On May 22nd, the House of Representatives approved an amended version of the budget reconciliation bill, sending it to the Senate for consideration. The bill, H.R. 1, known as the One Big Beautiful Bill Act, passed by a vote of 215 in favor, 214 opposed, with one member voting present.
The bill had been debated for more than 21 hours in the House Rules Committee, which then approved a revised version of the bill.
“NRF commends the House for passing this forward-thinking tax package and President Trump’s ‘One Big Beautiful Bill’ to provide much-needed relief for families and businesses across the nation. This legislation represents a clear commitment to fostering economic growth, stability and opportunity for all Americans,” the National Retail Federation (NRF) said in a statement.
“For retailers, predictability in the tax code is critical to maintaining competitiveness, investing in employees and delivering value to customers. By restoring key provisions that encourage investment and growth, this measure gives businesses the confidence they need to plan for the future and support their communities,” NRF continued.
Tax Changes in the Final House Bill
Below are tax-related provisions in the final bill that differ from the text of the bill that was approved by the House Ways and Means and Budget committees as stated in the Journal of Accountancy:
- SALT Cap: An increase in the limit on the federal deduction for state and local taxes (the SALT cap) to $40,000 per household ($20,000 for married taxpayers filing separately) starting in 2025. The deduction would be phased out for taxpayers with modified adjusted gross income (MAGI) over $500,000 ($250,000 for married taxpayers filing separately).
- Trump accounts: New tax-favored savings accounts for children, which the original text of the bill called “money account for growth and advancement,” or MAGA, accounts have had their name changed to “Trump accounts.”
- Itemized deductions: The bill would permanently remove the Sec. 68 overall limitation on itemized deductions (known as the Pease limitation) and would implement a two-pronged reduction.
- Contingent fees: The bill contains language under which Treasury “may not regulate, prohibit or restrict the use of a contingent fee in connection with tax returns, claims for refund, or documents in connection with tax returns or claims for refund prepared on behalf of a taxpayer.”
- Business loss carryforwards: The bill amends Sec. 461(l)(2) to provide that any excess business loss of a noncorporate taxpayer is carried forward as an excess business loss rather than being treated as a net operating loss (NOL).
- Low-carbon electricity production: The manager’s amendment would provide for a faster phaseout of existing tax credits for low-carbon electricity.
- Wind and solar leasing: The manager’s amendment would deny the Sec. 45Y clean-electricity production credit and the Sec. 48E clean-electricity investment credit for expenditures for wind and solar leasing arrangements.
- FDII and GILTI: Under the TCJA, after 2025, the foreign-derived intangible income (FDII) deduction was scheduled to be reduced from 37.5% of FDII to 21.875%, and the global intangible low-taxed income (GILTI) inclusion deduction amount was scheduled to be reduced from 50% to 37.5% under Sec. 250(a)(3).
- BEAT tax: The bill repeals the scheduled increase in the base-erosion and anti-abuse (BEAT) tax from 10% to 12.5% after 2025, and instead increases it to 10.1%
- Silencers: The manager’s amendment removes silencers from the definition of “firearm” under Sec. 5845 and sets the Sec. 5811 transfer tax rate on silencers at zero.
- Waiver of House rule on tax increases: The committee waived Clause 5(b) of House Rule XXI for purposes of voting on the bill.
A report by the Congressional Budget Office released on Tuesday estimated that the tax provisions of the bill — prior to the changes made in the manager’s amendment — would increase the federal deficit by $3.775 trillion over 10 years from 2025 through 2034.
