FY25 U.S. Tax Bill

May 13, 2025

Ways and Means Chairman’s Revisions

An initial draft bill, a first peek.

The drafting of the U.S. tax bill is progressing, with House Ways and Means Committee Chairman Jason Smith (R-MO) releasing the first draft of proposals in two parts—on May 9 and May 12. This initial draft serves as a framework, offering a preliminary look at various tax proposals under committee consideration.

The formal drafting process is set to begin on May 13, 2025. The framework signals an intent to permanently extend several provisions currently scheduled to expire at the end of the year. Additionally, the first draft introduces new tax proposals affecting individuals, businesses, and international taxation.

Given the bill’s extensive 400-page scope, the committee has also released a section-by-section summary, while the Joint Committee on Taxation (JCT) has provided a technical description of the legislation.

Given the state of fluidity, we will share comments in the coming days on key business provisions relevant to the industries we serve as we continue to monitor modifications to this initial draft, which are likely before the bill is finalized.

Some notable provisions include:

Permanent extension of provisions set to expire at the end of the year.
Domestic R&D full expensing, with options to capitalize and amortize.
Increase in the SALT deduction cap and related modifications.
Significant enhancements to bonus depreciation, including expanded depreciation for qualified (non-residential) production property.
Permanent elimination of miscellaneous itemized deductions.
Reinstatement of the business interest deduction, with limitations computed based on taxable income before depreciation, amortization, and depletion.
Exclusion of certain income services performed in the U.S. Virgin Islands from tested income in calculating GILTI.
Retention of (1) the current BEAT rate of 10%, (2) the 50% deduction for GILTI, and (3) the 37.5% deduction for FDII.

Observations

While many provisions warrant further analysis, 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, including UTPR under Pillar Two, digital services tax, diverted profits tax, and other “unfair” taxes on US persons. The countermeasures would be implemented via the US withholding and other U.S. taxation mechanism.

This initial draft did not include proposals to modify taxation of carried interest. An area that has been raised in the past as being under consideration.

More updates to follow.

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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.