Tracking Key Provisions in Reconciliation Tax Bill
Republicans completed work on a major tax bill that would affect nearly all businesses and investors. 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 comparison of the key tax provisions in the final enacted bill that passed the Senate on July 1 and the House on July 3. The proposals are also compared against current law, President Trump’s campaign platform, and the earlier version of the bill that passed the House on May 22. Use it as a resource for tracking proposals and assessing their potential impact.
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 and subscribe to receive timely and informative Tax Policy & Legislation content straight to your inbox.
Comparison of Key Provisions in the 2025 Tax Legislation
Track the status of the federal tax proposals below to understand how the new legislation will impact you and your business.
The House proposal column is consistent with the tax title as passed by the House on May 22, while the final column is consistent with the final bill sent to the president's desk.
Item
Current Law
Trump Proposal
House Bill Passed May 22
Final Enacted Bill Passed by House and Senate
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. 39.6% rate reinstated on incomes over $1 million.
Extends the TCJA changes and provides an additional year of inflation adjustments for all brackets except the 35% and 37% brackets, effective after 2025.
Same as House but provides the additional year of inflation adjustments only to the 10% and 12% brackets.
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.
Short-term capital gains are taxed at ordinary rates;
Long-term capital gains rates (without net investment income tax):
- 0% for taxpayers with income up to $94,050 (MFJ), $47,025 (S), and $63,000 (HOH)
- 15% for taxpayers with income between $94,051 to $583,750 (MFJ), $47,026 and $518,900 (S), and $63,001 and $551,350 (HOH)
- 20% for taxpayers with income over $583,750 (MFJ), $518,900 (S), and $551,350 (HOH)
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 making the current bracket thresholds permanent.
Same as House.
Standard deduction (Sec. 63)
For 2025:
Increased amounts expire after 2025.
- $30,000 (MFJ),
- $15,000 (S/MFS),
- $22,500 (HOH).
Increased amounts expire after 2025.
The Trump proposal would increase these amounts and make the increases permanent.
Makes permanent the increased standard deduction under TCJA, with an additional year of inflation adjustment, and temporarily increases the deduction for four years from 2025 through 2029 by $2,000 (MFJ), $1,500 (HOH), and $1,000 (S/MFS).
Permanently increases the standard deduction beginning in 2025 to $32,000 (MFJ), $15,750 (S), and $23,625 (HOH).
Personal exemptions (Sec. 151)
Personal exemptions are at zero through 2025.
Personal exemptions would remain at zero permanently.
Permanently repeals personal exemptions.
Same as House, except a new personal exemption is created for seniors to replace the House deduction, discussed below.
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:
- $200,000 of modified adjusted gross income (MAGI) for single filers
- $400,000 MAGI for joint filers. CTC reverts to $1,000 per qualifying child after 2025, with a higher refund earned income threshold and lower phaseout levels.
Vice President JD Vance suggested increasing the CTC to $5,000 per child regardless of income level.
Increases 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.
Permanently increases the CTC to $2,200 beginning in 2025, indexing it to inflation thereafter. Makes permanent the refundable portion of the CTC.
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 filers) and between $383,900 and $483,900 (joint returns) in 2024. Provision expires after 2025.
The current rule would be made permanent.
Makes the deduction permanent at an increased 23% rate with a change to the phaseout rules for nonqualified income.
Extends deduction to business development companies, and other modifications effective after 2025.
Extends deduction to business development companies, and other modifications effective after 2025.
Makes deduction permanent at 20% rate with slightly different change to the phaseout rules for nonqualified income than the House.
Creates new minimum $400 deduction for taxpayers with at least $1,000 of qualified income, with both figures indexed to inflation.
Creates new minimum $400 deduction for taxpayers with at least $1,000 of qualified income, with both figures indexed to inflation.
