Tracking Key Provisions in Reconciliation Tax Bill
House Republicans have made significant progress on a major tax bill that would affect nearly all businesses and investors. The House narrowly passed the legislation on May 22, and it now moves to the Senate for consideration.
With the prospect of enactment moving closer, businesses must remain vigilant and proactive. Changes in tax laws can significantly impact financial planning and operational strategies. By staying informed and prepared, businesses can help mitigate risks, capitalize on opportunities, and maintain compliance with new changes.
The following table offers a detailed breakdown of the key tax provisions in the House-passed bill, comparing the proposals to current law and the Republican campaign platform. Use it as a resource for tracking proposals and assessing their potential impact. Further changes to the tax bill are expected on the Senate side, and we will update the table as the proposals evolve. For more information on the legislative process and the Senate outlook, see House Vote Tees up $4 Trillion Tax Bill for Senate Action.
BDO’s National Tax Office will continue to monitor legislative developments closely and assess their implications for businesses and individuals. Check our tax policy page periodically for the latest information.
Key Provisions Included in the 2025 Tax Legislation
Track the status of the federal tax proposals below to understand how possible new legislation could impact you and your business.
The House proposal column is consistent with the tax title as passed by the House on May 22.
Individual Provisions
ITEM | CURRENT LAW | TRUMP PROPOSAL | HOUSE PROPOSAL FROM BILL PASSED MAY 22 |
Individual income tax rates (Sec. 1). | Individual tax rates include: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
These rates expire after 2025 and revert to pre-TCJA rates. | The current rates would be made permanent; the individual income tax would be replaced by tariffs.
The 39.6% rate would be reinstated on incomes over $1 million. | Extends the TCJA changes with modifications to index the brackets to inflation, effective after 2025. |
Capital gains rate (Sec. 1(h)). | Current capital gains rates: Short-term capital gains are taxed at ordinary rates; Long-term capital gains rates (without net investment income tax):
Collectibles: 28%
Rate thresholds are scheduled to change in 2026. | The top LTCG rate would be reduced to 15% and bracket thresholds made permanent.
Cryptocurrency would be exempt from capital gains tax. | No change except for making the current bracket thresholds permanent. |
Standard deduction (Sec. 63). | For 2024:
Increased amounts expire after 2025. | The Trump proposal would increase these amounts and make the increases permanent. | The provision would make permanent the increased standard deduction under TCJA, with an additional year of inflation adjustment, and temporarily increase the deduction for four years from 2025 through 2029 by $2,000 (MFJ), $1,500 (HOH), and $1,000 (S/MFS). |
Personal exemptions (Sec. 151). | Personal exemptions are at zero through 2025. | Personal exemptions would remain at zero permanently. | Follows the Trump proposal, effective after 2025. |
Child tax credit (Sec. 24). | Maximum child tax credit (CTC) is $2,000 per qualifying child; up to $1,700 per child can be refundable. CTC is reduced by $50 for each $1,000 of income above the following levels:
CTC reverts to $1,000 per qualifying child after 2025 with a higher refund earned income threshold and lower phase-out levels. | Vice President JD Vance suggested increasing the CTC to $5,000 per child regardless of income level. | The provision would increase the CTC to $2,500 per child from 2025 through 2028. The CTC would revert to $2,000 in 2028, adjusted for inflation. The refundable portion of the CTC would be made permanent. |
Qualified business income deduction (Sec. 199A). | Individuals, fiduciaries, and trust/estate beneficiaries may deduct 20% of qualified business income from a partnership, S corporation, or sole proprietorship (20% of total qualified real estate investment trust dividends and publicly traded partnership income are also eligible).
There is no cap on the deduction; however, the deduction is subject to income limitations. In 2024, the deduction phases out for incomes between $191,950 and $241,950 (single) and between $383,900 and $483,900 (joint) in 2024.
