Tax Legislation
Senate Version of ‘One Big, Beautiful Bill’ Excludes SALT Relief
Date: 6/18/2025 | Author: Ryan Moore, CPA, CVA
Last month, we reported that the House version of the “One Big, Beautiful Bill” included a $30,000 increase to the cap on the deduction for state and local taxes (SALT) for individual taxpayers ($10,000 – $40,000). The $40,000 deduction is subject to a phaseout but cannot be less than $10,000. House GOP lawmakers fought hard for even higher state tax deductibility but settled for the $40,000. Those same GOP lawmakers may be disappointed by the version currently taking shape in the Senate.
On Monday, June 16th, the Senate released the first draft language of the tax provisions in its version of the “One Big, Beautiful Bill.” Though the Senate version of the bill intentionally mirrors many of the House provisions, there was one notable departure: the Senate version includes NO increase to the SALT deduction cap. The Senate’s current draft of the bill maintains the $10,000 SALT deduction cap.
It is worth noting that the Senate identified the $10,000 SALT deduction cap as a “placeholder” and expects further negotiations on this amount. While several GOP Senators support lowering the House’s proposed $40,000 SALT cap, many GOP Representatives have warned they’ll oppose the bill if the cap is reduced. This politically sensitive issue is far from resolved.
As always, we will continue to monitor progress on the legislation and keep you informed of important updates. Should you have any questions or concerns, please contact your WG tax advisors for more information.
House Bill Proposed Section 899 – A U.S. Response to “Unfair” Foreign Taxes
Date: 6/4/2025 | Author: Darko Naumoski, CPA
Buried in the House version of the “One, Big, Beautiful Bill” there is a new Internal Revenue Code (IRC) Section 899 in which lawmakers and the current administration are considering enacting laws with punitive measures against foreign countries that impose unfair taxes targeting American businesses. This response would be implemented via two separate measures: increased withholding taxes on taxpayers from countries that levy “unfair” taxes, and changes to the tax rate and the definition of applicable taxpayers subject to the Base Erosion and Anti-Abuse Tax regime.
Currently, the House bill is being reviewed and marked up by the various Senate committees, and changes are expected. However, it is unknown whether Section 899 will be modified, removed, or kept as is. Given the potential magnitude of these changes, businesses with cross-border activity should be aware of these potential provisions.
Under the proposed bill, “unfair taxes” as defined in Section 899 include:
- Digital Services Taxes (DSTs)
- Undertaxed Profits Rules (UTPRs), which are part of the OECD’s Pillar 2 framework
- Diverted Profits Taxes
- Other taxes the Treasury designates as unfair or discriminatory
Tax Impact: Increased Applicable Tax Rates
If a country is labeled as imposing unfair taxes on U.S. taxpayers, Section 899 would raise U.S. tax rates on foreign taxpayers and governments from that country by 5 percentage points per year, up to a maximum increase of 20 percentage points. The additional withholding tax is expected to apply to FDAP (fixed, determinable, annual, and periodic) income, such as interest, dividends, royalties, and annuities, U.S. real estate investment income (FIRPTA) withholding taxes, and U.S. effectively connected income of foreign corporations, among others.
The affected taxpayers under this provision are (but not limited to):
- Foreign governments and their subsidiaries of any discriminatory foreign country;
- Any individual (other than a U.S. Citizen or resident) who is a tax resident of a discriminatory foreign country;
- Any foreign companies that are majority owned by persons who are tax residents in discriminatory foreign countries;
- Any private foundation created or organized in a discriminatory foreign country.
However, foreign companies (including Controlled Foreign Corporations and Partnerships) that are majority-owned by U.S. persons are generally unaffected.
Treaty Considerations and Statutory Exclusions
Even if a country has a tax treaty with the U.S. (which usually reduces tax rates), Section 899 is expected to apply. For example, a treaty-reduced rate of 10% could increase to 15% in year one, and then keep growing yearly by 5% up to 30% (10% treaty rate, plus a maximum of 20% under IRC 899).