Alternative minimum tax (AMT) exemptions and phaseouts (Sec. 55)
The TCJA increased exemption from 2018 through 2025. Exemptions in 2025:
Phaseout of AMT:
- $137,000 (MFJ)
- $88,1000 (S/HOH)
- $68,500 (MFS)
Phaseout of AMT:
- $1,252,700 (MFJ)
- $636,350 (S/HOH/MFS)
The increased exemption amounts would be made permanent.
Generally makes permanent the TCJA AMT thresholds permanent, but only after resetting the inflation adjustments back to the 2018 level, effectively reducing the thresholds and reindexing them to inflation after 2026. The amounts in 2026 would be reduced to:
Phaseout of AMT:
- $109,400 (MFJ)
- $70,300 (S/HOH)
- $54,700 (MFS)
Phaseout of AMT:
- $1,000,000 (MFJ)
- $500,000 (S/HOH/MFS)
Same as House but only the phaseout thresholds would be reset to the 2018 level, not the exemption amounts, and the phaseout of the exemptions based on the amount of income exceeding the thresholds would be slowed by half.
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.
Makes permanent the lower cap on indebtedness.
Same as House but treats certain mortgage insurance premiums as qualified interest.
Casualty loss deduction (Sec. 165(c))
Personal casualty losses incurred after December 31, 2017, and before January 1, 2026, are generally not deductible under the TCJA (except to the extent of personal casualty gains) unless they are disaster losses, which remain deductible under the TCJA to the extent the loss exceeds 10% of AGI.
The casualty loss limitations would be made permanent.
Makes the casualty loss limitations under the TCJA permanent.
Same as House but extends the exception for disaster loss treatment to state-declared disasters.
Other itemized deductions (Sec. 63)
From 2018 through 2025:
- Medical/dental expenses if they exceed 7.5% of AGI
- Charitable contributions generally up to 60% of AGI
- Misc. itemized deductions suspended
Itemized deduction limitations would be made permanent.
Makes limits on itemized deduction limits permanent.
Similar to House but allows an itemized deduction for certain educator expenses.
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.
Makes 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.
Same as House but the new limit would only cap the value at the 35% bracket rather than the 32% bracket.
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.
Reinstates a deduction for charitable contributions for taxpayers that do not itemize of up to $300 (MFJ) or $150 (S, HOH, MFS) for years 2025-2028.
Reinstates a permanent charitable deduction for nonitemizers beginning in 2026 of up to $1,000 (S, HOH, MFS) or $2,000 (MFJ). Creates a new 0.5% floor on itemized charitable deductions that limits the deduction to the amount exceeding 0.5% of the deductible base.
Other TCJA limits
From 2018 through 2025:
- Limit on deducting wagering losses
- Limit on exclusion and deduction of wagering losses
- Repeal of exclusion for bicycle commuting reimbursements
- ABLE account changes
- Exclusion for student loan forgiveness after death
- Treatment of service on Sinai Peninsula
Make TCJA limits permanent.
All listed TCJA changes would be made permanent.
Same as House, but would restore the ability to deduct up to 90% of wagering losses (up to wagering income).
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.
No provision.
Taxation of Social Security benefits (Sec. 86)
- 0% is taxed if combined income (AGI + nontaxable interest + half SS benefits) is below $32,000 (MFJ) or $25,000 (S)
- Up to 50% is taxed if combined income is between $32,000 and $44,000 (MFJ) or $25,000 and $34,000 (S)
- Up to 85% is taxed if combined income exceeds $44,000 (MFJ) or $34,000 (S)
All Social Security benefits would be exempt from tax.
Creates a $4,000 income tax deduction for taxpayers aged 65 and above for four years from 2025 through 2028. Deduction would be available without regard to whether deductions are itemized, but phases out beginning with MAGI exceeding $150,000 (MFJ) and $75,000 (S/HOH/MFS).
Creates a $6,000 personal exemption for taxpayers aged 65 and above for four years from 2025 through 2028. Exemption would phase out with MAGI 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.