Provision expires after 2025. | The current rule would be made permanent. | The deduction would be made permanent at an increased 23% rate with a change to the phase-out rules for nonqualified income. The deduction would also be extended to business development companies, and other modifications would be made effective after 2025. |
Alternative minimum tax (AMT) exemptions and phase-outs (Sec. 55). | The TCJA increased exemption from 2018 through 2025. Exemptions in 2025:
Phase-out of AMT:
| The increased exemption amounts would be made permanent. | The provision would generally make the TCJA AMT thresholds permanent, but only after resetting the inflation adjustments back to the 2018 level, effectively reducing the thresholds and re-indexing them to inflation after 2026. The amounts in 2026 would be reduced to:
Phase-out of AMT:
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Deduction for qualified residence interest (Sec. 163(h)). | For indebtedness incurred after December 31, 2017, and before January 1, 2026, taxpayers may treat no more than $750,000 ($375,000 if MFS) as acquisition indebtedness for purposes of the mortgage interest itemized deduction.
For indebtedness incurred on or before December 31, 2017, and for all acquisition indebtedness on or after January 1, 2026, the indebtedness amounts are $1 million ($500,000 if married filing separately). | The lower indebtedness amounts would be made permanent. | Follows the Trump proposal, effective after 2025. |
Casualty loss deduction (Sec. 165(c)). | For certain presidentially declared disaster areas, such losses are deductible to the extent the loss exceeds 10% of the individual’s adjusted gross income (AGI).
For personal casualty losses incurred after December 31, 2017, and before January 1, 2026, losses generally are deductible only to the extent of personal casualty gains.
For personal casualty losses incurred on or after January 1, 2026, an individual generally may claim an itemized deduction for a casualty loss. | The casualty loss limitations would be made permanent. | Follows the Trump proposal, effective after 2025. |
Itemized deductions (Sec. 63). | From 2018 through 2025:
| Itemized deduction limitations would be made permanent. | Follows the Trump proposal. |
Pease limitation on itemized deduction. | The Pease limit on itemized deductions is suspended under the TCJA for 2018 to 2025. | The repeal of the limitation would be made permanent. | The provision would make the repeal of the Pease limitation permanent but would create a new limitation in its place. The new limit would generally cap the value of itemized deductions so that the maximum benefit would be equivalent to reducing taxable income in the 32% bracket rather than in the 35% and 37% brackets. |
Charitable deduction (Sec. 170). | The individual deduction for charitable contributions is available only for taxpayers that itemize their deductions. For 2021, a temporary provision allows a charitable deduction of up to $300 for non-itemizing taxpayers. | No specific proposal. | The provision would reinstate a deduction for taxpayers that do not itemize for charitable contributions of up to $300 (MFJ) or $150 (S, HOH, MFS) for years 2025-2028. |
Other TCJA limits. | From 2018 through 2025:
| Make TCJA limits permanent. | All listed TCJA changes would be made permanent. |
Taxation of carried interest (Sec. 1061). | Treated as long-term capital gain (top rate 20%) if held over three years (TCJA); otherwise taxed at ordinary rates.
| Tax carried interest as ordinary income. | No provision. |
Taxation of Social Security benefits (Sec. 86). |
| All Social Security benefits would be exempt from tax. | The provision would create a $4,000 income tax deduction for taxpayers aged 65 and above for four years from 2025 through 2028. The deduction would be available without regard to whether deduction is itemized, but phases out beginning with AGI exceeding $150,000 (MFJ) and $75,000 (S/HOH/MFS). |
Taxation of tip income (Sec. 61). | Tip income is taxed under Sec. 61 and reported to employers monthly under Sec. 6053. | Tips would be exempt from income tax and potentially employment tax.
| The provision would create an income tax deduction equal to reported tip income from 2025 through 2028. The deduction would be available only for voluntary tips in occupations that “traditionally and customarily” received tips before 2025 in a business that is not a specified service trade or business under Section 199A. The deduction is available without regard to whether deductions are itemized but is available only to taxpayers that are not “highly compensated employees” under Section 414 ($160,000 in 2025). The provision would also extend the FICA tip credit to cover certain beauty services. |
Taxation of overtime pay (Sec. 61). | Overtime pay is subject to income and employment tax. | Overtime pay would be exempt from income and employment taxes. | The provision would create an income tax deduction equal to overtime pay under the FLMA from 2025 through 2028. The deduction would be available without regard to whether deductions are itemized but is only available to taxpayers that are not “highly compensated employees” under Section 414 ($160,000 in 2025). |
Auto loan interest deduction. | There is no current deduction for personal interest, which includes interest incurred on a personal vehicle loan. | Interest on loans for domestic vehicles would be deductible. | The provision would create an above-the-line deduction for up to $10,000 in interest paid on a loan for vehicles with final assembly in the U.S. The deduction would phase out when modified AGI exceeds $100,000 (S) or $200,000 (MFJ).
