Senate Passes Megabill with Changes to Tax Provisions

The Senate voted on July 1, 2025, to pass their version of the Republican reconciliation bill, colloquially known as the “One Big Beautiful Bill Act” (OBBBA). The vote was 51-50, with Vice President J.D. Vance casting the tie-breaking vote. 

The bill contained several changes from the first draft of the legislation the Senate Finance Committee introduced on June 16, 2025. Notable changes include: 

• The SALT cap was increased to $40,000 (or $20,000 if filing separately). The marriage penalty remains. The amount begins to phase out for those with an AGI over $500,000/$250,000. These amounts will increase by 1% for 2026, 2027, 2028, and 2029. In 2030, the cap will revert back to $10,000/$5,000.
• Provisions limiting the use of PTETs were removed entirely.
• The change to 461(l) that would have disallowed the use of excess business loss carryforwards as NOLs was removed.
• IRC Sec. 899 (the so-called “Revenge Tax”) was removed.
• The remittance tax was reduced from 3.5% to 1%. It will only apply to transfers of cash, cashier’s checks, or money orders. However, there is no longer any credit for U.S. citizens or nationals.
• The BEAT rate was reduced to 10.5% from 14%.
• The treatment of Trump accounts was modified to more closely correspond with individual retirement accounts. 
• Clean vehicle credits (25E, 30D, and 45W) will terminate after September 30, 2025; home efficiency credits (25C and 25D) will expire after December 31, 2025, and building credits (30C, 45L, and 179D) will expire after June 30, 2026. 
• The hydrogen production credit (45V) terminates for projects beginning after 12/31/2027; as does the Clean Production Tax Credit (45Y) or Investment Tax Credit (48E) for solar or wind projects. 
• The Advanced Manufacturing Credit (45X) phases out after December 31, 2030; with the credit being terminated for wind components after December 31, 2027. 
• The Clean Fuel Production Credit (45Z) is extended through December 31, 2029. 
• The Advanced Manufacturing Investment Credit (48D) was increased from 30% to 35%. 
• Current IRC Sec. 1062 is redesignated as IRC Sec. 1063 and IRC Sec. 1062 will be a provision that allows a taxpayer to pay the net income tax from the sale of qualified farmland property to a qualified farmer in equal amounts over four years. 
• The increase in the standard deduction is slightly reduced to $15,750 for single filers, $23,625 for Head of Household, and $31,500 for joint filers (was $16,000, $24,000, and $32,000). 
• The exemption for religious schools for purposes of the university endowment excise tax was removed.
• Most of the requirements that both parents or married individuals have Social Security Numbers (SSN) for certain credits and incentives were changed so that only one parent or individual is required to have an SSN. 

The litigation funding tax was decreased to 31.8% from 40.8%; however, the Senate Parliamentarian ruled on June 30, 2025, that this provision violated the Byrd Rule. Senate leadership did not make changes to include the provision in the final version. The excise tax of up to 30% or 50% on solar and wind projects was also removed.  

The bill has been sent back to the House for consideration. After the House Rules Committee votes on a rule for debate, the bill can be brought for a full vote on the House floor. The House is expected to reconvene the morning of July 2, 2025.