Creates an income tax deduction equal to reported tip income from 2025 through 2028. 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. Deduction would be available without regard to whether deductions are itemized but only to taxpayers with income below the threshold for “highly compensated employees” under Section 414 ($160,000 in 2025). The provision would also extend the FICA tip credit to cover certain beauty services.
Same as House provision but deduction would be capped at $25,000 and would phase out for MAGI exceeding $150,000 (S) or $300,000 (MFJ).
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.
Creates an income tax deduction equal to overtime pay under the FLMA from 2025 through 2028. Deduction would be available without regard to whether deductions are itemized but only to taxpayers that are not “highly compensated employees” under Section 414 ($160,000 in 2025).
Same as House provision but deduction would be capped at $12,500 (S) or $25,000 (MFJ), and phase out for MAGI exceeding $150,000 (single) or $300,000 (joint).
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.
Creates 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. Deduction would phase out when modified AGI exceeds $100,000 (S) or $200,000 (MFJ). Effective for tax years 2025 through 2028.
Same as House except the deduction would be available for nonitemizers instead of as an above-the-line deduction.
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.
Makes SALT cap 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 199A.
Sets a $40,000 SALT cap for 2025 that would phase down to $10,000 for income exceeding $500,000. These thresholds would increase by 1% each year from 2026 through 2029. In 2030, the SALT cap would revert to $10,000.
Credit for caregivers
No provision.
A tax credit for caregivers would be provided.
No provision.
No provision.
Eliminate double taxation of Americans abroad
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.
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.
Makes 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.
Makes the active loss limit under Section 461(l) permanent while reducing the threshold at which the limit applies.
Tax-preferred savings accounts
The tax code provides for some tax-preferred savings and spending accounts.
No specific provision.
Creates 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.
Same general provision as House, with some minor and technical modifications.
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).
Exemption amount would be increased to $15 million per taxpayer in 2026 and indexed for inflation thereafter.
Same as House.
Item
Current Law
Trump Proposal
House Bill Passed May 22
Final Enacted Bill Passed by House and Senate
Corporate rate (Sec. 11).
Flat 21% rate.
Provide 15% rate for domestic manufacturing.
No provision.
No provision.
Bonus depreciation (Sec. 168(k)).
Bonus depreciation phases down to:
- 80% in 2023
- 60% in 2024
- 40% in 2025
- 20% in 2026
- 0% thereafter
Make 100% bonus depreciation permanent and extend to factories.
Restores 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 and the property is placed in service by the end of 2032.
Same as House but it would be made permanent (other than for the new category production property).
Production property would be required to be placed in service by the end of 2030 instead of 2032.
Production property would be required to be placed in service by the end of 2030 instead of 2032.
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.
Restore the expensing of domestic research costs for tax years beginning after Dec. 31, 2024, and before Jan. 1, 2030 (foreign research costs would still be amortized over 15 years). Taxpayers would retain election to capitalize. The provision would require taxpayers to reduce their deduction by the amount of any research credit.
Same as House but domestic research cost expensing would be made permanent with additional transition rules.
Taxpayers would have the option to claim unused amortization deductions from tax years beginning in 2022 to 2024 in the first tax year beginning after 2024 or ratably in the first two tax years beginning after 2024. Alternatively, taxpayers that meet the gross receipts threshold for simplified accounting methods under Section 448(c) could amend returns to retroactively claim full expensing.
Taxpayers would have the option to claim unused amortization deductions from tax years beginning in 2022 to 2024 in the first tax year beginning after 2024 or ratably in the first two tax years beginning after 2024. Alternatively, taxpayers that meet the gross receipts threshold for simplified accounting methods under Section 448(c) could amend returns to retroactively claim full expensing.
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.
Restores 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.
Permanently restores the more favorable calculation for tax years beginning after Dec. 31, 2024, but amends the provision for tax years beginning after Dec. 31, 2025.
Interest capitalized to other assets would be subject to the limit (except interest capitalized to straddles under Section 263(g) or to certain production property under Section 263A(f)) and ATI would exclude income inclusions from Subpart F, GILTI, and any Section 78 gross-up.