The proposal would be effective for tax years 2025 through 2028. |
State and local tax (SALT) cap (Sec. 164). | SALT itemized deductions limited to $10,000 ($5,000 MFS) of state and local income, property, and sales taxes through 2025. | The SALT deduction cap would be eliminated. | The SALT cap would be made permanent at an increased threshold of $40,000, beginning in 2025. The 40,000 threshold would phase down to $10,000 for income exceeding $500,000. These thresholds would increase by 1% each year from 2026 to 2033. The provision would also largely shut down state PTET workaround regimes unless 75% of the entities’ gross receipts come from a qualifying trade or business under Section 163(j). |
Credit for caregivers. | No provision. | A tax credit for caregivers would be provided. | No provision. |
Eliminate double taxation of Americans abroad (Secs. 61, 911). | Individuals may exclude foreign earned income from U.S. tax up to a threshold indexed to inflation ($130,000 in 2025). | Provide increased or unlimited exemption from U.S. tax on foreign income. | No provision. |
Active loss limit (Sec. 461). | Section 461 limits a taxpayer’s ability to deduct certain active business losses above a limit that is indexed to inflation and in 2025 reached $626,000 (MFJ) and $313,000 (S/HOH/MFS). The limited loss generally becomes an NOL in future years. The provision is set to expire for tax years beginning after Dec. 31, 2028. | No specific provision. | The provision would make the active loss limit under Section 461(l) permanent, while requiring losses arising from the limit to be tracked separately and applied as part of the Section 461(l) calculation in future years. |
Tax-preferred savings accounts. | The tax code provides for some tax-preferred savings and spending accounts. | No specific provision. | The provision would provide a new type of tax-preferred account for minors). Contributions would be capped annually at $5,000 and would not be deductible, but the accounts would generally be exempt from tax, with qualified distributions taxed as capital gains. Under a pilot program, children born from 2025 through 2028 would receive a $1,000 contributory credit in their account. |
Lifetime exemption amount (Secs. 2010, 2505). | Lifetime exemption amount set at $10 million indexed to inflation ($13.99 million in 2025). The top estate tax rate is 40%. Exemption amount would be cut in half in 2026. 40% rate is permanent. | The exemption amount would be increased and made permanent (or the estate tax would be repealed in full). | The exemption amount would be increased to $15 million per taxpayer in 2026 and indexed for inflation thereafter. |
Business Provisions
ITEM | CURRENT LAW | TRUMP PROPOSAL | HOUSE PROPOSAL FROM BILL PASSED MAY 22 |
Corporate rate (Sec. 11). | Flat 21% rate. | Provide 15% rate for domestic manufacturing. | No provision. |
Bonus depreciation (Sec. 168(k)). | Bonus depreciation phases down to:
| Make 100% bonus depreciation permanent and extend to factories. | The provision would provide 100% bonus depreciation for property placed in service after Jan. 19, 2025, and before 2030. In addition, 100% expensing would be extended to cover nonresidential real property that is considered qualified production property if construction of the property begins after Jan. 19, 2025, and before 2030. |
Deduction for domestic research and experimental expenditures (Sec. 174). | For tax years beginning after 2022, taxpayers must amortize domestic research costs over five years and foreign costs over 15 years. | Restore and make permanent expensing of research costs. | The provision would restore the expensing of domestic research costs for tax years beginning after Dec. 31, 2024, and before Jan. 1, 2030 (foreign research would still be amortized over 15 years). Taxpayers would retain elections to capitalize. The provision would require taxpayers to reduce their deduction by the amount of any research credit. |
Business interest deduction calculation (Sec. 163(j)). | For tax years beginning after 2022, taxpayers must include amortization, depreciation, and depletion in the calculation of adjusted taxable income (ATI) for calculating whether the deduction for net interest expense exceeds the cap of 30% of ATI. | Restore and make permanent the previous calculation allowing taxpayers to exclude amortization, depreciation, and depletion from ATI. | The bill would restore the more favorable calculation of ATI for tax years beginning after Dec. 31, 2024, and before Jan. 1, 2030. The provision would also adjust the floor plan financing exception. |
