The Senate Finance Committee on Monday released its version of proposed tax provisions to be included in the budget reconciliation bill being considered by Congress. The House of Representatives passed its version of the bill, H.R. 1, known as the One Big Beautiful Bill Act, in May. The Senate is considering its own version of the bill, which has to meet certain criteria to be exempt from the Senate’s filibuster rules and therefore eligible to be passed on a majority vote.

Many tax provisions in the Senate Finance Committee’s version of the bill are similar to tax provisions in the bill that passed the House. For example, like the House bill, the Senate bill would repeal various clean-energy credits and incentives that were enacted as part of the Inflation Reduction Act of 2022, P.L. 117-169.

Although the text of the proposed bill runs to 549 pages, the text is apparently not complete. One section of the bill is marked “reserved” — a section labeled “tax treatment of certain international entrepreneurs.” And while the Senate version of the bill retains the House bill’s provision creating Trump savings accounts, the Finance Committee says that “further refinements to the text included in the House-passed H.R. 1 with respect to the Trump accounts program continue to be developed and finalized in coordination with the Trump Administration.”

And although the bill retains the $10,000 state and local tax deduction limit (SALT cap), the Senate Finance Committee’s explanation of the bill says that “the amount of the individual SALT cap is the subject of continuing negotiations.”

Here’s a look at the key tax provisions in the Senate’s proposed legislative language that differ from the bill that passed the House.

Provisions for individuals

Tax rates: Like the House bill, the Senate bill would make permanent the tax rates enacted in 2017 in the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. The bill would add an additional year of inflation adjustment to the 10%, 12%, and 22% individual tax brackets.

Standard deduction: Like the House bill, the Senate bill would make the TCJA’s increased standard deduction amounts permanent. For tax years beginning after 2025, the standard deduction would increase to $16,000 for single filers, $24,000 for heads of household, and $32,000 for married individuals filing jointly. The standard deduction would be adjusted for inflation after that.

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Personal exemptions and senior deduction: Like the House bill, the Senate bill would permanently set the deduction for personal exemptions at zero. The Senate bill would provide a temporary $6,000 deduction for individual taxpayers who are age 65 or older. The House bill provided a temporary $4,000 “senior bonus” deduction for those individuals. The Senate’s senior deduction would begin to phase out when a taxpayer’s modified adjusted gross income (MAGI) exceeds $75,000 ($150,000 in the case of a joint return). It would be in effect for the years 2025 through 2028.

SALT cap: The current law caps an individual’s state and local tax deduction at $10,000. The House bill originally would have increased that to $30,000; however, the manager’s amendment approved by the House increased the cap to $40,000 per household ($20,000 for married taxpayers filing separately) starting in 2025. The Senate version of the bill would retain the current $10,000 cap, but, as noted above, this provision is still being negotiated. The Senate bill would also implement changes to prevent taxpayers from avoiding the SALT cap.

The bill would provide a list of taxes subject to the SALT cap (“specified taxes” and passthrough entity taxes (PTETs)) and a list of taxes not subject to a SALT cap (“excepted taxes”). It would provide that certain payments that substitute for specified taxes are also subject to the SALT cap, and it would require partnerships and S corporations to treat specified taxes and PTETs as separately stated items. The bill would impose an addition to tax in certain cases where a partnership makes a state or local tax payment, one or more partners receive a state or local tax benefit, and the allocation of the tax payment differs from the allocation of the tax benefit. It would prevent the capitalization of specified taxes and would grant Treasury authority to issue regulations to prevent avoidance of the SALT cap.

The House bill also included a provision that would have barred owners of specified trades or businesses (SSTBs) (borrowing the definition from the qualified business income (QBI) deduction under Sec. 199A) from claiming any deduction for PTETs. The Senate version does not include the same provision. Rather, it limits all passthrough entity owners’ PTET SALT 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.

In reaction to the House bill’s version of this measure, AICPA President and CEO Mark Koziel, CPA, CGMA, called the PTET changes “unfair” to affected passthrough businesses, including accounting firms.

Child tax credit: The Senate bill would increase the amount of the nonrefundable child tax credit to $2,200 per child beginning in 2025 (a different amount from the House bill) and would index the credit amount for inflation. The bill would also make permanent the $1,400 refundable child tax credit, adjusted for inflation. It would also make permanent the increased income phaseout threshold amounts of $200,000 ($400,000 in the case of a joint return), as well as the $500 nonrefundable credit for each dependent of the taxpayer other than a qualifying child.

