Last updated May 27 2025. The bill has cleared the House and now faces Senate negotiations, so details may still change.
1. A larger, permanent Section 199A deduction
The bill would raise the qualified business income deduction for pass‑through owners from 20 percent to 23 percent and lock it in permanently. Supporters estimate the higher rate could add 1 million Main Street jobs over the next decade. Ways and Means
Planning note: S‑Corporations, partnerships, and sole proprietors should revisit entity‑selection models and reasonable‑compensation studies to see whether the larger deduction tilts the scale toward or away from pass‑through status.
2. 100 percent bonus depreciation returns
Full expensing for most equipment and machinery would run from 19 January 2025 through 2029, instead of phasing down to 0 percent after 2026 under current law. Bipartisan Policy Center
Planning note: Accelerating capital purchases into the 2025–2029 window could generate immediate deductions and improve cash flow models.
3. Full R&D expensing is restored
Domestic research and development costs, currently amortized over five years, could again be deducted in full through 2029.
Planning note: Businesses that deferred or scaled back R&D in 2023‑2024 can reconsider those projects, especially if they also claim state R&D credits.
4. Interest deduction calculated on EBITDA, not EBIT
The pre‑2022 earnings‑before‑interest‑taxes‑depreciation‑and‑amortization standard would apply from 2025‑2029, allowing larger deductions on leveraged deals.
Planning note: Model debt‑to‑equity scenarios now; the five‑year sunset means lenders may shorten amortization schedules or adjust covenants.
5. Section 179 doubled and partial expensing for new factories
The immediate‑expensing cap under § 179 would jump to $2.5 million, with the phase‑out beginning at $4 million, both indexed for inflation. In addition, eligible manufacturing and processing structures placed in service before 2033 could be 100 percent depreciated if construction starts before 2029.
Planning note: Manufacturers planning green‑field sites or major build‑outs should align construction timelines with the qualifying window.
6. Less 1099 paperwork
The American Rescue Plan’s $600 Form 1099‑K trigger would be repealed; the pre‑2022 $20,000/200‑transaction standard returns. The separate Form 1099‑MISC threshold for contractor payments would rise from $600 to $2,000 and index for inflation starting 2026.
Planning note: Update vendor‑onboarding and payment‑platform settings to match the higher limits once effective.
7. SALT deduction changes affect owners in high‑tax states
The $10,000 cap would remain but a new $40,000 cap would apply to many filers, phasing down for incomes above $500,000. The bill also curtails some pass‑through “work‑around” regimes by counting certain state charitable contributions toward the cap.
Planning note: Entity‑level elective taxes that currently bypass the cap may lose some usefulness; model after‑tax cash flows in both scenarios.
8. Net operating loss (NOL) limits made permanent
The temporary TCJA ceiling on excess business losses ($313,000 single, $626,000 married in 2025, indexed thereafter) would never expire.
Planning note: Seasonal or capital‑intensive firms should monitor loss utilization strategies, including cost‑segregation and accounting‑method elections.
9. Larger estate‑tax exemption for family businesses
The bill would keep the “doubled” basic exclusion amount (about $13 million per person in 2025) in place beyond its scheduled sunset, protecting more closely held companies from liquidity crunches at succession. Ways and Means
Planning note: Re‑evaluate buy‑sell agreements, life‑insurance funding, and GRAT structures assuming the higher exemption may survive.
10. International tax rates stay lower
Preferential rates for GILTI (10.668 percent), FDII (13.335 percent), and BEAT (10.1 percent) would continue, while harsher BEAT rules would be rolled back.
Planning note: Multinationals should revisit IP location and foreign financing models but also watch for retaliatory foreign digital‑services taxes that could trigger the bill’s higher withholding rates.
11. New ceilings on deductions and compensation
- Corporate charitable contributions: A 1 percent‑of‑taxable‑income floor is added to the existing 10 percent ceiling.
- Executive pay: The $1 million deduction limit tightens by aggregating compensation across related entities and expands to more officers after 2027.
Planning note: Public companies and large nonprofits may need to restructure executive packages or increase charitable giving above the new floor to retain deductibility.
12. Clean‑energy credit rollback and a limited extension
Several Inflation Reduction Act clean‑energy incentives would be pared back, while the clean‑fuel production credit is extended through 2031 with stricter domestic‑content rules.
Planning note: Developers with pending solar, wind, or carbon‑capture projects should lock in “begin‑construction” milestones before any phase‑out dates are enacted.
What Happens Next
The Senate Finance Committee is drafting its own version, and key senators have hinted at changes to SALT, clean‑energy provisions, and the bill’s overall cost. Final passage will likely require a compromise package later this summer.
Curious on how to plan for the future. Contact us today at High Impact CPA and see how you can minimize your tax burden.