Limitation on expensing of certain depreciable assets (Sec. 179). | Section 179 allows taxpayers to expense qualified property up to a cap that is indexed to inflation ($1.25 million in 2025), but this cap is reduced dollar for dollar by the amount of qualified property placed in service that exceeds a threshold indexed to inflation ($3.13 million in 2025). | No specific proposal. | The provision would increase the Section 179 deduction cap to $2.5 million with a phase-out threshold of $4 million, indexed to inflation. |
Increase in gross receipts threshold for small manufacturing companies to use cash method of accounting (Sec. 448). | Section 448 allows taxpayers with less than $25 million in gross receipts (indexed to inflation and reaching $31 million in 2025) to use the cash method of accounting and other simplified accounting methods. | No specific proposal. | The provision would increase the threshold to $80 million for certain “manufacturing taxpayers,” but with adjusted aggregation rules for gross receipts. |
Global intangible low-taxed income (GILTI) (Sec. 951A). | Intended to prevent U.S. multinational corporations from shifting profits to low-tax foreign jurisdictions by imposing a minimum tax on certain foreign earning of U.S. corporations; effective rate is 10.5%, increasing to 13.125% after 2025. | Extend current rate. | The provision would lower the current Section 250 deduction slightly, creating a permanent GILTI effective rate of 10.668%. The bill would also exclude qualified Virgin Islands services income from GILTI tested income. |
Foreign-derived intangible income (FDII) (Sec. 250). | Intended to encourage the sale of goods and services to foreign markets, it permits U.S. corporations to claim a reduced rate on income derived from exports; effective rate is 13.125% of eligible income, increasing to 16.4% after 2025. | Extend current rate. | The provision would lower the current Section 250 deduction slightly, creating a permanent FDII effective rate of 13.335%. |
Base erosion and anti-abuse tax (Sec. 59A). | Intended to prevent large multinational corporations from eroding the U.S. tax base with deductible payments (interest, royalties, etc.) to foreign affiliates in low-tax jurisdictions. BEAT imposes an additional tax on certain corporations that make large payments to foreign-related parties to discourage profit shifting. It generally applies to corporations with annual gross receipts of $500 million or more in a three-year period. The rate is 10%, increasing to 12.5% after 2025 with other changes. | Extend the current rate and credit rules. | The provision would permanently increase the BEAT to 10.1% and make permanent the current favorable treatment of credits. |
Reciprocal taxes. | Section 891 allows the president to double most taxes on citizens and corporations of a foreign country that imposes discriminatory or extraterritorial taxes on U.S. citizens or corporations (this authority has never been invoked). | Impose reciprocal taxes and tariff on countries with “unfair” tax or trade policies. | The provision would create new Section 899 to increase tax and withholding rates on resident taxpayers from countries imposing “unfair foreign taxes.” Unfair foreign taxes would include the UTPI and other Pillar Two taxes, digital services taxes, “extraterritorial taxes,” discriminatory taxes,” and any tax “disproportionally borne” by U.S. persons. Domestic entities controlled by covered foreign resident taxpayers would also be subject to unfavorable BEAT changes. |
Opportunity zones (Sec. 1400Z). | Investment in a Qualified Opportunity Fund allows taxpayers to defer capital gain and receive a step-up in basis so that appreciation on the qualified investment is tax-free after a 10-year holding period. Qualified investments must be made by the end of 2026. | Extend current provision. | The provision would allow qualified investments from 2027 through 2033. The mandatory recognition date for these investments would be Dec. 31, 2033, and taxpayers would receive a 10% increase in basis for holding onto the property for five years. Taxpayers could designate up to $10,000 of their aggregate investments to offset ordinary income, with no recapture. The provision would provide new designations of opportunity zones, with special benefits for a new category of rural opportunity zones. The provision would also require additional reporting.