However, income that is excluded by statute from taxation (such as that under the portfolio interest exemption) appears not to be affected by the new law and remains fully exempt from income (and withholding) taxes.
Tax Impact – Changes to BEAT (Base Erosion and Anti-Abuse Tax)
Section 899 would expand the application of BEAT to U.S. and foreign companies that are majority-owned by applicable (foreign) persons. The law proposed the following changes:
- Remove the $500 million gross receipts and 3% base erosion percentage in some cases;
- Expands what is considered “base erosion payments”;
- Disallow certain credits and exceptions;
- Apply higher BEAT rates (up to 12.5%) to U.S. companies owned by targeted foreign entities.
The result of the above proposed changes would be the subjection of smaller foreign-owned U.S. businesses and foreign corporations doing business in the U.S. to the BEAT provisions. The Base Erosion and Anti-Abuse Tax system was designed to prevent large multinational corporations from avoiding taxes by shifting profits out of the country through deductible payments to foreign affiliates. The application of BEAT to smaller businesses will add a significant administrative burden and costs, in addition to a potential increase in their tax liabilities.
While multiple proposed dates of applicability based on certain criteria exist, the earliest proposed date that would impact most taxpayers is January 1, 2026.
If enacted, these provisions would have a far-reaching impact on both U.S.-based and foreign-parented businesses, as well as foreign companies and individuals doing business in the U.S. Taxpayers who may be impacted by these provisions should start planning for the potential impact on their business and immediately contemplate any repatriation or restructuring considerations to minimize the future impact.
As mentioned above, the House bill is currently with the Senate for their consideration. As of this writing, it is unknown whether there will be any changes to the proposed Section 899, or if any parts of it will remain.
Should you have any questions or concerns, please contact your WG tax advisors for more information.
New Deductions on the Horizon (2025–2028)
Date: 5/27/25 | Author: Jenna McDonough
Some major tax changes could be coming—if the Senate signs off. The House has passed a bill introducing several new deductions aimed at workers, seniors, and car buyers. Here’s a quick overview of what’s in the proposal:
Tip Deduction
Starting in 2025, tipped workers may qualify for a new deduction, though tips will still count as taxable income; this would allow a deduction for the amount reported as tips.
- Applies to voluntary cash tips in industries where tipping is customary, like restaurants, salons, or spas.
- Not available to high earners (over $160,000 in 2025) or those in professional services (e.g., law, finance).
- Must have a valid Social Security number.
- Individuals will not need to itemize to claim the deduction.
Bonus for Employers: The FICA tip credit would expand beyond the food and beverage industry to include businesses in the beauty service industry.
Overtime Pay Deduction
- Employees earning overtime (excluding tips) may be eligible for a deduction from 2025–2028. As with tips, income limits, and other eligibility rules would apply.
- Individuals will not need to itemize to claim the deduction.
Extra Deduction for Seniors
Taxpayers 65 and older could deduct an additional $4,000:
- Income Limitation – phases out at $75,000 (single) / $150,000 (joint).
- Must have a valid Social Security number.
This proposal is seen as a creative workaround to lower taxes on Social Security income – something that’s been politically challenging to do directly.
Auto Loan Interest Deduction
Car buyers could deduct up to $10,000 in auto loan interest, but:
- The vehicle must be assembled in the U.S.
- Does not apply loans to purchase business-use vehicles.
- Income Limitation – phases out at $100,000 (single) / $200,000 (joint).
- Individuals will not need to itemize to claim the deduction.
What’s next? The Senate still needs to weigh in, so these aren’t law yet—but change is on the horizon. We’re watching closely and will keep you updated.
We’ll share more details on the bill’s contents in the coming days. Stay tuned for updates.
House Narrowly Passes Bill, Senate Action Next
Date: 5/22/25 | Author: Bill McDevitt, CPA
Earlier today, the House passed the bill by a single vote. The legislation now moves to the Senate, where lawmakers will draft and vote on their own version.
If the Senate passes a revised version, both chambers will meet in conference to reconcile the differences between the versions and create a final blended bill. That blended version will then return to the House and Senate for a straight up-or-down vote, with no further changes allowed.