Interest capitalized to other assets would be subject to the limit (except interest capitalized to straddles under Section 263(g) or to certain production property under Section 263A(f)) and ATI would exclude income inclusions from Subpart F, GILTI, and any Section 78 gross-up.
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.
Increases the Section 179 deduction cap to $2.5 million with a phaseout threshold of $4 million, indexed to inflation.
Same as House.
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.
Increases the threshold to $80 million for certain “manufacturing taxpayers,” but with adjusted aggregation rules for gross receipts.
No provision.
Long-term contracts (Section 460).
Taxpayers building homes are generally exempt from the percentage of completion method for long-term contracts. Home builders are also exempt from the uniform capitalization rules if they meet the gross receipts test under Section 448(c) ($31 million in 2025) and the contracts do not exceed two years.
No proposal.
No provision
Expands the exception from the percentage of completion method for home construction to include any residential construction and expands the exception from the uniform capitalization rules to apply to residential construction while increasing the allowable construction period to three years.
Qualified small business stock (Sec. 1202).
Taxpayers can exclude the gain from the sale of QSB stock held for more than five years.
No proposal.
No provision.
Provides a 50% exclusion for QSB stock held three years and a 75% exclusion for stock held four years.
Increases the current limit on the exclusion from $10 million (or 10 times basis) to $15 million indexed to inflation beginning in 2027.
Increases the current limit on assets at the time of stock issuance from $50 million to $75 million, indexed to inflation beginning in 2027. Provisions are generally effective for stock issued after the date of enactment.
Increases the current limit on the exclusion from $10 million (or 10 times basis) to $15 million indexed to inflation beginning in 2027.
Increases the current limit on assets at the time of stock issuance from $50 million to $75 million, indexed to inflation beginning in 2027. Provisions are generally effective for stock issued after the date of enactment.
Advanced manufacturing investment credit (Sec. 48D).
Section 48D provides a 25% credit for semiconductor manufacturing facilities.
No proposal.
No provision.
Increases the credit from 25% to 35% for property placed in service after 2025.
New Markets Tax Credit (Sec. 45D).
The new markets tax credit is scheduled to expire in 2026
No specific proposal.
No provision.
Makes the credit permanent.
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.
Extends program to 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 require new designations of opportunity zones, with special benefits for a new category of rural opportunity zones. The provision would also require additional reporting.
Makes program permanent over 10-year rolling designation periods. Gain deferred on investments made after 2026 would be recognized five years after investment with a 10% increase in basis.
Step-up in basis to FMV after 10 years would be capped at FMV after 30 years.
Makes changes to designations and reporting requirements similar to the House provision.
Step-up in basis to FMV after 10 years would be capped at FMV after 30 years.
Makes changes to designations and reporting requirements similar to the House provision.
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 $20,000 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.
Reinstates the 200 transaction and $20,000 threshold retroactive to the enactment of the $600 threshold.
Same as House.
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.
Increases the threshold for reporting to $2,000 beginning in 2026 and indexes it to inflation thereafter.
Same as House.
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.
Permits 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..
Same as House.
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.”
Limits the amount amortizable under Section 197 to 50% for acquisitions of professional sports franchises made after the date of enactment.
No provision.
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.
Increases the population component of the state low-income tax credit ceiling to 12.5% for 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.
The proposal would generally be applicable after 2025.
Permanently increases the population component of the state low-income tax credit ceiling to 12%.
Modifies the tax-exempt bond financing requirement.
Modifies the tax-exempt bond financing requirement.
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.
Expands 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.
Same as House.
Disguised sales (Sec. 707).
Section 707 provides rules for certain transactions between partners and a partnership.
No specific provision.
Clarifies that the rules prescribed under Section 707(a)(2) are self-executing and not contingent on the issuance of regulations by Treasury.
Same as House.
Remittance excise tax.
There is not specific current excise tax on remittances.
No specific provision.