The provision would generally be effective after the date of enactment. |
Form 1099-K reporting (Sec. 6050W). | For payments made after 2021, Section 6050W generally requires payment settlement entities to perform reporting once aggregate annual payments to a payee exceed $600 or more. The IRS delayed implementation of this threshold so payments made in 2022 and 2023 were reportable only to the extent aggregate payments exceeded $10,000 and the number of transactions exceeded 200. Reporting is required for 2024 and 2025 only if aggregate payments exceed $5,000 in 2024 and $2,500 in 2025 (without regard to the number of transactions). | No specific provision. | The provision would reinstate the 200 transaction and $20,000 threshold retroactive to the enactment of the $600 threshold. |
Form 1099-NEC and 1099-MISC reporting (Secs. 6041, 6041A). | Sections 6041 and 6041A generally require reporting on non-employee compensation or payments from a business for services on Form 1099-NEC or 1099-MISC once aggregate payments to a payee exceed $600 for the year. | No specific provision. | The provision would increase the threshold for reporting to $2,000 beginning in 2026 and index it to inflation thereafter. |
1% floor on corporate charitable contribution deduction (Sec. 170). | Corporations are generally permitted to deduct charitable contributions up to 10% of taxable income. | No specific provision. | The provision would permit a corporation to deduct a charitable contribution only to the extent it exceeds 1% of taxable income (up to 10% of taxable income) for tax years beginning after 2025. |
Sports franchise amortization (Sec. 197). | Section 197 generally allows taxpayers to amortize intangible assets over a 15-year period after they are acquired. | Eliminate “special tax breaks for sports owners.” | The provision would limit the amount amortizable under Section 197 to 50% for acquisitions of professional sports franchises made after the date of enactment. |
Low-income housing credit (Sec. 42). | The low-income housing tax credit offers credits for certain low-income building projects that receive an allocation up to state caps. | No specific provision. | The provision would increase the population component of the state low-income tax credit ceiling to 12.5% for years 2026, 2027, 2028, and 2029. The provision would also modify the tax-exempt bond financing requirement and temporarily include certain Indian and rural areas.
The proposal would generally be applicable after 2025. |
Executive compensation (Sec. 162(m)). | Section 162(m) generally denies public companies a deduction for compensation in excess of $1 million paid to “covered employees.” | No specific provision. | The provision would expand the aggregation rules so that the identification of covered employees and the calculation of compensation would be made on a controlled group basis under the rules in Section 414. |
Disguised sales (Sec. 707). | Section 707 provides rules for certain transactions between partners and a partnership. | No specific provision. | The provision would clarify that the rules prescribed under Section 707(a)(2) are not contingent on regulations from Treasury. |
Remittance excise tax. | There is not specific current excise tax on remittances. | No specific provision. | The provision would create a 3.5% excise tax on certain “remittance transfers” made after 2025. |
REIT asset test (Sec. 856). | REITs are subject to a qualified asset test that generally allows them to hold no more than 20% of their assets in taxable REIT subsidiaries. | No specific provision. | The provision would increase the amount of allowable assets held in taxable REIT subsidiaries to 25%. |
Meals deduction (Sec. 274). | Beginning in 2026, employers will no longer be able to deduct meals provided to employees at the convenience of the employer (if the meals are excluded from employee income). | No specific provision. | The provision would provide an exception allowing taxpayer to deduct meals provided at the convenience of the employee if the meals were sold by the taxpayers in a bona fide transaction for full consideration. |
Employee retention credit (Sec. 3134). | The employee retention credit was available for certain wages paid in specific periods of 2020 and 2021. | No specific provision | The provision would disallow refunds effective as of the date of enactment unless the claim was filed by Jan. 31, 2024. It would also extend the statute of limitations for certain claims and increase preparer and promoter penalties in certain circumstances. |
Energy Provisions
ITEM | CURRENT LAW | TRUMP PROPOSAL | HOUSE PROPOSAL FROM BILL PASSED MAY 22 |
Clean fuel production credit (Sec. 45Z). | Section 45Z provides a credit for the production of certain transportation fuels that meet lifecycle greenhouse gas emissions standards. The credit is scheduled to expire for fuel sold after 2027. | Repeal all Inflation Reduction Act (IRA) energy credits. | The provision would extend the credit to fuel sold through the end of 2031, with a new requirement that feedstock be produced or grown in the U.S., Mexico, or Canada. The calculation of greenhouse gas emission would be amended to exclude indirect land use changes. Taxpayers that are foreign entities of concern would not qualify for the credit for tax years beginning after the date or enactment. Taxpayers that are “foreign influenced entities” would be ineligible for the credit for tax years beginning two years after the date of enactment. The credits would not be transferable for fuel produced after 2027.