We’ll share more details on the bill’s contents in the coming days. Stay tuned for updates.
Key International Tax Provisions in the Proposed “One Big, Beautiful Bill”
Date: 5/19/25 | Author: Darko Naumoski, CPA
As the legislative process is in the early stages of development and changes are sure to follow, below we outline the major international provisions of the new “One Big, Beautiful Bill” as proposed by the House Ways and Means Committee.
- GILTI (Global Intangible Low-Taxed Income): 49.2% GILTI deduction made permanent (Effective rate of 13.335% after 80% limit on foreign tax credits).
- New law excludes certain Virgin Island services income from “tested income” and GILTI.
- FDII (Foreign-Derived Intangible Income): 36.5% FDII deduction made permanent (Effective rate of 13.335%).
- BEAT (Base Erosion and Anti-Abuse Tax): 10.1% BEAT rate made permanent (11% for banks/dealers).
- New Section 899 – Remedies against “Unfair Foreign Taxes”
- Increased tax rates on certain foreign companies and individuals who are residents in a country with an “unfair foreign tax” (up to 20%).
- Modified BEAT rules for US corporations majority-owned by foreign persons in a country with an “unfair foreign tax”.
- Disallowed Foreign Real Property Taxes: The law essentially disallows the deduction of foreign real property taxes except when accrued, incurred, or paid by an active trade or business in the course of its business operations.
- It does not include foreign income, war profits, and excess profits taxes
- Excise tax of 3.5% on remittances sent to foreign transferees unless the transferor is a US citizen. Remittance excise tax is treated as a refundable credit on the transferor’s US personal tax return.
We will continue to monitor the legislation surrounding the international provisions and provide updates as more details emerge.
*Note: The information in this post has been updated as of June 19th. The proposed law reflects the House-passed version of the bill dated May 22, 2025.
House Draft Bill Proposes Immediate Expensing for Section 174 R&D Costs
Date: 5/16/2025 | Author: Bridget Uribe, CPA
Among the handful of provisions in the House draft legislative package, called “The One, Big, Beautiful Bill,” is a long-awaited change to the treatment of research and experimental (R&E) expenditures under Section 174. The proposal would repeal the amortization requirement introduced by the Tax Cuts and Jobs Act (TCJA) and restore the ability for businesses to immediately expense domestic research and development (R&D) costs, reverting to the rules in place before 2022.
Under the TCJA, starting in tax year 2022, businesses have been required to capitalize and amortize domestic R&E costs over five years (fifteen years for foreign research), a significant departure from the longstanding rule of fully expensing R&D costs under Section 174.
The proposal would:
- Allow full expensing of domestic Section 174 R&E costs for tax years beginning after December 31, 2024, and before January 1, 2030
- Foreign R&D expenses are unchanged and must continue to be capitalized over a 15-year period
Notably absent from the bill is any guidance on whether taxpayers will be able to expense costs that have been already capitalized under the current rules for the tax years 2022-2024.
The proposal has been well received by industry groups and tax professionals, but its fate in the Senate remains uncertain.
We are closely monitoring this legislation and will continue to provide updates as more details emerge.
House Proposes Increase to the SALT Deduction Cap in "The One, Big, Beautiful Bill," but is it enough?
Date: 5/15/2025 | Author: Ryan Moore, CPA
As part of the House’s initial draft of the legislative package known as “The One, Big, Beautiful Bill,” lawmakers have proposed increasing the federal cap on the state and local tax (SALT) deduction from $10,000 to $30,000. For taxpayers filing jointly and earning over $400,000, the higher cap would be gradually reduced, but it would not drop below the current $10,000 limit.
The SALT deduction cap, originally implemented under the Tax Cuts and Jobs Act (TCJA) of 2017, has remained a point of contention, especially in high-tax states such as New York, New Jersey, and California. Under the TCJA, for the first time in U.S. tax history, a hard cap of $10,000 was imposed on the deduction for state and local income, sales, and property taxes. Many taxpayers in high-tax states exceed this threshold early in the year, making the limitation particularly impactful.
