to $2.5 million, with a phaseout threshold raised to $4 million, both indexed for inflation after 2025.
Research & Development (R&D)	Allows full expensing of domestic R&D from Jan. 1, 2025, through 2029; amortization resumes in 2030. Taxpayers may choose from three options: (1) full expensing, (2) capitalization and amortization over a minimum recovery period of 60 months, or (3) capitalization and amortization over 10 years.
Business Interest Deduction	For 2025–2029, the limitation is calculated using EBITDA instead of EBIT.
Low-Income Housing Tax Credit	The 9% credit allocation is increased for 2026–2029, the bond-financing threshold for the 4% credit is lowered, and Indian and rural areas are designated as "difficult development areas."
Opportunity Zones	A new round of opportunity zones is created for 2027–2033, with revised eligibility and incentives, including special rules for rural areas.
Clean Energy & IRS Credits	Terminates or phases out several clean energy credits from the Inflation Reduction Act (IRA).

International tax provisions

Provisions	Highlights
GILTI & FDII	Preferential rates are permanently retained but slightly modified by reducing the Section 250 deduction by corporations from 50% to 49.2% for GILTI, and from 37.5% to 36.5% for FDII.
U.S. Virgin Islands	Excludes certain income for services performed in the U.S. Virgin Islands from tested income in calculating GILTI.
BEAT	The rate is permanently retained but slightly adjusted to 10.1%.
Section 899	Introduces countermeasures against discriminatory taxes imposed on U.S. businesses and individuals by foreign countries. These measures include potential increases in gross-basis withholding tax (up to 20%), disallowance of U.S. tax exemption for foreign governments, and add an interplay with the BEAT provisions.

The limited modifications to international tax proposals suggest a continued U.S. policy stance, integrating protections in the Code to address what is viewed as discriminatory taxation by other countries: UTPR under Pillar Two, digital services tax, diverted profits tax, and other “unfair” taxes on US persons.

Individual income tax provisions

Provisions	Highlights
Permanent Extension of Tax Rates & Brackets	The bill makes permanent the individual income tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA), including lower tax brackets and the increased standard deduction.
Standard Deduction	The nearly doubled standard deduction is made permanent, with an additional inflation adjustment and a temporary increase for 2025–2028 ($1,000 for single filers, $2,000 for joint filers).
Child Tax Credit	The credit increases from $2,000 to $2,500 per child, including a temporary enhancement for 2025–2028.
Sec. 199A Deduction	The 20% deduction for qualified business income from pass-through entities is made permanent and increased to 23% for tax years after 2025.
Estate & Gift Tax Exemption	The increased exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation.
SALT Deduction Cap	The cap is increased to $40,000 per household with a $500,000 income cap. Concerns remain that new bill language may prevent stakeholders in specified service-trade-businesses (SSTBs) from deducting state-level pass-through entity taxes (PTET), prompting advocacy efforts for modifications.
Charitable Deduction for Non-Itemizers	A temporary above-the-line deduction for charitable contributions is reinstated for 2025–2028 ($150 for single filers, $300 for joint filers).
No Tax on Tips & Overtime	For 2025–2028, above-the-line deductions are created for qualified tips (in certain occupations) and for overtime premium pay, subject to income and occupation limitations.
Enhanced Deduction for Seniors	For 2025–2028, a $4,000 deduction is available for seniors (age 65+) with income below $75,000 ($150,000 for joint filers).
Car Loan Interest Deduction	For 2025–2028, up to $10,000 of interest on loans for U.S.-assembled passenger vehicles may be deducted, subject to income phaseouts.
Moving Expense Deduction	The bill permanently terminates the deduction except for Armed Forces.
Miscellaneous Deductions	The bill makes permanent the elimination of miscellaneous deductions.
Personal Exemptions	Personal exemptions are permanently terminated.
Other Deductions & Credits	The bill makes permanent or enhances several deductions and credits, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits.

What is next?

The House version of the bill has now moved to the Senate, where senators will debate its provisions, and significant revisions are expected. As noted by members of the Senate Finance Committee, the upper chamber is unlikely to rubber-stamp the House version.

If the Senate passes the House version without changes, it will go directly to the President for approval.

If the Senate makes revisions, the House and Senate must reconcile differences in the Conference Committee, where negotiators work toward a final compromise. Once the revised bill is agreed upon, both chambers must vote again before sending the bill to the President. The process may be quick or prolonged, depending on the level of disagreement.

We will monitor developments closely and provide updates as the legislative process unfolds.

How you can prepare

We recommend reviewing your current tax strategy in light of these proposed changes.

Taking a proactive approach to identifying the most impactful provisions—both within this proposal and other aspects of the House bill—can provide valuable planning opportunities. Scenario modeling may help uncover strategies that save time, reduce costs, and mitigate potential missteps.

We help businesses and stakeholders navigate the complexities of tax with confidence and clarity. To that effort, we offer preliminary insights into how these tax proposals may affect your current profile, explore available strategies, and assess additional planning opportunities that merit further evaluation.

For more information or assistance, contact us.

Disclaimer:

The contents of this insight are intended for general information only. illumina CPA Group, Inc. is not, by means of this communication, rendering professional advice or services. Before making any decisions or taking any action that may affect your finances or your business, you should consult a qualified professional adviser.