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Previously owned clean vehicle credit (Sec. 25E). | Section 25E provides a credit for certain previously owned EVs and other “clean” vehicles. | Repeal all IRA energy credits. | The provision would repeal the credit for purchases after 2025. |
Clean vehicle credit (Sec. 30D). | Section 30D provides a credit for certain EVs and other “clean” vehicles. | Repeal all IRA energy credits. | The provision would repeal the credit for purchases after 2025 unless the manufacturer has sold fewer than 200,000 clean vehicles since 2010, in which case the credit expires for purchases after 2026. |
Commercial clean vehicles credit (Sec. 45W). | Section 45W provides a credit for certain commercial EVs and other clean vehicles. | Repeal all IRA energy credits. | The provision would repeal the credit for purchases after 2025 unless the vehicle was acquired pursuant to a written binding contract in place before May 12, 2025. |
Alternative fuel vehicle refueling property credit (Sec. 30C). | Section 30C provides a credit for certain EV charging property and other alternative fuel refueling property. | Repeal all IRA energy credits. | The provision would repeal the credit for property placed in service after 2025. |
Energy-efficient home improvement credit (Sec. 25C). | Section 25C provides a credit for certain energy-efficient home improvement property. | Repeal all IRA energy credits. | The provision would repeal the credit for property placed in service after 2025. |
Residential clean energy credit (Sec. 25D). | Section 25D provides a credit for certain residential clean energy property. | Repeal all IRA energy credits. | The provision would repeal the credit for property placed in service after 2025. |
New energy-efficient home credit (Sec. 45L). | Section 45L provides a credit for construction of energy-efficient new homes. | Repeal all IRA energy credits. | The provision would repeal the credit for property acquired after 2025 unless construction began before May 12, 2025. |
Election to have credit paid directly (Sec. 6417). | Section 6417 provides a direct refundable payment option for tax-exempt entities and for certain credits. | Repeal all IRA energy credits. | No provision. |
Clean energy production credit (Sec. 45Y). | The production tax credit under Section 45Y offers a per-kilowatt credit for the production of electricity from sources meeting lifecycle greenhouse gas emissions standards. The credit is scheduled to phase out when certain nationwide emissions goals are reached (or 2032 if later). | Repeal all IRA energy credits. | The provision would repeal the credits for all property except nuclear for property beginning construction more than 60 days after enactment or placed in service after 2028. The credit would be available for advanced nuclear facilities beginning construction before 2029. Facilities receiving “material assistance” from any prohibited entity would not be eligible if construction began after Dec. 31, 2025. Credits would be disallowed for any tax years beginning after the date of enactment if the taxpayer is a prohibited foreign entity. Credits would be disallowed for entities receiving “material assistance” from any “foreign influenced entity” or sending payments to a prohibited foreign entity if construction began more than two years after the date of enactment. No credit would be allowed for tax years beginning after the date of enactment for leased wind and solar property qualifying for the residential tax credit under Section 25D. |
Clean energy investment credit (Sec. 48E). | The investment tax credit under Section 48E provides a credit against the cost basis of qualified property that generates electricity meeting lifecycle greenhouse gas emissions standards or is qualified energy storage or interconnection property. The credit is scheduled to phase out when certain nationwide emissions goals are reached (or 2032 if later). | Repeal all IRA energy credits. | The provision would repeal the credits for all property except nuclear for property beginning construction more than 60 days after enactment or placed in service after 2028. The credit would be available for advanced nuclear facilities that begin construction before 2029. Facilities receiving “material assistance” from any prohibited foreign entity would not be eligible if construction began after Dec. 31, 2025. Credits would be disallowed for any tax years beginning after the date of enactment if the taxpayer is a prohibited foreign entity. Credits would be disallowed for entities receiving “material assistance” from any “foreign influenced entity” or sending payments to a prohibited foreign entity if construction began more than two years after the date of enactment. No credit would be allowed for tax years beginning after the date of enactment for leased wind and solar property qualifying for the residential tax credit under Section 25D. |
Credit for carbon oxide sequestration (Sec. 45Q). | Section 45Q provides a credit per metric ton of carbon captured and permanently sequestered. The credit expires for projects beginning construction after 2032. | Repeal all IRA energy credits. | The provision would not allow taxpayers that are foreign entities of concern to qualify for the credit for tax years beginning after the date or enactment. Taxpayers that are a “foreign influenced entity” would be ineligible for the credit for tax years beginning two years after the date of enactment. The credits would not be transferable for projects beginning construction more than two years after the date or enactment. |