While the proposed increase represents a potential relief for some taxpayers, it has drawn criticism from lawmakers on both sides. A group of Republican representatives from high-tax states have argued that the $30,000 cap does not go far enough and have signaled they may withhold support for the bill unless the cap is raised further. With at least five House Republicans expressing opposition, the SALT provision may pose a significant hurdle to the bill’s advancement, particularly given the narrow GOP majority in the House.
We are closely monitoring this legislation and will continue to provide updates as more details emerge.
House Republicans Have Revealed the Tax Portion of the "Big, Beautiful Bill"
Date: 5/13/2025 | Author: Stephanie Holston, CPA
House Republicans have revealed the tax portion of the “Big, Beautiful Bill”, as promised.
Much of the bill is an extension of the Tax Cuts and Jobs Act of 2017.
The bill proposes to make the TCJA tax rate cuts permanent.
It also extends and enhances the 199A deduction.
The bill also includes President Trump’s promise to reduce the tax on overtime, retirement income, and tips. These are all capped and subject to phase-out.
The SALT cap still stands, although the $10,000 cap is raised to $15,000 for individuals and $30,000 for married filing jointly (MFJ).
The bill is scheduled for markup today. It remains to be seen what changes will be made in the House before it moves to the Senate.
Stay tuned for more updates and a deeper dive into the bill’s contents.
Can You Expense a Building? Maybe…
Date: 4/30/2025 | Author: Bill McDevitt, CPA
In a surprising announcement yesterday, Treasury Secretary Scott Bessent called full expensing “one of the most powerful parts of President Trump’s 2017 tax bill” and revealed plans to make it retroactive to January 20th. But that’s not all—it’s expanding.
“We’re also looking to add full expensing for factories,” Bessent said. “So bring your factory back. You can fully expense the equipment and the building.”
The takeaway? This proposal appears to be narrowly focused on incentivizing businesses to reshore manufacturing operations. Whether it becomes law—and under what conditions—remains to be seen, but the potential tax benefit is significant.
Renewing the American Dream Act
Date: 4/24/2025 | Author: Bill McDevitt, CPA
House Republicans are planning to bring Tax Legislation to the floor during the week of May 19, which is the final week the House is in session before the Memorial Day recess.
This timeline makes it unlikely that the Tax Legislation will reach the President’s desk before Memorial Day—a target date that few considered realistic to begin with. It remains to be seen whether the package will be ready for a floor vote by the week of May 19, as significant work remains. Drafting the legislative language is only part of the challenge; reaching consensus on what to include and exclude is often more difficult.
The working title of the Republican reconciliation package is the “Renewing the American Dream Act.” It is yet to be determined whether President Trump will accept this title or its acronym, RADA.
Senate Republicans Unveil Revised Budget Reconciliation Bill
Date: 4/4/2025 | Author: Bill McDevitt, CPA
This week, Senate Republicans unveiled a new version of the budget reconciliation bill. Key points include:
- $3 Billion in immediate spending cuts, with an expected total of $1.5-$2 Trillion in cuts.
- Tax cuts potentially totaling up to $5.2 Trillion.
- A $5 Trillion increase in the debt ceiling.
The Senate sets a $1.5 Trillion cap on tax cuts. Republicans plan to use the “current policy baseline” tactic to suggest that extending Trump’s 2017 tax cuts will cost nothing.
The GOP aims for the $5 Trillion debt ceiling increase to last until after the 2026 midterms.
The House and Senate must adopt identical budget resolutions before they can draft and pass the whole law. The Senate hopes to pass the modified bill this weekend, to have the House adopt it before their two-week Easter recess.
Speaker Mike Johnson aims to get the package to President Trump’s desk by Memorial Day, though some GOP senators believe it will take longer.
Time will tell—stay tuned!
Big Beautiful Bill
Date: 3/12/2025 | Author: Bill McDevitt, CPA
Speaker Johnson said today that he plans to get a vote in the House on the so-called “Big Beautiful Bill” by Easter, April 20, 2025.
He hopes that the bill can be passed by the Senate and signed into law by Memorial Day, May 26, 2025.
