Overview
On June 16, 2025, the Senate Finance Committee released its draft legislative text as part of the Senate’s version of the budget reconciliation legislation (the "Draft Senate Tax Bill"). The House of Representatives previously passed its version of the reconciliation legislation, the One, Big, Beautiful Bill Act (the "House Tax Bill") on May 22 on a 215-214 vote, with all Democrats and 2 Republicans voting against the legislation.
The Draft Senate Tax Bill includes several key differences as compared to the House Tax Bill, including:
- Permanent extension of the TCJA’s corporate tax provisions related to R&D, bonus depreciation, and interest deductibility rather than the 5-year extensions provided in the House Tax Bill.
- New taxes on third-party litigation funding.
- Delayed application of section 899, until 2027 for calendar-year taxpayers, and maximum increase in tax limited to 15% (5% each year).
- Numerous changes to the international tax rules, including the BEAT, FDII, and GILTI (renamed “Net CFC Tested Income”) regimes, certain foreign tax credit limitation and expense allocation provisions, rules for calculating pro rata shares of CFC income, and restoring the limitation on downward attribution.
- Longer phase out for many IRA energy tax credits, additional clarity on the foreign entity of concern (FEOC) restrictions, and restoration of transferability.
- Increase of the CHIPS Act’s Advanced Manufacturing Investment Credit.
- Making permanent the opportunity zone program by creating rolling, ten-year OZ designations and extension of the New Markets Tax Credit program.
- Permanent extension of section 199A pass-through deduction at the 20% rate rather than the 23% rate included in the House Tax Bill.
- Permanent extension of the current $10,000 state and local tax (SALT) cap rather than the $40,000 SALT cap included in the House Tax Bill and a key sticking point for House Republicans from New York and New Jersey to support the legislation. The Senate Finance Committee stated that the individual SALT provision is subject to additional negotiations. The Draft Senate Tax Bill does not include corporate SALT (C-SALT) provisions. Limits passthrough entity owners’ PTET deduction to the unused portion of their SALT deduction plus the greater of $40,000 of their allocation of the PTET or 50% of their allocation of the PTET; unlike House Tax Bill, the Draft Senate Tax Bill does not contain special limitations on the deduction of PTETs for owners of SSTBs.
- Income limitations on President Trump’s campaign provisions related to no taxes on tips and overtime pay.
- Smaller excise tax on private college endowments compared to the House Tax Bill.
- Increased charitable deduction for taxpayers who do not itemize but a more limited charitable deduction for taxpayers who itemize and for corporations.
The Senate Finance Committee’s release of Draft Senate Tax Bill completes the process for the Senate Committees that received reconciliation instructions to release reconciliation legislation. The Senate Committees are not expected to mark-up or vote on the legislation in Committee, but rather the Committees are expected to send the legislation to the Senate floor where additional amendments may be included, and a vote is anticipated before the July 4 recess.
President Trump, Senate Majority Leader Thune (R-SD), and Speaker Johnson (R-LA) are continuing to work towards a July 4 deadline to complete their work on the reconciliation legislation. Although that deadline is still possible, it is likely the work will continue into July and August, particularly as any Senate-passed bill is likely to include changes from the House-passed bill. Given the narrow margins in Congress and the push and pull among the various groups within the Republican caucus (such as the House Freedom Caucus urging deeper spending cuts vs. New York Republicans urging an increase in the SALT deduction), we think it is more likely that Congress will continue to work on the legislation into July and potentially early August and enact legislation before leaving for the August Congressional recess. The outside timeline is driven by the debt limit, which is likely to be addressed in the legislation.
Please click here for a chart summarizing significant provisions of the House Tax Bill and the Draft Senate Tax Bill.