Clean hydrogen production tax credit (Sec. 45V). | Section 45V provides a production tax credit for producing hydrogen meeting certain lifecycle greenhouse gas emissions standards. The credit expires for projects beginning construction after 2032. | Repeal all IRA energy credits. | The provision would repeal the credit for projects beginning construction after 2025. |
Zero-emission nuclear power production credit (Sec. 45U). | Section 45U provides a production tax credit for producing nuclear power for facilities placed in service before August 16, 2022. | Repeal all IRA energy credits. | The provision would repeal the credit for tax years beginning after 2031. The provision would not allow taxpayers that are foreign entities of concern to qualify for the credit for tax years beginning after the date or enactment. Taxpayers that are a “foreign influenced entity” would be ineligible for the credit for tax years beginning two years after the date of enactment. |
Advanced manufacturing production credit (Sec. 45X). | Section 45X provides a credit for producing and selling certain wind, energy, inverter and battery components, as well as critical minerals. The credit begins to phase out in 2030. | Repeal all IRA energy credits. | The provision would repeal the credit for wind energy components sold after 2027 and for all other components sold after 2031. The provision would not allow taxpayers that are foreign entities of concern to qualify for the credit for tax years beginning after the date of enactment. Taxpayers that are a “foreign influenced entity” would be ineligible for the credit for tax years beginning two years after the date of enactment. There are also restrictions on components made with material assistance from a foreign entity of concern or making any payments to a prohibited foreign entity. The credit would not be transferable for components sold after Dec. 31, 2027. |
Energy investment tax credit (Sec. 48). | The investment tax credit under Section 48 is available only for projects that began construction before 2025, except for geothermal heat pump property, which must be placed in service before 2035. | Repeal all IRA energy credits. | The provision would begin to phase out the credit for geothermal property for projects beginning in 2030 and would be completely repealed for projects beginning construction in 2032 or later. The provision would not allow taxpayers that are foreign entities of concern to qualify for the credit for tax years beginning after the date of enactment. Taxpayers that are a “foreign influenced entity” would be ineligible for the credit for tax years beginning two years after the date of enactment. The credits would not be transferable for projects beginning construction more than two years after the date of enactment. |
Qualifying income of certain publicly traded partnerships (Sec. 7704). | Publicly traded partnerships can generally be taxed as partnerships only if 90% of their income comes from qualifying income sources, such as real property or certain traditional energy activity. | No specific provision. | The provision would add to the definition of qualifying income certain income from carbon capture facilities or for the transportation or storage of sustainable aviation fuel or hydrogen. |
Tax-Exempt Provisions
| ITEM | CURRENT LAW | TRUMP PROPOSAL | HOUSE PROPOSAL FROM BILL PASSED MAY 22 |
Excise tax on private foundation net investment income (Sec. 4940(d)). | Net investment income of private foundations is subject to an excise tax of 1.39%, with a tiered rate structure based on the size of the foundation’s assets. | No proposal. | The provision would increase rates in a tiered structure. For private foundations with assets
The proposal would be effective for taxable years beginning after the date of enactment. |
Excise tax on investment income of certain private colleges and universities (Sec. 4968). | Net investment income of certain educational institutions is subject to a 1.4% excise tax. | Large university endowments would be subject to a 35% excise tax. | The provision would increase rates under a new tiered structure. For institutions with adjusted per-student endowments
The proposal would be effective after 2025. |
| Excise tax on highly paid employees of tax-exempt organizations (Sec. 4960). | A 21% excise tax is imposed on compensation over $1 million to “covered employees,” defined as the five most highly compensated employees or former employees of the organization or someone who was a covered employee for any period after 2016. | No proposal. | The definition of covered employee would be revised to include all current and former employees. The proposal would be effective after 2025. |
| Taxation of qualified transportation fringe benefits (Sec. 511). | Unrelated business taxable income (UBTI) of an exempt organization does not include amounts paid or incurred for qualified transportation fringe benefits (such as parking or transit passes). A provision in the TCJA that was previously repealed included a similar provision. | No proposal. | UBTI would include amounts paid or incurred by tax-exempt organizations for qualified transportation fringe benefits. No deduction would be permitted for such expenditures. The proposal would be effective for amounts paid or incurred after 2025. |
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