Creates a 3.5% excise tax on certain “remittance transfers” made after 2025 with an exception for transfers from U.S. citizens and nationals.
Creates a 1% excise tax on remittance transfers made after 2025 with an exception for transfers sent from most accounts at financial institutions.
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.
Increases the amount of allowable assets held in taxable REIT subsidiaries to 25%..
Same as House.
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.
Provides an exception allowing taxpayers to deduct meals provided at the convenience of the employer if the meals were sold by the taxpayer in a bona fide transaction for full consideration.
Same as House but adds additional exception for meals provided on certain fishing vessels or processing plants.
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.
Disallows refunds effective as of the date of enactment unless the claim was filed by Jan. 31, 2024. Extends the statute of limitations for certain claims and increases preparer and promoter penalties in certain circumstances.
Substantially similar to House provision.
Item
Current Law
Trump Proposal
House Bill Passed May 22
Final Enacted Bill Passed by House and Senate
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 earnings of U.S. corporations; effective rate is 10.5% before FTC haircut), increasing to 13.125% after 2025.
Extend current rate.
Lowers the current Section 250 deduction slightly for tax years beginning after 2025, creating a permanent GILTI effective rate of 10.668% (before FTC haircut). The bill would also exclude qualified Virgin Islands services income from GILTI tested income.
Reduces the Section 250 deduction to 40% for tax years beginning after 2025, creating an effective rate of 12.6% (before FTC haircut). FTC haircut would be reduced from 20% to 10%. Taxes associated with PTET would no longer be treated as deemed paid under Section 78. QBAI return is repealed for purposes of the Section 951A calculation. Limits expense allocation for FTC purposes to “directly allocable” deductions and expressly excludes interest and R&E.
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%.
Reduces the Section 250 deduction to 33.34% for tax years beginning after 2025, creating an effective rate of 14%. QBAI reduction to FDII is repealed. Eligible income is reduced only by deductions properly allocable to the income and expressly excludes interest and R&E. Excludes income or gain from Section 367(d) transactions disposing of intangible property and property subject to depreciation amortization or depletion (effective June 16, 2025).
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.
Increases BEAT rate to 10.5%.
Makes permanent the current favorable treatment of credits.
Makes 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 tariffs on countries with “unfair” tax or trade policies.
Creates new Section 899, which increases tax and withholding rates on resident taxpayers from countries imposing “unfair foreign taxes.” Unfair foreign taxes would include the UTPR and digital services taxes, diverted profits taxes, “extraterritorial taxes,” “discriminatory taxes,” and any tax “disproportionally borne” by U.S. persons. Rates would increase five percentage points per year up to a maximum of 20 percentage points above the statutory rate. Domestic entities controlled by covered foreign resident taxpayers would also be subject to unfavorable BEAT changes. Provision would generally be effective for tax years beginning in 2026 and later.
No provision.
CFC look-through rule (Section 954(c)(6))
CFC look-through rules are scheduled to expire for tax years beginning on or after January 1, 2026.
No specific proposal.
No provision.
Makes the CFC look-through rule permanent.
Downward attribution rule (Sec. 958(b)(4)).
TCJA repealed the exception for downward attribution under Section 958(b)(4).
No specific proposal.
No provision.
Restores the exception from downward attribution rules under Section 958(b)(4), while adding a narrower rule under Section 951B that more closely aligns with TCJA’s intent.
Foreign tax credits (Section 904).
Income from inventory produced and sold by the taxpayers is generally sourced based on production activities.
No specific proposal.
No provision.
Treats income from the sale of inventory produced in the U.S. and sold through foreign branches as foreign-source income, capped at 50%.
Pro rata rules (Section 951).
The pro rata rules generally require a U.S. shareholder to own stock of the CFC on the last day on which the foreign corporation was a CFC.
No specific proposal.
No provision.
Requires a U.S. shareholder of a CFC to include its pro rata share of Subpart F or GILTI income if it owned stock in the CFC at any time during the foreign corporation’s tax year in which it was a CFC.
