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A Clearer Look at the Competing House and Senate Tax Proposals

Back in May, the House passed the One Big Beautiful Bill Act—a sweeping tax package aimed at extending and enhancing several provisions of the 2017 Tax Cuts and Jobs Act (TCJA). Then, on June 16, the Senate released its own version of the bill—and it doesn’t quite match the House’s.

To move forward, both chambers must agree on identical language. With Republicans aiming to finalize the bill by July 4, negotiations are heating up. Here’s a plain-English breakdown of where things stand.

Key Areas of Difference

Several tax areas are at the center of the debate. These include:

1. Business Tax Breaks (“The Big Three”)

• Bonus depreciation (writing off 100% of qualified assets immediately)
• R&D expensing
• Interest deduction rules
• Senate: Wants to make these permanent
• House: Applies them only through 2029

Why it matters: Making these permanent would give businesses more certainty for long-term planning and investments.

2. State and Local Tax (SALT) Deduction

• Senate: Keeps the $10,000 cap in place, no income-based phaseout
• House: Raises the cap to $40,000, but limits it for high earners

Why it matters: High-income taxpayers in high-tax states would see very different results depending on which version prevails.

3. Qualified Business Income (QBI) Deduction

• Senate: Keeps the 20% deduction and makes it permanent
• House: Temporarily increases the deduction to 23%

Why it matters: The Senate’s version offers more consistency; the House version gives a short-term bump.

4. Clean Energy Incentives

Both bills look to scale back incentives created by the Inflation Reduction Act—but the Senate’s version would phase them out more gradually and on different timelines.

Other Senate Highlights

Individual Tax Provisions

• Makes TCJA-era tax brackets and standard deductions permanent
• Adds new above-the-line deductions for tips and overtime pay
• Locks in limits on business losses used to offset personal income

Estate Tax

• Increases the exemption amount to $15 million (adjusted for inflation) and makes it permanent
• Aligned with the House version here

Charitable Deductions

• Adds a 0.5% income threshold for individuals to deduct charitable giving
• Keeps the 1% floor for corporations

Notable Additions in the Senate Bill

• Qualified Small Business Stock (QSBS): More generous gain exclusions and higher thresholds for qualification
• Opportunity Zones: Overhaul and extension, with new benefits for rural investments
• Employee Retention Credit (ERTC): Tightens enforcement and expands audit timelines
• Disaster Relief: Expands eligibility for casualty loss deductions
• Nonprofits & Higher Ed: Higher taxes on large university endowments and expanded excise taxes on compensation

What’s Missing from Both Bills?

Interestingly, both versions avoid:

• Raising corporate tax rates
• Adjusting capital gains or carried interest rules
• Changing the individual tax rates for top earners

What Comes Next

Negotiations between the House and Senate will be critical. If they can’t reach a consensus, the entire package could stall—especially with a projected $2.4 trillion cost attached to the House version. The Senate version has not yet been scored.

Our Take

While no version is final, the shape of the legislation gives a good preview of where tax policy could be heading—especially for business owners, high-income earners, and those planning for major life events like a liquidity event or generational wealth transfer.

If you have questions about how this could impact your financial or tax strategy, now is the time to start planning.