One Big Beautiful Bill

Congressional Republicans were able to meet their self-imposed July 4 deadline to pass their sweeping reconciliation measure.  The Senate passed the bill 51-50, with Vice President JD Vance breaking a tie and the House voted 218-214 to clear the measure for President Trump’s signature.  The bill would cost $3.4 trillion under traditional estimate while save about $400 billion under an alternative “current policy” model.  Key parts of Trump’s policy agenda were included:

• Permanently extending 2017 tax cuts
  • Cutting Medicaid and nutrition assistance
  • Phasing out Biden-era clean energy tax credits
  • Boosting funds for immigration and border security

Make provisions of Republicans’ 2017 tax law permanent, including:

• Lower individual income tax rates
• Enhanced standard deduction and child tax credit, which would be further boosted
• Higher estate and gift tax exemption
• Increased income exemption subject to AMT
• Raise SALT deduction cap for five years, starting at $40,000 and growing by 1% through 2029, then permanently reduce cap to $10,000
• Make 20% pass-through deduction permanent; create new $400 deduction for certain filers

Make permanent business tax breaks for R&D, depreciable property, and interest expenses

• Create deductions for tips, overtime, auto loans, seniors through 2028, with caps on tip, overtime deductions
• Boost advanced manufacturing tax credit, including for chipmakers, to 35% of investments, from 25%

Phase out clean electricity tax credits

• Wind, solar energy credits end in 2028 unless project construction begins within year of enactment
• Hydropower, nuclear, geothermal credits begin phasing out after 2033, end by 2036

Per the Tax Section of the Bill: 

Making 199A Qualified Business Income Deduction Permanent

• The bill makes the Section 199A tax deduction permanent, supporting our top tax goal. Section 199A, revised in 2018, offers up to a 20% deduction on qualified business income for certain pass-through entities.

Estate Tax Relief

• The bill permanently increases the unified estate and gift tax exemption to an inflation-indexed $15 million per individual and $30 million per couple for taxable years beginning after December 31, 2025.  Under current law, the 2025 estate and gift tax exemption is an inflation-indexed $5 million.

Restoring 100% Bonus Depreciation

• The availability of 100% bonus depreciation benefits, enabling essential investments in equipment and infrastructure without the burden of delayed tax benefits.  Current law states that qualified property has 40% bonus depreciation if put into service on January 1, 2025; 20% bonus depreciation if put into service on or after January 1, 2026; and no bonus depreciation if put into service on or after January 1, 2027.  The bill makes 100% bonus depreciation permanent.

Maintaining Section 179 Expensing

• Section 179 expensing allows for the immediate expensing of qualifying capital investments, allowing contractors to choose how to expense and depreciate their capital investments such as machinery and technology to promote investment and innovation in their operation.  The bill increases the maximum amount a taxpayer can expense under section 179 from a total expense amount of $1,250,000 and a phaseout threshold amount of $3,130,000 for tax year 2025 to $2,500,000 and $4,000,000 respectively for tax year 2026.

Extension of Clean Hydrogen Production Credit In a change from previous text, the bill extends the Section 45V Clean Hydrogen Production Tax Credit until January 1, 2028, instead of cutting it off at the end of this year.  After this credit was created in the Inflation Reduction Act of 2022.