QBI deduction: TheSenate bill would make the Sec. 199A deduction for QBI permanent. It would expand the Sec. 199A deduction limit phase-in range for SSTBs and other entities subject to the wage and investment limitation by increasing the $50,000 amount for non-joint returns to $75,000 and the $100,000 amount for joint returns to $150,000.

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The bill would also introduce an inflation-adjusted minimum deduction of $400 for taxpayers who have at least $1,000 of QBI from one or more active trades or businesses in which they materially participate.

The House bill would raise the QBI deduction rate from 20% to 23%. The Senate would keep the rate at 20%.

Estate and gift tax exemption amounts: The Senate bill would permanently increase the estate tax exemption and lifetime gift tax exemption amounts to $15 million for single filers ($30 million for married filing jointly) in 2026 and index the exemption amount for inflation after that.

Alternative minimum tax exemption: The Senate bill would permanently extend the TCJA’s increased individual alternative minimum tax exemption amounts and revert the exemption phaseout thresholds to their 2018 levels of $500,000 ($1 million in the case of a joint return), indexed for inflation.

Mortgage interest deduction: The Senate bill would permanently extend the TCJA’s provision limiting the Sec. 163 qualified residence interest deduction to the first $750,000 in home mortgage acquisition debt. It would also make permanent the exclusion of interest on home-equity indebtedness from the definition of qualified residence interest. The Senate bill would also treat certain mortgage insurance premiums on acquisition indebtedness as qualified residence interest.

Casualty loss deductions: Under the Senate bill, the TCJA’s provision limiting the itemized deduction for personal casualty losses to losses resulting from federally declared disasters would become permanent, but the bill would expand the provision to include certain state-declared disasters.

Miscellaneous itemized deductions: The Senate bill would make permanent the TCJA’s suspension of the Sec. 67(g) deduction for miscellaneous itemized deductions but would remove unreimbursed employee expenses for eligible educators from the list of miscellaneous itemized deductions.

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Itemized deductions limitation: The bill would permanently remove the Sec. 68 overall limitation on itemized deductions (known as the Pease limitation) and replace it with a new overall limitation on the tax benefit of itemized deductions. For individual taxpayers in the highest tax bracket, the provision would cap the value of each dollar of otherwise allowable itemized deductions at 35 cents.

Wagering losses: The Senate bill would amend Sec. 165(d) to clarify that the term “losses from wagering transactions” includes any deduction otherwise allowable under Chapter 1 of the Code incurred in carrying on any wagering transactions. The bill would limit the term “losses from wagering transactions” to 90% of the amount of those losses, and losses would be deductible only to the extent of the taxpayer’s gains from wagering transactions during the tax year.

No tax on tips: The Senate bill would provide a deduction of up to $25,000 for qualified tips received by an individual in an occupation that customarily and regularly receives tips. The deduction would be allowed for both employees receiving a Form W-2, Wage and Tax Statement, and independent contractors who receive Form 1099-K, Payment Card and Third Party Network Transactions, or Form 1099-NEC, Nonemployee Compensation, or who report tips on Form 4317, Social Security and Medicare Tax on Unreported Tip Income. The deduction would be an above-the-line deduction and, therefore, available for taxpayers who claim the standard deduction or itemize deductions. The deduction would begin to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). This temporary deduction would be available for tax years 2025 through 2028. A transition rule would allow employers required to furnish statements enumerating an individual’s tips for tax year 2025 to use “any reasonable method” to estimate designated tip amounts.

No tax on overtime: The Senate bill would provide an above-the-line deduction of up to $12,500 ($25,000 in the case of a joint return) for qualified overtime compensation received by an individual during a given tax year. The deduction would begin to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). The bill defines qualified overtime compensation as overtime compensation paid to an individual required under Section 7 of the Fair Labor Standards Act of 1938that is in excess of the regular rate (as used in that section) at which the individual is employed. Overtime deductions would only be allowed for qualified overtime compensation if the total amount of qualified overtime compensation is reported separately on Form W-2. This temporary deduction would be available for tax years 2025 through 2028.

Child and dependent care credit: The Senate bill would permanently increase the amount of the child and dependent care tax credit from 35% to 50% of qualifying expenses. The credit rate would phase down for taxpayers with adjusted gross income over $15,000.

