Exactly six months into the 119th Congress, Republicans passed their “One Big, Beautiful Bill.” The sweeping tax and spending package delivers on key elements of President Trump’s legislative agenda including the extension of many Tax Cuts and Jobs Act (TCJA) provisions, new tax relief measures, several limitations on business and individual tax deductions, a roll back of Inflation Reduction Act (IRA) incentives, new funding for national defense and immigration enforcement, reductions in Medicaid and an increase to the debt limit.
After an especially turbulent week on Capitol Hill filled with last-minute, high-stakes negotiations, both chambers passed the same version of the reconciliation package. Trump then signed the bill into law on July 4, a symbolic target date that drove the reconciliation process in recent weeks.
The Final Bill
The Senate drafted the final bill, which represents a hard-fought compromise between moderates and conservatives within the upper chamber. While many House Republicans publicly objected to portions of the Senate’s proposal, the House eventually passed it without any changes.
The final product generally resembles the Senate’s first proposal, the tax provisions of which are detailed in Tracking Tax Reform: A Closer Look at the Senate Finance Committee Tax Framework; however, negotiations led to several key changes.
Notable revisions include:
- State and Local Tax (SALT) Cap: Republicans struck a deal to increase the SALT cap to $40,000 for a five-year period.
- Green Energy Credits: The final deal tweaked the rollback of IRA credits, including a more moderate phaseout for wind and solar projects.
- “Revenge Tax”: After Trump and Treasury Secretary Scott Bessent announced a deal with G7 countries, the Section 899 retaliatory tax provisions were removed from the bill.
- Pass-Through Entity Tax (PTET): Previous versions of the bill contained limitations on the deductibility of PTET payments; however, all PTET provisions were dropped from the final bill.
- Base-Erosion and Anti-Abuse Tax (BEAT): The final version removed the significant changes to the BEAT regime, opting instead to increase the rate from the current 10% to 10.5%.
Cherry Bekaert will release a more comprehensive look at the final bill in the coming days.
Total Cost
The Joint Committee on Taxation estimates the total cost of the tax provisions to be $4.47 trillion when measured against current law and $715 billion when measured against current policy. The final tax and spending cut figures meet the Senate’s reconciliation instructions but exceed those allowed by the House, violating the framework policymakers in the lower chamber painstakingly negotiated just three months ago.
For more information on each chambers’ reconciliation instructions, visit Tracking Tax Reform: Congress Adopts Compromise Budget Resolution.
Additionally, the Congressional Budget Office estimated the bill will increase total deficits by $3.4 trillion over 10 years, a figure that spooked many deficit hawks. After the Senate passed their version of the bill, numerous House conservative policymakers vehemently opposed the upper chamber’s proposal, citing the impact on the federal deficit.
Speaker Mike Johnson (R-LA) and Trump were ultimately able to get members onside with promises of robust enforcement of provisions in the bill, including IRA credit phaseouts, and leveraging the immense political pressure of the moment.
Additional Details and Upcoming Webinar
As noted above, our Tax Policy and National Tax Office teams will publish more information on the contents of the final bill later this week.
To help you navigate the impact of the tax reconciliation bill and understand what it means for your business and tax planning, Cherry Bekaert will host a series of webinars from July through September. Each session will cover a different aspect of the new law, with insights from our specialists.
Tax Horizons: Planning Ahead After the Reconciliation Bill
Join us for the sessions below — all webinars start at 12 P.M. ET.
- August 13: Your Financial Legacy: Key Individual and Estate Tax Shifts
- August 27: Business Tax in Motion: Navigating Key Corporate and PTE Developments
- September 10: New Global Playbook: International Game Changers
- September 24: From Capitol to County: State & Local Tax in Focus
We encourage you to register for the full series, even if you are unable to attend every session.
Your Guide Forward
Cherry Bekaert’s Tax Policy group is committed to bringing you information on the latest developments and opportunities.
