KPMG reports: Tax subtitle for “One Big Beautiful Bill Act”
Analysis and observations on the tax subtitle for the "One Big Beautiful Bill Act"
Introduction
The House of Representatives on May 22, 2025, passed H.R. 1 (House bill), the budget reconciliation bill known as the “One Big Beautiful Bill Act” (OBBBA) (read TaxNewsFlash). On July 1, 2025, the Senate passed its version of H.R. 1 (Senate bill), which made various amendments to the bill, including changes to the tax subtitle that was included in the House bill (read TaxNewsFlash). On July 3, 2025, the House passed the Senate bill without amendment, and the bill was signed into law by President Trump on July 4, 2025 (Pub. L. No. 119-21).1
This analysis of the legislation generally describes current law (meaning the law prior to enactment of the legislation), the House bill, and the amended Senate bill ultimately passed by the House and signed by the president.
Both the House and Senate bills would generally make permanent the tax provisions of the TCJA. Both bills also would temporarily provide for tax benefits promised by the president for tip income, overtime pay, and auto loan interest, and introduce a host of revenue-raising provisions. However, the enacted Senate bill differs from the House bill in several ways, as described below.
Among the important business provisions of the enacted Senate bill are provisions that:
- Reinstate and make permanent expensing of R&D costs, the higher EBITDA cap on the deduction for interest, and 100% bonus depreciation (the House bill would only extend these provisions for five years)
- Make permanent the section 199A deduction for passthrough business income (at the current 20% rate instead of the higher 23% rate of the House bill)
- Renew and reform the Opportunity Zone program
- Add a 100% first-year depreciation deduction for real property used in a production activity (the House bill included a similar proposal)
Note that the House bill included a proposed retaliatory tax on certain foreign corporations under new section 899 that was removed in the enacted Senate bill following the announcement of an agreement with the other G7 countries regarding the tax (read TaxNewsFlash).
The enacted Senate bill also includes revenue-raising provisions that:
- Repeal or phase out energy tax credits created by the Inflation Reduction Act (IRA) (though in some cases extending the credits further than the House bill)
- Make extensive reforms to the U.S. international tax regime, including to foreign-derived intangible income (FDII), global intangible low-taxed income (GILTI), and the base erosion anti-abuse tax (BEAT), and permanently extend the CFC look-through rule of 954(c)(6)
- Temporarily increase the $10,000 cap on the state and local tax (SALT) deduction to $40,000, with no significant changes to the treatment of passthrough entity taxes
- Impose a 1% tax on remittances to a recipient outside the United States (would have been 3.5% under the House bill)
- Increase taxes on college endowments (but at lower rates than those of the House bill and omitting a provision on private foundations)
- Bar the IRS from making payment on certain employee retention credit claims filed after January 31, 2024
1 The Joint Committee on Taxation (JCT) has provided a number of documents estimating the revenue effects of the various versions of the bill:
- JCX-26-25R, which estimates the revenue effects of the provisions of the bill as passed by the House on May 22, 2025
- JCX-35-25, which estimates the Senate-approved bill using a present law baseline (the same baseline used for the estimates for the House bill provided above) that assumes that tax provisions of current law expire according to their terms
- JCX-34-25, which estimates the Senate-approved bill using a “current policy baseline” as adopted by the Senate, which assumes that tax policies currently in effect (such as the lower Tax Cuts and Jobs Act (TCJA) individual tax rates) are permanent and therefore extending those provisions has no revenue effect.
KPMG reports: Tax subtitle for “One Big Beautiful Bill Act”
For KPMG analysis and observations, select a topic of interest below.
Accounting for income taxes implications
Accounting methods
Compensation and benefits
Exempt organizations
Estate and gift
Global mobility and select individual provisions
Incentives and credits
International
Passthroughs
Practice, procedure and administration
State income and federal excise tax implications
Overview of Senate tax measures for budget reconciliation
Overview and initial observations on H.R. 1 tax subtitle
Sector and industry highlights
These reports, mainly a compilation of the subject matter reports listed above, provide information related to specific sectors and industries.
Index of tax subtitle provisions
For ease of reference, provided below is a list of the provisions in H.R. 1 discussed in KPMG’s sector or industry-specific reports indicating the specific report(s) in which each provision is discussed.