Sec. 529 plans: The Senate bill would allow tax-exempt distributions from Sec. 529 savings plans to be used for additional educational expenses in connection with enrollment or attendance at an elementary or secondary school. The bill would also allow tax-exempt distributions from 529 savings plans to be used for additional qualified higher education expenses, including “qualified postsecondary credentialing expenses.”

Charitable contribution deduction: The Senate bill would create a charitable contribution deduction for taxpayers who do not elect to itemize, allowing nonitemizers to claim a deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly for certain charitable contributions. For itemizers, the bill would impose a 0.5% floor on the charitable contribution deduction: The amount of an individual’s charitable contributions for a tax year is reduced by 0.5% of the taxpayer’s contribution base for the tax year. For corporations, the floor would be 1% of the corporation’s taxable income (up to the current 10% limit).

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Business provisions

Bonus depreciation: The Senate bill would permanently extend the Sec. 168 additional first-year (bonus) depreciation deduction. The allowance would be increased to 100% for property acquired and placed in service on or after Jan. 19, 2025, as well as for specified plants planted or grafted on or after Jan. 19, 2025. The House bill would have implemented 100% bonus depreciation from Jan. 19, 2025, through the end of 2029.

Sec. 179 expensing: The Senate bill would increase the maximum amount a taxpayer may expense under Sec. 179 to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million.

Research-and-development expenses: The Senate bill would allow taxpayers to immediately deduct domestic research or experimental expenditures paid or incurred in tax years beginning after Dec. 31, 2024. However, research or experimental expenditures attributable to research that is conducted outside the United States would continue to be required to be capitalized and amortized over 15 years under Sec. 174.

Small business taxpayers with average annual gross receipts of $31 million or less would generally be permitted to apply this change retroactively to tax years beginning after Dec. 31, 2021. And all taxpayers that made domestic research or experimental expenditures after Dec. 31, 2021, and before Jan. 1, 2025, would be permitted to elect to accelerate the remaining deductions for those expenditures over a one- or two-year period.

Limitation on business interest: The Senate bill would reinstate the EBITDA limitation under Sec. 163(j) for tax years beginning after Dec. 31, 2024. Therefore, for purposes of the Sec. 163(j) interest deduction limitation for these years, adjusted taxable income would be computed without regard to the deduction for depreciation, amortization, or depletion. The bill would also modify the definition of “motor vehicle” to allow interest on floor plan financing for certain trailers and campers to be deductible.

Special depreciation allowance for qualified production property: The Senate bill would allow an additional first-year depreciation deduction equal to 100% of the adjusted basis of “qualified production property.” Qualified production property is generally nonresidential real property used in manufacturing.

Advanced manufacturing investment credit: Under the Senate bill, the advanced manufacturing investment credit rate would increase from 25% to 30%, effective for property placed in service after Dec. 31, 2025.

Employer-provided child care credit: The Senate bill would increase the Sec. 45F employer-provided child care credit from $150,000 to $500,000 and the percentage of qualified child care expenses from 25% to 40%. The rate would be 50% for qualifying small businesses (meeting the gross-receipts test under Sec. 448(c) using a five-year, rather than a three-year, average of gross receipts).

Opportunity zones: The Senate bill would make opportunity zones permanent but with several changes, including narrowing the definition of “low-income community.” The changes would take effect Jan. 1, 2027.

International provisions

Foreign tax credit: The Senate bill would limit the deductions of a U.S. shareholder allocable to income in the global intangible low-tax income (GILTI) category when determining its foreign tax credit limitation. It would also modify the determination of deemed paid credit for taxes properly attributable to tested income and change the rules for sourcing certain income from the sale of inventory produced in the United States.

GILTI and FDII: The Senate bill would decrease the Sec. 250 deduction percentage for tax years beginning after Dec. 31, 2025, to 33.34% for foreign-derived intangible income (FDII) and 40% for GILTI, resulting in an effective tax rate of 14% for both FDII and GILTI. The bill also proposes changing the definition of deduction-eligible income for purposes of determining FDII. The bill would also eliminate the use of a corporation’s deemed tangible income return for determining FDII and the use of net deemed tangible income return in determining GILTI. These changes would then result in the elimination of the terms FDII and GILTI, which would be renamed “foreign-derived deduction eligible income” and “net CFC tested income,” respectively.

