Wolters Kluwer Tax and Accounting (TAA) has published a tax briefing on the Senate Finance Committee’s version of the 2025 budget reconciliation bill. The proposal, which follows the House’s narrow passage of its own version in May, includes sweeping changes to the tax code that could reshape the financial landscape for individuals and businesses alike.
The Senate’s draft of the “One Big Beautiful Bill Act” aims to make permanent many provisions from the 2017 Tax Cuts and Jobs Act (TCJA), while introducing new deductions and eliminating several green energy tax credits. With a self-imposed July 4 deadline and a looming debt ceiling, the pressure is on for lawmakers to reconcile the two versions.
Key Highlights from the Senate Proposal:
- Permanent Extension of TCJA Provisions: Retains lower individual tax brackets, expanded standard deductions, and the elimination of personal exemptions.
- New Deductions Introduced: Allows capped deductions for tip income ($25,000) and overtime pay ($12,500), with phaseouts based on income.
- Estate Tax Exclusion: Increases the basic exclusion amount to $15 million, adjusted for inflation.
- Business Incentives: Makes 100% bonus depreciation permanent and reinstates deductions for domestic R&D expenditures.
- Green Energy Rollbacks: Terminates a wide range of clean energy tax credits—including those for electric vehicles and residential energy improvements—on an accelerated timeline compared to current law, though generally with later effective dates than the House version.
- IRS Reforms: Terminates the Direct File program and imposes new penalties for fraudulent ERC claims.
Visit the following link to read the full report: https://engagetax.wolterskluwer.com/BudgetReconciliation2025.
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