The Trump administration tax bill that was approved by the House of Representatives is awaiting action in the Senate before negotiations begin to hammer out a single bill that will pass both bodies.
"We knew that the Senate would make changes," said Stephen Eckert, a partner in the National Tax Office of Top 100 Firm Plante Moran. For example, the expensing of R&D costs in the Senate bill would make R&D expensing permanent for domestic activities, while the House bill presents a five-year window for the deduction.
"That's an example of a change that is widely supported and is in the House bill," said Eckert. "The Senate version is more favorable than the House provisions, but there's no real surprise there."
The Senate bill also includes changes that were expected: It makes some adjustments for green energy credits that the House bill would have more aggressively ended. It also slows down the process and keeps them around for a longer period.
There are a few surprises, however. The Senate bill would change the interest expense capitalization rules that were not in the House bill.
Both the House and Senate bills propose a new Section 899. "The proposed new section would allow the U.S. to impose additional tax on distributions, paid to persons with a sufficient connection to a country that imposes unfair foreign taxes. The difference between the two proposals is that the Senate version delays implementation for a year in order to alleviate some of the concerns about it, at least in the short term," said Eckert.
"The other big item is the SALT cap," said Eckert. "The House version has a $40,000 limitation, which would get phased down but would not go below $10,000. The Senate version maintains the existing $10,000 cap on the state and local tax deduction. In many cases the Senate bill takes rules from the House version and makes them permanent, which would be a welcome change for practitioners, since it makes planning less difficult. The retention of the $10,000 SALT limitation has generated a lot of comments from Republicans in the House, and overall the SALT cap is one of the biggest items in the negotiations."
Although the Republican leadership is trying to accelerate and complete work by July 4, it might be a significant challenge to complete the package by that date, according to Eckert. "However, I would expect them to complete their work during the months of July. There are a few challenging negotiations left — provided those get resolved, it should advance to the House by the end of the month [of July]."
Roger Harris, president of Padgett Business Services, agreed. "It's unlikely that it will be on the president's desk by July 4. We think the Senate will get their work done by then, and Thune has said he would keep the Senate in session over the holiday. Then the question is, what does the Senate version have that's different from the House, and how long will it take to reconcile the two bills?"
Clearly, some bill will pass Congress by the end of the year, but both the House and the Senate bills will have passed their respective chambers by the narrowest of margins, leaving little wiggle room.
"There are small differences and big differences," Harris remarked. "Changing the threshold for Section 1099 reporting makes some sense, but the challenge for Republicans is the impact on the deficit going forward, so there are a lot of potential trade-offs. Whatever the impact, when a provision loses revenue you have to find something to replace it. It's like a jigsaw puzzle. You're juggling all the pieces from a political standpoint, while trying to accomplish the result from a budgetary standpoint, and sometimes those conflict with each other."
Meanwhile, the American Institute of CPAs expressed its appreciation to the Senate on June 18, 2025 for its efforts to "improve and correct" the House bill, while raising concerns over proposals to eliminate the pass-through entity tax SALT deduction for specified service trades or businesses. It listed a number of provisions it supports in the Senate bill, which it has expressed support for in the past.
These include:
- An increase in the standard deduction for years 2025 through 2028;
- Inclusion of legislation to expand the use of Section 529 accounts for costs associated with obtaining a post-secondary credential, which grants financial flexibility to those pursuing or advancing in the accounting profession;
- Repeal of the American Rescue Plan Act's lowered threshold for Form 1099-Ks to $600 — the reconciliation legislation will return the requirement to $20,000 with over 600 transactions;
- Increase in the filing threshold for Forms 1099-NEC and 1099-MISC from $600 to $2,000, adjusted for inflation;
- Provision regarding Section 174A research and experimental expenditures, which many now be expensed for domestic research or experimental expenditures under new Section 174A and provisions of transition rules for remaining domestic R&E expenditures;
- A provision regarding the extension and enhancement of Paid Family and Medical Leave Tax Credit, which would provide certainty to businesses by making a temporary paid family leave tax credit permanent;
- Continued permanency of the qualified business income deduction but expanding the deduction limitation phase-in range for SSTBs to $150,000 for married filing jointly and $75,000 for others, an increase from $100,000 and $50,000;
- Retention of the Tax Cuts and Jobs Act higher exemption amounts for the individual alternative minimum tax, which simplifies filing for many taxpayers;
- A provision regarding Section 163(j) that reinstates the earnings before interest, taxes, depreciation and amortization limitation;
- Permanent extension of Section 954(c)(6) of the look-through rule for controlled foreign corporations; and,
- Restoration of the limitation of "downward attribution" of stock ownership under Section 958(b).
"There's plenty of work left to be done," said Eckert. "All the issues are challenging. In legislation of this size, the longer it sits out there, the more time there is for lobbyists to exert pressure. I don't think there's any panic now, but as the weeks start to pass in July there will be some growing concern, especially if they have to consider other things such as the expiration of the debt ceiling in August. But right now we're where we expected to be at this point."