BEAT: The Senate bill would make various changes to the current base-erosion and anti-abuse tax (BEAT). These changes would include adjustments to the calculation of the base-erosion minimum tax amount, exempting certain payments that are subject to sufficient foreign income tax from treatment as base-erosion payments, and reducing the base-erosion percentage threshold from 3% to 2%.

Business interest limitation: The Senate bill would provide that the Sec. 163(j) business interest limitation would be calculated prior to the application of any interest capitalization provision. The bill would also exclude Subpart F and GILTI inclusions and the associated Sec. 78 gross-up amounts, as well as amounts determined under Sec. 956, from a taxpayer’s adjusted taxable income for purposes of Sec. 163(j).

Unfair foreign taxes: The Senate bill would impose increased rates of tax (up to 15%) on certain affected taxpayers connected to countries that are deemed to impose unfair foreign taxes. The affected taxpayers would include foreign governments, resident individuals, resident corporations, resident foreign private foundations, and entities owned by such persons. The bill would also subject certain domestic entities owned by a tax resident of an offending foreign country to certain modifications to the BEAT that would expand the scope of entities subject to the BEAT.

Administrative changes

Employee retention credit enforcement: The Senate bill would require employee retention credit (ERC) promoters to comply with due diligence requirements with respect to a taxpayer’s eligibility for (or the amount of) an ERC. The bill would apply a $1,000 penalty for each failure to comply. It would also extend the penalty for excessive refund claims to employment tax refund claims. It would also prevent the IRS from issuing any additional unpaid claims under Sec. 3134, unless a claim for a credit or refund was filed on or before Jan. 31, 2024.

Earned income tax credit: The Senate bill would create a new earned income tax credit (EITC) certification program for tax years after 2027 (with transition rules beginning in 2024) to allow the IRS to detect and manage duplicative EITC claims.

— Alistair M. Nevius, J.D., is a freelance writer in North Carolina. To comment on this article or to suggest an idea for another article, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Updates on individual tax and business tax are among the many topics on the agenda at the AICPA & CIMA National Tax Conference, Nov. 17–18 in Washington, D.C., and online.

© Jason Yoder – stock.adobe.com

The latest version of a new federal spending plan will avoid the largest tax increase in history, but would be devastating to health care across the country, according to the analyses of supporters and opponents.

Lawmakers and advocates for various causes have sustained a running public debate about the provisions, including possible cuts to Medicaid, in the One Big Beautiful Bill Act, now up for debate in the Senate.

The Senate Finance Committee released its portion of the reconciliation bill that would make permanent the 2017 tax cuts approved in the first term of President Donald J. Trump. The bill would block a tax hike of more than $2.6 trillion on households earning less than $400,000 a year, and avoid a $1,700 tax hike on an average family of four, said an information sheet by Senate Finance Committee Chair Sen. Mike Crapo (R-Idaho). That committee published its portion of the bill late June 16.

In health care, Crapo listed more than a dozen “Commonsense Medicaid Reforms” that will make the program more fiscally sustainable. There would be work requirements for able-bodied adults who are choosing not to work and not caring for dependent children or elderly parents. Illegal immigrants would not qualify for benefits. The bill would end Medicaid “financing gimmicks” that increase federal spending by freezing and reducing provider taxes.

The bill also would stop pharmacy benefit managers from overcharging for prescription drugs.

“This bill prevents an over-$4 trillion tax hike and makes the successful 2017 Trump tax cuts permanent, enabling families and businesses to save and plan for the future,” Crapo said in a news release.

“It delivers additional tax relief to middle-class families still recovering from record inflation under the Biden administration,” he said, referring to the prior president. “It powers the economy by permanently extending critical pro-growth provisions and introduces new incentives for domestic investment, providing certainty for American job creators to spur domestic economic activity and invest in their workers.”

Class war in progress

Crapo’s counterpart on the Finance Committee, Ranking Member Sen. Ron Wyden (D-Oregon), called the legislation a “class war” that will hurt working Americans to give larger handouts to the wealthiest people.

“The biggest winners here are wealthy corporations who would get hundreds of billions of dollars in additional tax breaks on top of what they got in the House Republican bill,” Wyden said in a news release.

“Senate Republicans would pay for those new corporate tax breaks by making even deeper cuts to Medicaid, slashing funding for rural hospitals and other essential health care providers and throwing cash-strapped states off a funding cliff,” he said. “If those Medicaid cuts weren’t damaging enough, this bill would endanger hundreds of thousands of clean energy jobs and take food out of the mouths of millions of children.”

