Introduction

On May 22, 2025, the U.S. House of Representatives passed the “One Big Beautiful Bill Act” (the House Bill), which extends or makes permanent several tax provisions originally enacted under the 2017 Tax Cuts and Jobs Act (TCJA) and introduces a range of new measures. Notably, the legislation does not address the tax treatment of carried interests or modify capital gains rates, corporate tax rates, or the excise tax on stock buybacks.

The House Bill is now under Senate consideration, where significant changes may be made. As a result, the final contents of any enacted legislation remain uncertain.

This alert outlines key tax provisions in the House Bill related to businesses, individuals, cross-border activities, tax-exempt organizations, energy tax credits, and estates and trusts.

Business Tax Provisions

• Expansion of Section 199A Deduction: The bill permanently raises the Section 199A deduction for qualified business income of noncorporate taxpayers from 20% to 23%. It also extends the deduction for dividends paid by business development companies electing regulated investment company treatment.
• Reinstatement of 100% Bonus Depreciation: The bill restores full expensing for certain qualified property placed in service between January 20, 2025, and January 1, 2030, under Section 168(k).
• Broadened Business Interest Deduction: The bill reinstates the more favorable EBITDA standard for calculating the interest deduction limit under Section 163(j) for tax years beginning after December 31, 2024, and before January 1, 2030.
• Permanent Limitation on Excess Business Losses: The annual cap on excess business losses under Section 461(l) is made permanent ($313,000 for single filers and $626,000 for joint filers in 2025). Disallowed losses continue to carry forward as net operating losses, and future excess loss calculations must include prior disallowed losses.
• Increased Section 179 Expensing Limits: The bill raises the Section 179 expensing limit to $2.5 million, with the phase-out threshold starting at $4 million for property placed in service in 2025. Both thresholds are indexed for inflation in subsequent years.
• Full Deduction for Domestic R&D Expenses: New Section 174A allows immediate expensing of domestic research and development expenditures for tax years beginning after 2024 and before 2030. Taxpayers may alternatively elect to capitalize and amortize such costs over at least 60 months.
• Enhanced Opportunity Zone Program: The current program set to expire in 2026 is replaced with a modified version, featuring stricter eligibility, enhanced reporting, and increased incentives for rural investments.
• New Limits on Sports Franchise Amortization: The bill limits amortization to 50% (down from 100%) of the value of intangibles acquired in professional sports team transactions occurring after enactment.

Individual Tax Provisions

• Extension of Lower Income Tax Rates: The individual tax rate reductions under the TCJA, including the 37% top rate, are made permanent.
• Higher Cap on SALT Deduction: The bill permanently increases the cap on state and local tax deductions to $40,400, with a reduction based on income exceeding $505,000. It also restricts certain passthrough entities—such as financial services, law, and accounting firms—from utilizing state-level passthrough tax regimes starting in 2026.
• New Itemized Deduction Cap: Replacing the Pease limitation, the bill introduces a permanent cap limiting the value of each dollar of itemized deductions to $0.35 for taxpayers in the top tax bracket, effective for tax years beginning after 2025.

International Tax Provisions

• Adjusted GILTI and FDII Rates: The bill permanently sets the GILTI and FDII effective tax rates at 10.668% and 13.335%, respectively.
• Revised BEAT Rate: The base erosion and anti-abuse tax (BEAT) rate is permanently set at 10.1% starting in 2026, but increases to 12.5% for certain domestic corporations majority-owned by entities linked to discriminatory foreign countries.
• New Code Section 899: This provision imposes higher U.S. tax rates on certain income earned by residents and entities tied to “discriminatory foreign countries” that impose “unfair foreign taxes” on U.S. persons. The penalty rate increases in 5% annual increments up to a 20% maximum. Implementation is triggered by specific timelines related to the enactment of both the U.S. and foreign tax laws.

Tax-Exempt Organization Provisions

• Tiered Excise Tax for Private Foundations: Section 4940(a) is revised to impose higher excise tax rates on net investment income based on asset size—ranging from 2.78% to 10%.
• Tiered Excise Tax on University Endowments: Excise tax rates on net investment income of private colleges and universities increase to 7%, 14%, or 21%, based on their student-adjusted endowments.
• Broadened Definition of “Covered Employee”: The bill expands the scope of the excess compensation tax under Section 4960 to include all current and former employees of applicable organizations.
• Expanded UBIT Rules: Unrelated business income tax (UBIT) is extended to include transit and parking benefits as well as revenue from name or logo licensing by charitable organizations.
• Corporate Charitable Deduction Floor: A new 1% floor is imposed on corporate charitable deductions under Section 170.

Energy Tax Provisions

• Clean Electricity PTC and ITC Eliminated: Sections 45Y and 48E credits are generally repealed, with exceptions for projects started within 60 days of enactment and placed in service before 2029. Projects must also comply with new “prohibited foreign entity” (PFE) rules.
• Advanced Nuclear Facility Credit: Subject to accelerated termination but available for projects beginning before 2029, also subject to PFE rules.
• Clean Hydrogen PTC: Phased out early but remains available for projects with construction started before December 31, 2025.
• Carbon Sequestration Credit (45Q): Remains intact through its originally scheduled expiration under the Inflation Reduction Act (IRA), though transferability is eliminated for certain facilities.
• Advanced Manufacturing PTCs (45X):
  • Non-wind components: Phased out starting in 2030, subject to PFE rules and elimination of transferability after 2027.
  • Wind components: Terminated after 2027, with similar restrictions.
• Clean Fuel PTC (45Z): Maintained through scheduled expiration under the IRA, but also subject to PFE rules and transferability restrictions.
• Zero-Emission Nuclear PTC (45U): Available for projects beginning construction before 2032, subject to PFE rules.
• Geothermal Energy ITC: Phased out for post-2029 projects, but remains with similar restrictions and elimination of transferability.
• Residential Solar and Wind Property: No credits allowed under Sections 45Y or 48E for residential property leased to third parties, if the lessee would qualify for a Section 25D credit.
• Accelerated Termination of Several Credits: Includes:

1. Residential Clean Energy Credit (25D)
2. Energy Efficient Home Improvement Credit (25C)
3. New Energy Efficient Home Credit (45L)
4. Clean Vehicle Credit (30D)
5. Used Clean Vehicle Credit (25E)
6. Alternative Fuel Refueling Credit (30C)
7. Commercial Clean Vehicle Credit (45W)

Trusts and Estates Provisions

• Increased Estate and Gift Exemption: The bill permanently raises the exemption for estate, gift, and generation-skipping transfers to $15 million, indexed for inflation beginning in 2026.
• Permanency of Current Rate Schedules: The 37% top income tax rate for trusts and estates is made permanent, preventing a scheduled increase to 39.6%.
• Application of SALT Cap: SALT deduction limitations applicable to individuals under the bill also apply to trusts and estates.