Item
Current Law
Trump Proposal
House Bill Passed May 22
Final Enacted Bill Passed by House and Senate
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.
Extends 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 emissions 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 of 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.
Same as House, but retains transferability and reinstates a stackable small agri-biodiesel credit under Section 40A.
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.
Repeals the credit for purchases after 2025.
Repeals the credit for purchases after Sep. 30, 2025.
Clean vehicle credit (Sec. 30D).
Section 30D provides a credit for certain EVs and other “clean” vehicles.
Repeal all IRA energy credits.
Repeals 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.
Repeals the credit for purchases after Sep. 30, 2025.
Commercial clean vehicles credit (Sec. 45W).
Section 45W provides a credit for certain commercial EVs and other clean vehicles.
Repeal all IRA energy credits.
Repeals the credit for purchases after 2025 unless the vehicle was acquired pursuant to a written binding contract in place before May 12, 2025.
Repeals the credit for purchases after Sep. 30, 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.
Repeals the credit for property placed in service after 2025.
Repeals the credit for property placed in service after June 30, 2026.
Energy-efficient home improvement credit (Sec. 25C).
Section 25C provides a credit for certain energy-efficient home improvement property.
Repeal all IRA energy credits.
Repeals the credit for property placed in service after 2025.
Repeals the credit for property placed in service after Dec. 31, 2025.
Residential clean energy credit (Sec. 25D).
Section 25D provides a credit for certain residential clean energy property.
Repeal all IRA energy credits.
Repeals the credit for property placed in service after 2025.
Repeals the credit for property placed in service after Dec. 31, 2025.
Energy-efficient commercial buildings deduction (Sec. 179D).
Section 179D offers a deduction of up to $5 per square foot for certain energy-efficient improvements to lighting, HVAC, and hot water systems and the building envelope.
Repeal all IRA energy provisions.
No provision.
Repeals the deduction for construction beginning after June 30, 2026.
New energy-efficient home credit (Sec. 45L).
Section 45L provides a credit for construction of energy-efficient new homes.
Repeal all IRA energy credits.
Repeals the credit for acquisitions after 2025 unless construction began before May 12, 2025.
Repeals the credit for acquisitions after Jun 30, 2026.
Energy property depreciation (Sec. 168).
Qualified energy property generally has a five-year depreciable life.
No specific proposal.
No provision.
Repeals the five-year depreciable life for energy property placed in service after the date of enactment.
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.
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). Taxpayers must generally meet prevailing wage and apprenticeship rules to receive full credit amounts. Additional credits are available for projects in energy communities or meeting domestic sourcing requirements.
Repeal all IRA energy credits.
Repeals the credit for all property except nuclear 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.
Phases out the credit for projects beginning construction after 2033, except for wind and solar. Wind and solar projects must be placed in service by the end of 2027 if they begin construction more than 12 months after the date of enactment. Facilities receiving “material assistance” from any prohibited entity would not be eligible if construction began after Dec. 31, 2025, but the definition of material assistance would include a cost threshold. No credit would be allowed for taxpayers that are prohibited foreign entities for tax years beginning after the date of enactment.
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 that 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). Taxpayers must generally meet prevailing wage and apprenticeship rules to receive full credit amounts. Additional 10% credits are available for projects in energy communities or meeting domestic sourcing requirements.
Repeal all IRA energy credits.
Repeals the credits for all property except nuclear property 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.
Phases out the credit for projects beginning construction after 2033, except for wind and solar. Wind and solar projects must be placed in service by the end of 2027 if they begin construction more than 12 months after the date of enactment. Facilities receiving “material assistance” from any prohibited entity would not be eligible if construction began after Dec. 31, 2025, but the definition of material assistance would include a cost threshold. No credit would be allowed for taxpayers that are prohibited foreign entities for tax years beginning after the date of enactment. Increases the domestic sourcing threshold for the 10% additional credit from 40% to 45% for construction beginning after June 16, 2025, 50% for construction beginning after Dec. 31, 2025, and 55% for construction beginning after 2026.