Expanding HSAs, rural health

The House of Representatives has approved its version of the bill. A leader there noted the bill will expand on the Health Savings Acount (HAS) model to reduce medical expenses. That will allow up to 20 million patients more flexibility in spending their health care dollars, said a statement from House Ways & Means Committee Chair Rep. Jason Smith (R-Missouri).

The bill would make permanent the flexible Individual Coverage Health Reimbursement Arrangements policy established during the president’s first term. It also would expand the federal Rural Emergency Hospitals designation, Smith said.

“The Democrats’ one-size-fits-all approach to health care has been an historical failure — hiking costs up, driving quality down, and stripping Americans of choices,” Smith said. “Under The One, Big, Beautiful Bill, we are improving the availability of health care in America — including for those in rural communities.

“Increased access to HSAs and Health Reimbursement Arrangements will empower small businesses and help individuals to take control of their health care, better manage those expenses, and seek out insurance coverage that actually meets their needs,” he said.

Effects on physicians

Some medical organizations issued statements that did not sound convinced about potential positive changes in health care under the bill.

The Medical Group Management Association issued a concise, blunt assessment of the Senate legislation — and it’s not good news for physicians or their patients.

“Legislative language emerging from the Senate abandons America’s physician practices by ignoring current and future cuts to Medicare reimbursement,” said the statement by Anders Gilberg, MGMA senior vice president, government affairs.

“It largely retains problematic student loan provisions from the House bill, which will exacerbate physician workforce shortages,” Gilberg said. “The Senate’s proposed additional Medicaid cuts will result in skyrocketing uncompensated care, compounding financial problems for physicians treating patients in underserved areas and hospitals subject to EMTALA,” the federal Emergency Medical Treatment & Labor Act.

“In its current form, the bill offers little or nothing positive for medical practices and their patients,” he said.

No money for doctors

If approved, the legislation would mean an $81 billion spending cut for physicians from 2025 to 2034, according to an analysis by the Urban Institute with support from the Robert Wood Johnson Foundation (RWJF). The organizations published a breakdown for declines in health care spending and what it would mean for doctors, hospitals, prescription drugs and other health care services. California, Florida and New York would fare the worst for physician spending decreases.

Hospital spending would drop by $321 billion, while prescription drug spending would decline by $191 billion for the same period. Meanwhile, the value of uncompensated care for uninsured patients would increase by $24 billion for physicians, $63 billion for hospitals, and $41 billion for prescription drugs, also for the period 2025 to 2034, according to that analysis.

“The Medicaid cuts Congress is considering would be the largest funding reduction in the program’s history, and it is hard to overstate just how devastating the impacts would be,” RWJF Senior Policy Adviser Katherine Hempstead said in a news release. “Such drastic changes to Medicaid financing would have ripple effects that go well beyond people covered by the program, further squeezing hospitals, limiting access to care for entire communities, and destabilizing state and local economies.”

Where is physician reimbursement?

David Jakubowicz, MD, president of the Medical Society of the State of New York, said the Senate bill “plans to double down on the harm to our health care system” by cutting Medicaid. The House version at least started to address Medicare cuts to physician reimbursement, but the Senate bill left that out, he said in a statement.

“Hospitals get an inflationary adjustment. Even Medicare Advantage Plans under criminal investigation get an inflationary adjustment. But physicians keep getting pay cuts year after year — for the past 20 years,” Jakubowicz said.

“Is it any wonder that physician wait times are going up, and private practices are closing?” he said. “Congress fails to provide common sense inflationary updates to U.S. doctors and their patients — and they need to go back to the drawing board and work to truly ensure that our patients can receive the care they need.”

Jakubowicz’ statement appeared to allude to last month’s Wall Street Journal report that the U.S. Department of Justice launched a criminal investigation into UnitedHealth Group for possible Medicare fraud. UnitedHealth Group issued a statement that it had not been notified of any criminal investigation and called the report “deeply irresponsible.”

Hospitals in trouble

If approved, the legislation would result in 1.8 million people in rural communities losing Medicaid coverage by 2034, said an analysis by the American Hospital Association (AHA). The Medicaid provisions in the bill would lead to a $50.4 billion cut in federal Medicaid spending on rural hospitals over the next decade, in a segment of health care where 48% operated at a financial loss in 2023.