This is very ambitious timing, but given the speed at which things are happening in Washington now, it may be possible.
Time will tell…
The Budget Advanced by the House Contains Approval for $4.5 Trillion in Tax Cuts
Date: 3/5/2025 | Author: Stephanie Holston, CPA
The budget advanced by the House contains approval for $4.5 trillion in tax cuts. However, the Trump administration has an ambitious agenda regarding tax policy, which quickly adds up to more than what’s been approved.
The estimated costs of some of the proposals are:
- Extension of the TCJA provisions – $4 trillion
- Removal of the SALT deduction cap – $200 billion
- Exemption of tips from income – $100 billion
- Exemption of overtime from income – $300 billion
- Exemption of all social security payments from income – $600 billion
The total of the above comes to $5.2 trillion—and these are just some of the proposals. Now begins the negotiations, so it remains to be seen what will be in and what will be out.
In addition to that tug of war, how these tax cuts are scored also matters. We will continue to keep you informed as the budget moves through Congress.
Tale of Two Budget Bills
Date: 2/27/2025 | Author: Bill McDevitt, CPA
Last week, the House and the Senate each passed a budget bill that contains a budget resolution framework.
The bills were passed on a partisan line, with razor-thin margins.
The Senate approach is a small bill that does not address changes to tax law; they intend to address tax changes in the second bill later this year.
The approach in the House is much more comprehensive. The so-called “One Big Beautiful Bill” addresses many subjects, including tax reform.
The President prefers the “One Big Beautiful Bill” path.
So, what happens now?
At some point, the two chambers will need to agree on a single framework; let the arm-twisting and “Horse Trading” commence.
How Can You Pass Tax Legislation Without 60 Votes in the Senate?
Author: Bill McDevitt, CPA
Normally, the Senate needs 60 votes to pass tax legislation. However, the budget reconciliation process requires only a simple majority.
The following are the basic aspects of the budget reconciliation process:
Step 1: Congress passes a budget resolution. This resolution instructs House and Senate committees to write parts of the bill and how much to change spending or revenue. In other words, limits are set on the bill’s cost over a period, usually ten years.
Step 2: Committees write a bill that follows the instructions in the budget resolution.
Step 3: Committees mark up their bills. This is where the horse-trading happens. Often, there are more things that Congress wants to do than there is room in the budget resolution.
Step 4: The committee bills are packaged into a single reconciliation package. One in the House passes with a simple majority (as usual), and one in the Senate also passes with a simple majority (rather than the normal 60 votes).
Step 5: If we have two different reconciliation packages, what happens now? There will be more horse-trading until there is a single reconciliation bill.
Step 6: Both the full House and Senate must vote again to approve the reconciliation bill.
Step 7: The bill is signed into law by the President.
Because of the thin majorities in both the House and the Senate, just a few members can hold the progress hostage, until they get what they want. It will be interesting to watch. We will do our best to keep you up to date with this WG Tax Legislation Watch blog. At this point, if you are as old as me, you may be hearing the Schoolhouse Rock song “I’m Just a Bill” in your head. I know that I am.
For a more detailed analyisis of the budget reconciliation process, click here.
If you have questions or require additional information, please contact your WG advisor.
President Trump met with House GOP
Author: Bill McDevitt, CPA
Trump met with House GOP leadership yesterday. The stated goal of the House is to outline the main points of the bill by the end of the day today. Hold hearings next week and pass the legislation in April. Ambitious goals… Senate leadership is meeting with the President at Mar-a-Lago today. The Senate has stated that they first want to pass legislation to fund Trump’s deportation plan and complete the border wall. The Senate plans to take up tax legislation later this year.
Questions? Ask a WG Advisor
Bill McDevitt
CPA, CVA
This blog is intended to provide general information on potential tax law changes under consideration in Washington. The topics discussed reflect legislative proposals and ongoing developments; however, not all provisions may ultimately be enacted into law. There is no guarantee regarding the final content, timing, or passage of any tax legislation. The information presented should not be relied upon as tax, legal, or financial advice. For guidance on how potential changes may impact your specific situation, consult with a qualified tax professional.
