U.S. Senate Releases Its Version Of Historic Tax Bill

Early last week, Republican leaders on the U.S. Senate Finance Committee released details of the tax portion of the chamber’s version of the One Big, Beautiful Bill Act (OBBBA), which is legislation that addresses President Donald Trump’s key domestic spending and tax priorities. Readers may recall that the U.S. House of Representatives approved their version of the OBBBA in May.

The Senate version of the legislation includes several individual and business-related tax cuts, including:

• Permanent restoration of immediate expensing for domestic research and development expenses, the EBITDA-based limitation on business net interest deductions, and 100 percent bonus depreciation for short-lived investments;
• Temporary 100 percent expensing of qualifying structures;
• Making permanent the Section 199A pass-through deduction and increasing phase-in range of limitation by $50,000 for non-joint returns and $100,000 for joint returns;
• A permanent increase in the estate and lifetime gift tax exemption to an inflation-indexed $15 million for single filers and $30 million for joint filers in 2026; and
• A one-percent floor on deduction of charitable contributions made by corporations.

Provisions for families and individuals — and pass through businesses that pay income tax through the individual federal income tax system — include:

• Making permanent expiring individual tax rate and bracket changes and increasing the inflation adjustment for some brackets;
• A permanent increase in the standard deduction to $32,000 for joint filers, $24,000 for heads of household, and $16,000 for all other filers in 2026 and adjusting it to inflation after 2026;
• Making permanent the personal exemption elimination;
• Making permanent the itemized deduction for state and local taxes (SALT) cap of $10,000 and partially repealing SALT cap workarounds;
• Other changes and limitations to itemized deduction permanent, including a limitation on personal casualty losses, a termination of the miscellaneous itemized deduction, Pease limitation on itemized deductions, and certain moving expenses;
• A limitation on the value of itemized deductions to 35 cents on the dollar for taxpayers in the top income tax bracket;
• Making permanent the increase in the alternative minimum tax (AMT) exemption and reverting the AMT exemption phaseout thresholds to the 2018 levels of $500,000 for single filers and $1 million for joint returns and indexing the thresholds to inflation going forward;
• For 2025 to 2028, deductibility up to $12,500 for individuals and $25,000 for joint filers of the premium portion of overtime compensation; and
• For 2025 to 2028, temporarily making auto loan interest deductible for itemizers and non-itemizers for autos with final assembly in the United States.

The S Corp Association has provided a comparison of how the House-approved and draft Senate bills differ in their impact on businesses. Read that analysis at this link.