“The Medicaid cuts in the One Big Beautiful Bill Act would devastate rural hospitals across the country,” AHA President and CEO Rick Pollack said in a statement. “Many rural hospitals would be forced to choose between maintaining services, keeping staff and possibly closing their doors. Patients would be forced to travel hours for basic or emergency care, and communities would suffer.”

There are 16.1 million Medicaid beneficiaries living in rural communities, with Medicaid covering 47% of rural births and 65% of nursing home residents. More than 50% of the Medicaid population lives in rural communities in Montana, South Dakota, Wyoming, Mississippi, Vermont, Kentucky, North Dakota, Alaska and Maine, according to AHA.

Cancer care at risk

The American Cancer Society Cancer Action Network (ACS CAN) put its tally at $793 billion in cuts to Medicaid leaving almost 11 million people uninsured with no other affordable health insurance options.

“No one is safe from the harms that this bill will cause, not even cancer patients,” the organization’s summary said. There will be cuts to cancer treatments and screenings, leading to later stage diagnoses that increase costs for everyone, according to the organization.

“Research tells us time and time again that access to health insurance is one of the most significant predictors in surviving a cancer diagnosis,” ACS CAN President Lisa Lacasse said in a statement. “ACS CAN is urging Senators to remove these harmful cuts to health care programs before this bill comes to the floor.

“This bill will undo more than a decade of progress in decreasing uninsured rates nationwide and improving cancer outcomes,” Lacasse said. “It cannot be overstated that this will result in more suffering and death from cancer.”

The Senate Finance Committee on Monday released its version of the massive tax and spending bill that President Donald Trump is pushing for, and it includes a new provision to make the opportunity zone program permanent.

In the draft bill spearheaded by the committee’s chairman, Mike Crapo, the opportunity zone program would become a permanent part of the tax code, with fresh designations every 10 years. The first new cycle would begin on July 1, 2026, and would go into effect in January 2027.

The opportunity zones provision was created as part of the Tax Cuts and Jobs Act of 2017 as an economic development tool to steer investment toward distressed communities across the country. Governors nominated census tracts in their states that met certain qualifications to become opportunity zones, and the country now has 8,764 OZ census tracts.

Investors can receive tax benefits by reinvesting capital gains into funds that either invest in businesses or real estate projects in these zones. The program was scheduled to sunset in 2026.

In May, the House Ways and Means Committee unveiled its version of the One Big Beautiful Bill, which later passed in the House, and it included a provision to renew and reform the opportunity zone program. It would have extended the program through 2033, rather than the permanent extension the Senate committee has now proposed.

“This is huge,” Savoy Equity Partners co-founder Barrett Linburg said at the start of a series of social media posts Monday on the new OZ proposal.

The bill still needs to go through markup before being voted on by the Senate, and provisions could change, but Linburg praised the Senate committee’s version.

“BOTTOM LINE: If this passes, OZs go from experimental to essential infrastructure for rebuilding distressed communities,” Linburg wrote in a post.

The Senate bill also changed the process through which investors receive a step-up in basis, a key part of the tax benefits, to become more gradual over the course of several years, according to Linburg.

The bill maintains provisions from the House version that would increase the benefits for investment in rural areas and lower the income threshold for areas to qualify as opportunity zones.

Economic Innovation Group, the think tank that helped spur the initial opportunity zone legislation with a 2015 white paper, also praised the Senate version.

“EIG applauds Chairman Crapo and the Senate Finance Committee for their leadership in advancing legislation to make Opportunity Zones a permanent feature of the tax code,” EIG CEO John Lettieri said in a statement about the news.

It will not be easy to pass the “big, beautiful” budget reconciliation bill by the July 4 deadline Senate leadership is eyeing.

On Monday, the Senate Finance Committee—which handles matters such as health care and taxes—released its draft legislative text for the “big, beautiful bill.”

This 10-year budgetary framework is the vehicle for fulfilling a number of President Donald Trump’s campaign promises, such as funding border security and extending his 2017 tax cuts.

In May, the House of Representatives passed its version of the bill by a margin of 215-to-214, with one “present vote.” This was thanks to last-minute concessions from House leadership to holdouts.

Now, the Senate’s version of the bill seems to rework many of those midnight hour deals, which could make passing the bill in the House a Herculean task.

For example, the Finance Committee slows down the phaseout of Biden-era green energy incentives—an issue that many in the House Freedom Caucus will live and die over.

