The Senate passed its amended version of the One Big Beautiful Bill today, more than a month after the House passed its version of the bill. Vice President Vance cast the tie-breaking vote to push the Senate’s amended bill through. Republican Senators Rand Paul, Susan Collins and Thom Tillis voted against the bill’s passage. The bill must now be passed by the House of Representatives, where only three Republican votes can be lost in order for the bill to stand. Republican leaders are trying to meet President Trump’s deadline to sign the bill into law by July 4, 2025.
House Bill vs. Senate Bill
Comparisons of the major individual income tax provisions in the House bill versus the Senate bill are highlighted below.
| Individuals | House Bill | Senate Bill |
|---|---|---|
| Individual Income Tax Rates | Permanently extends the Tax Cuts & Jobs Act (TCJA) income tax rates for individuals, estates, and trust with the highest tax rate remaining at 37%. Inflation adjustments for all brackets except 37%. | Same as the House, except inflation adjustment only apply to 12% and 22%. |
| Dependent Care Assistance Program | Not included. | Increase the exemption amount to $7,500 (previously $5,000).
Effective date for taxable years beginning after December 31, 2025. |
| Standard Deduction | Permanently allows for the increased standard deduction amount provided under the Tax Cuts & Jobs Act. In addition, provides for an additional increase in the standard deduction of $1,500 for head of household filers, and $1,000 for single and married filing separate filers for taxable years starting in 2025 and ending in 2028.
Effective for taxable years beginning after December 31, 2025. |
Permanently allows for the increased standard deduction amount provided under the Tax Cuts & Jobs Act. In addition, provides for an additional increase in the standard deduction of $1,500 for head of household filers, and $1,000 for single and married filing separate filers for taxable years starting in 2025 and ending in 2028.
Effective for taxable years beginning after December 31, 2025. |
| Charitable Contributions for Taxpayers Utilizing the Standard Deduction | Provides for an above the line charitable contribution of $300 for joint filers or $150 for other filers for taxable years beginning after December 31, 2024 and before January 1, 2029. | For taxable years beginning after December 31, 2025, allowing for an above the line deduction of $2,000 for joint filers, or $1,000 for other filers. |
| Charitable Contributions for Taxpayers Utilizing the Itemized Deduction | Nothing provided. | Charitable contribution for itemizing taxpayers only allowed as a deduction to the extent in exceeds 0.5% of the taxpayer’s contribution base for the taxable year. |
| State and Local Tax Limitation for Individuals | Increases the deduction for state and local income and property taxes to $40,000 (previously $10,000).
The $40,000 deduction is decreased if a taxpayers modified AGI exceeds $500,000 ($252,500 MFS) and is limited to $10,000 ($5,000 MFS). A MFJ whose modified AGI exceeds $600,000 will be limited to a $10,000 deduction. Beginning in 2026, increases the deduction to $40,400 per year (50% of that amount for married filing separately), subject to the reduction above, with income limitations of $505,000 (50% of that amount for married filing separately). Applies to taxable years beginning after December 31, 2024. |
The Senate bill would allow for an increased $40,000 state and local tax limit in 2025 and increase that amount through 2029, and apply similar modified AGI limitations as the House. The state and local tax cap will revert to $10,000 in the 2029 taxable year. |
| Itemized Deduction Limitation | Repeals the PEASE limitation and applies an additional limitation on all itemized deductions for taxpayers who are in the 37% tax bracket.
Applies to taxable years beginning after December 31, 2025. |
Similar to the House proposal, but adds that the 199A computation should not be impacted by the limitation. |
| Miscellaneous Itemized Deductions | Permanently suspends miscellaneous itemized deductions.
Applies to taxable years beginning after December 31, 2025. |
Provides a miscellaneous itemized deduction for unreimbursed educator expenses only. |
| Alternative Minimum Tax (AMT) | Permanently extends the increased AMT exemption amount and phaseout thresholds. | No significant changes to the House proposal. |
| Excess Business Loss Limitation | Provides that the excess business loss rule be made permanent. Provides that any excess disallowed loss created for taxable years beginning after December 31, 2024 to be included in the subsequent year’s testing of the excess business loss limitation. Thereby providing any disallowed loss created due to the excess business loss rule can only offset business income in the future and will not be allowed to offset non-business income in future years. | Provides that the excess business loss limitation be made permanent and allows for any excess business loss to be a net operating loss carried forward to the following year. |
| Estate and Gift Tax Exemption Amount | Permanently increase the estate and gift tax exemption amount to $15 million, indexed annually for inflation. | No significant changes to the House proposal. |
| Qualified Opportunity Zones (QOZ) | Provides an additional OZ investment to be designated from January 1, 2028 through December 31, 2033. Limit the criteria for low-income communities, only allowing areas with a statewide median income of 70% or less (previously 80% or less) to be eligible for OZ designation. At least 25% of designated communities must be low-income communities.
Requires that of the low-income communities identified, at least one-third of low-income designated zones be in rural areas. Provide for a single, streamlined 10% basis step-up for investments held for five years, with rural investments provided a three times greater step up or 30%. |
Provides for a rolling 10-year OZ designation beginning on January 1, 2027, making QOZ investment opportunities permanent.
Similar designation as the House bill for low-income and rural communities. Gain which is deferred by the investment in an OZ will be triggered the earlier of when the investment is sold or exchange, or the date which is 5 years after the investment. While the original Senate bill provided for an increase in basis over a rolling 6 year period, the final Senate bill passed limits the 10% (30% in the case of a qualified rural opportunity fund) to not take effect until after the investment is held for at least 5 years. In addition, the Senate bill that passed the house would require the investor to hold the investment for 30 years in order for the basis of the investment to equal the FMV of the investment, and therefore trigger no additional gain or loss. |
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