Credit for carbon oxide sequestration (Sec. 45Q).
Section 45Q provides a credit per metric ton of carbon captured and permanently sequestered. The maximum credit rates in 2025 for equipment placed in service after 2022 are $85 per metric ton for geologic storage and $60 per metric ton for tertiary injectant or other productive use (increased rates are available for direct air capture). The credit expires for projects beginning construction after 2032.
Repeal all IRA energy credits.
Repeals the credit for taxpayers that are foreign entities of concern to qualify 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 or enactment.
Increases the credit rates for productive use to the same $85 per metric ton available for geologic storage (with corresponding increase for direct air capture rates). Taxpayers that are a “foreign specified entity” or “foreign influenced entity” would be ineligible for the credit for tax years beginning after the date of 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.
Repeals the credit for projects beginning construction after 2025.
Repeals the credit for construction beginning after 2027.
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.
Repeals 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.
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.
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, except for critical minerals, for which the credit is permanent.
Repeal all IRA energy credits.
Repeals the credit for wind energy components sold after 2027 and for all other components sold after 2031. Denies a credit for taxpayers that are foreign entities of concern 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.
Repeals the credit for wind energy components sold after 2027 and phases out the credit for critical minerals, with 75% of the credit available for mineral produced in 2031, 50% for 2032, 25% for 2033, and no credit after 2033. Adds new credit for metallurgical coal. Denies a credit for components manufactured after 2025 if “material assistance” was provided by any prohibited entity, with the definition of material assistance including a cost threshold. No credit would be allowed for specified foreign entities for tax years beginning after enactment.
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.
Phases 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.
Eliminates the credit for construction beginning 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.
Adds income from carbon capture facilities or for the transportation or storage of sustainable aviation fuel or hydrogen to the definition of qualifying income.
Adds to the definition of qualifying income any income from carbon capture facilities, the transportation or storage of sustainable aviation fuel or hydrogen, nuclear energy, hydropower, and geothermal energy.
Item
Current Law
Trump Proposal
House Bill Passed May 22
Final Enacted Bill Passed by House and Senate
Excise tax on private foundation net investment income (Sec. 4940(d)).
Net investment income of private foundations is subject to a 1.39% excise tax, with a tiered rate structure based on the size of the foundation’s assets.
No proposal.
Increases rates in a tiered structure. For private foundations with assets
- Under $50 million, the rate would remain at 1.39%
- Equal to or greater than $50 million but less than $250 million, the rate would be 2.78%
- Equal to or greater than $250 million but less than $5 billion, the rate would be 5%
- At least $5 billion, the rate would be 10%.
No provision.
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.
Increase rates under a new tiered structure. For institutions with adjusted per-student endowments:
- Over $500,000 but not exceeding $750,000, the rate would remain at 1.4%
- Over $750,000 but not exceeding $1,250,000, the rate would be 7%
- Over $1,250,000 but not exceeding $2 million, the rate would be 14%
- Over $2 million, the rate would be 21%
Increases rates under a new tiered structure. For institutions with adjusted per-student endowments:
- Over $500,000 but not exceeding $750,000, the rate would remain at 1.4%
- Over $750,000 but not exceeding $2 million, the rate would be 4%
- Over $2 million, the rate would be 8%
Excise tax on highly paid employees of tax-exempt organizations (Sec. 4960).
A 21% excise tax is imposed on compensation over $1 million paid 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.
Revises definition of covered employee to include all current and former employees for tax years beginning after 2025.
Same as House, except that the provision would be limited to former employees employed in tax years beginning after 2016.
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.
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.
The proposal would be effective for amounts paid or incurred after 2025.
No provision.
Taxation of research income (Sec. 512).
Income from research is generally excluded from UBTI if the tax-exempt organization is operated primarily to carry on research with results that are freely available to the general public.
No proposal.
Narrows the exception for UBTI so it applies only if the actual results of research are freely available to the general public.
No provision.
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