“Yeah, I will not vote for this,” wrote Rep. Chip Roy, R-Texas, in response to the news that some solar and wind energy subsidies would continue well past the Trump administration under the Senate’s framework.

Yeah, I will not vote for this. https://t.co/vTLE5cls8b — Chip Roy (@chiproytx) June 16, 2025

Another faction that scoffed at the Senate’s plan on X were the SALT deduction advocates.

A state and local tax (SALT) deduction allows residents in high-tax states to deduct their state and local taxes on their federal tax returns. This is a major priority for Republican lawmakers from blue states such as New York.

Under Trump’s first-term 2017 tax cuts—which are set to expire at the end of the year—taxpayers currently can deduct up to $10,000 on their returns under SALT.

Speaker of the House Mike Johnson, R-La., successfully won over a number of holdout Republican SALT advocates from blue states to vote for the bill in the House by offering a quadrupling to $40,000 of the cap on SALT deductions for households that earn under $500,000 a year.

Now, this cap is back to $10,000 in the Senate.

“DEAD ON ARRIVAL,” wrote Rep. Mike Lawler, R-N.Y., in response to the first rumors of this drop in the cap.

What’s worse for the GOP’s effort to get the bill done before Independence Day is the fact that Lawler has many allies in his fight for a higher SALT deduction.

For a half-dozen blue-state Republicans, this tax break is a make-or-break provision.

The $40,000 SALT deduction was carefully negotiated along with other tax provisions by the House of Representatives and we all had to give a little to obtain the votes to pass the Big Beautiful Bill. For the Senate to leave the SALT deduction capped at $10,000 is not only… — Office of Rep. Nicole Malliotakis (@RepNicole) June 16, 2025

Republican Reps. Young Kim of California and Andrew Garbarino of New York both said the SALT changes put “the entire bill at risk” in a statement.

Rep. Nicole Malliotakis, R-N.Y., called it a “slap in the face” and Rep. Elise Stefanik, R-N.Y., said the “10K number will have to go up.”

These five SALT warriors hold a great amount of leverage, since they could kill the entire bill if just one of them voted against it.

There are, however, some changes that please House members.

For example, the Senate’s framework further limits states’ ability to tax health care providers.

Republicans often accuse states such as California of taxing providers simply to inject that money back into the health care system—a payment that the federal government is required to match with a subsequent payment to the state.

The new adjustments to the provider tax will please many fiscal hawks in the House.

But what’s top of mind at the moment is the math in the Senate to get the bill passed.

Sen. Josh Hawley, R-Mo., who represents a state with high Medicaid enrollment, shivered at the Senate’s work.

“This is going to defund rural hospitals effectively in order to, what, pay for solar panels in China,” said Hawley to reporters. “I’ll be really interested to see what the president thinks about this.”

The coming days will be a great test of both Senate Majority Leader John Thune, R-S.D., and Johnson as they attempt to wrangle their tight majorities in both chambers.

With the president focused on the emerging Israel-Iran conflict, they might be on their own for a bit.

The business community has some clear wins in a Senate version of President Trump’s “big, beautiful bill” released Monday, but it isn’t getting everything it wants.

The Senate’s Finance Committee released its 549-page blueprint this week. It contains significant changes from what the House passed in May, especially on taxes, Medicaid funding, and clean energy.

The changes are still being digested by the business community, but one proposal is already being embraced: a Senate-side push to make corporate tax deductions permanent for things like interest payments and new capital investments.

One idea that may not be quite so popular is the survival of an idea for a so-called revenge tax that would allow the government to levy new duties on foreign nations and their businesses.

That idea was introduced in the House version and sparked fears of reduced foreign investment. The version released Monday pares back the tax but doesn’t eliminate it entirely, as corporate lobbyists had asked.

Specific industries also have plenty at stake from changes made by the Senate.

Businesses that work in clean energy will have more time to adjust to the phase-out of Biden-era credits. Restaurants and gig economy companies have more limited tax breaks for tips and overtime in the Senate bill. Healthcare providers will also have to adjust to even steeper cuts to Medicaid’s provider tax structure — perhaps the most surprising and significant overall change in the Senate version.

What the Senate version of the bill doesn’t appear to have — as Elon Musk and others had pushed for — is a significant change in the final price tag. Both versions are expected to add trillions of dollars to the debt.

The Senate version also raises the debt ceiling by $5 trillion, compared with $4 trillion in the House version.

President Trump speaks to reporters while traveling back to Washington, D.C., from Canada on June 16 after leaving a G7 summit in Canada a day early. (Brendan Smialowski/AFP via Getty Images) (BRENDAN SMIALOWSKI via Getty Images)

The bill does have one clear cost-saving measure: slashing the annual deduction for individual state and local taxes (SALT) from $40,000 to $10,000.

But that provision is described in the bill’s official summary as “the subject of continuing negotiations,” with defenders of the deduction pledging to restore the full credit forthwith.

The Senate version earned a quick flurry of Republican pledges — from fiscal hawks to defenders of those SALT deductions to those who object to the Medicaid cuts — to vote no if the final version isn’t changed to their liking.

“We’re not seriously addressing our long-term deficit and debt,” Sen. Ron Johnson of Wisconsin told reporters soon after the unveiling, reiterating that he remains a no.

This latest release comes only about two weeks ahead of Republicans’ self-imposed deadline to get the bill to the president’s desk by July 4.

The Senate is aiming to pass the bill by next weekend, Ed Mills of Raymond James pointed out in a note, “however, we continue to view the July 4 target as ambitious” — suggesting that SALT and Medicaid provisions in particular could be under intense debate in the days ahead.

Here is a closer look at some of the major business world changes being proposed by the Senate:

Business-friendly measures

A key focus for business owners is a series of tax deductions that will reinstate credits for corporations around things like property depreciation, capital investments, new factory construction, interest expenses, and research and development costs.

These provisions were present in the House version but only temporarily. Permanency was a key Senate priority once they took over, even as it is expected to increase the price tag.

The bill “powers the economy by permanently extending critical pro-growth provisions and introduces new incentives for domestic investment, providing certainty for American job creators to spur domestic economic activity and invest in their workers,” offered Senate Finance Committee Chairman Mike Crapo as he unveiled these provisions.

Senate Finance Committee Chairman Mike Crapo of Idaho is overseeing the Senate’s version of the tax bill. (AP Photo/J. Scott Applewhite) (ASSOCIATED PRESS)

The Senate version also enhances credits for “opportunity zones,” which provide tax relief in rural and distressed communities.

The bill also includes Trump’s campaign promises of no taxes on tips and overtime, but in a more limited form.

Employees would be able to deduct up to $25,000 annually for tips and overtime, in contrast to the House’s approach of 100% deductibility under certain income limits.

The Senate blueprint also includes a rollback of clean energy credits for things like solar panels and electric vehicles.

The changes in the Senate would make that phaseout slower — zeroing out some key credits by 2028 — but with a bottom line that Republicans across the spectrum are united in eliminating these benefits entirely.

Amy Hanauer, executive director of the left-leaning Institute on Taxation and Economic Policy, reacted to the released proposal by saying that “the emerging clean energy economy will be curtailed and for what?”

“Our communities will be worse off as a result of this legislation,” she added.

On the fossil fuel side, the Senate bill continues to include changes to make permitting less laborious, open up new lease sales, and reverse a fee on excess methane emissions.

The Senate bill also includes a controversial plan to limit the ability of states to regulate artificial intelligence.

The Senate’s provisions are less airtight, stopping short of the outright ban proposed by the House, but are expected to remain a point of contention and potentially an issue for the Senate parliamentarian, given the Senate’s complex reconciliation rules.

Other changes less welcomed by the business community

Other changes in the bill appear to cut against business interests at least slightly.

The Senate bill makes permanent the so-called pass-through deduction — formally called a 199A deduction for small businesses — but at the current rate of 20%.

The House version also had permanency, but at a higher rate of 23%.

Meanwhile, a clear focus of business lobbyist ire has remained in the bill, but in a slightly diminished form: the so-called revenge tax.

This idea would allow a president to punish companies and countries if they adhere to foreign laws that policymakers find objectionable. In Trump’s case, things like the digital services taxes that often hit tech companies overseas.

The Senate version, in a nod to the flurry of concerns, set a maximum rate of 15% and delayed implementation until 2027 but kept the concept intact.

In addition to that tax, the SALT and Medicaid changes are likely to be most in focus in the days and weeks ahead.

Tobin Marcus of Wolfe Research noted Tuesday morning that “SALT changes underscore the reality that this is another step forward in negotiations, not the final answer.”

He added that “we still view late July as the real deadline.”

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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