IRC section | Section in House bill | Section in Senate bill | Provision | KPMG report |
1 | Sec. 110001 | Sec. 70101 | Extension and enhancement of reduced rates | |
63 | Sec. 110002 | Sec. 70102 | Extension and enhancement of increased standard deduction | |
151 | Sec. 110003 | Sec. 70103 | Termination of deduction for personal exemptions other than temporary senior deduction | |
24 | Sec. 110004 | Sec. 70104 | Extension and enhancement of increased child tax credit | |
199A | Sec. 110005 | Sec. 70105 | Extension and enhancement of deduction for qualified business income | |
2010 | Sec. 110006 | Sec. 70106 | Extension and enhancement of increased estate and gift tax exemption amounts | |
55 | Sec. 110007 | Sec. 70107 | Extension of increased alternative minimum tax exemption amounts and modification of phaseout thresholds | |
163 | Sec. 110008 | Sec. 70108 | Extension and modification of limitation on deduction for qualified residence interest | |
165 | Sec. 110009 | Sec. 70109 | Extension and modification of limitation on casualty loss deduction | |
67 | Sec. 110010 | Sec. 70110 | Termination of miscellaneous itemized deduction other than educator expenses | |
68 | Sec. 110011 | Sec. 70111 | Limitation on tax benefit of itemized deductions | |
132F | Sec. 110012 | Sec. 70112 | Extension and modification of qualified transportation fringe benefits | |
217 132 | Sec. 110013 | Sec. 70113 | Extension and modification of limitation on exclusion and deduction for moving expenses | |
224 | Sec. 110101 | Sec. 70201 | No tax on tips | |
225 | Sec. 110102 | Sec. 70202 | No tax on overtime | |
45S | Sec. 110106 | Sec. 70304 | Extension and enhancement of paid family and medical leave credit | |
25F | Sec. 110109 | Sec. 70411 | Tax credit for contributions of individuals to scholarship granting organizations | |
529 | Sec. 110110 | Sec. 70413 | Additional expenses treated as qualified higher education expenses for purposes of 529 accounts | |
529 | Sec. 110111 | Sec. 70414 | Certain post-secondary credentialing expenses treated as qualified higher education expenses for purposes of 529 accounts | |
170 | Sec. 110112 | Sec. 70424 | Permanent and expanded reinstatement of partial deduction for charitable contributions of individuals who do not elect to itemize | |
170 | Sec. 70425 | .5 percent floor on deduction of charitable contributions made by individuals and 60% limit on certain individual charitable contributions | ||
127 | Sec. 110113 | Sec. 70412 | Exclusion for employer payments of student loans | |
165 | Sec. 110114 | Sec. 70438 | Extension of rules for treatment of certain disaster-related personal casualty losses | |
1202 | Sec. 70431 | Expansion of qualified small business stock gain exclusion | ||
223 | Secs. 110201 – 110213 | Various tax changes relating to health savings accounts | ||
168 | Sec. 111001 | Sec. 70301 | Full expensing for certain business property | |
174 174A | Sec. 111002 | Sec. 70302 | Full expensing of domestic research and experimental expenditures | |
163 | Sec. 111003 | Secs. 70303, 70341, and 70342 | Modification of limitation on business interest | |
250 | Sec. 111004 | Secs. 70321, 70322, and 70323 | Modification of deduction for foreign-derived intangible income and global intangible low-taxed income | |
59A | Sec. 111005 | Sec. 70331 | Modifications to base erosion minimum tax amount | |
954 | Sec. 70351 | Permanent extension of look-thru rule for related controlled foreign corporations | ||
898 | Sec. 70352 | Repeal of election for 1-month deferral in determination of taxable year of specified foreign corporations | ||
958 | Sec. 70353 | Restoration of limitation on downward attribution of stock ownership in applying constructive ownership rules | ||
958 | Sec. 70354 | Modifications to pro rata share rules | ||
274 | Sec. 111006 | Sec. 70305 | Exceptions from limitations on deduction for business meals | |
168 | Sec. 111101 | Sec. 70307 | Special depreciation allowance for qualified production property | |
250 | Sec. 70311 | Rules for allocation of certain deductions to foreign source “Net CFC Tested Income” (fka Global Intangible Low-Taxed Income) for purposes of foreign tax credit limitation | ||
960 | Sec. 70312 | Modifications to determination of deemed paid credit for taxes properly attributable to tested income | ||
904 | Sec. 70313 | Sourcing certain income from the sale of inventory produced in the United States | ||
1400Z | Sec. 111102 | Sec. 70421 | Permanent renewal and enhancement of opportunity zones | |
179 | Sec. 111103 | Sec. 70306 | Increased dollar limitations for expensing of certain depreciable business assets | |
163 | Sec. 70341 | Coordination of business interest limitation with interest capitalization provisions | ||
163 | Sec. 70342 | Definition of adjusted taxable income for business interest limitation | ||
6050W 3406 | Sec. 111104 | Sec. 70432 | Repeal of revision to de minimis rules for third party network transactions | |
6041 | Sec. 111105 | Sec. 70433 | Increase in threshold for requiring information reporting with respect to certain payees | |
181 | Sec. 111107 | Sec. 70434 | Treatment of certain qualified sound recording productions | |
42 | Sec. 111108 | Sec. 70422 | Permanent enhancement of low-income housing credit | |
45D | Sec. 70423 | Permanent extension of the new markets tax credit | ||
448 | Sec. 111109 | Increased gross receipts threshold for small manufacturing businesses | ||
251A | Sec. 111110 | Global intangible low-taxed income determined without regard to certain income derived from services performed in the Virgin Islands | ||
45Z | Sec. 111111 | Sec. 70521 | Extension and modification of clean fuel production credit | |
856 | Sec. 111112 | Restoration of taxable REIT subsidiary asset test | ||
25E | Sec. 112001 | Sec. 70501 | Termination of previously owned clean vehicle credit | |
30D | Sec. 112002 | Sec. 70502 | Termination of clean vehicle credit | |
45W | Sec. 112003 | Sec. 70503 | Modification and termination of qualified commercial clean vehicles credit | |
30C | Sec. 112004 | Sec. 70504 | Termination of alternative fuel vehicle refueling property credit | |
25C | Sec. 112005 | Sec. 70505 | Termination of energy efficient home improvement credit | |
25D | Sec. 112006 | Sec. 70506 | Termination of residential clean energy credit | |
179D | Sec. 70507 | Termination of energy efficient commercial buildings deduction | ||
45L | Sec. 112007 | Sec. 70508 | Termination of new energy efficient home credit | |
168 | Sec. 70509 | Termination of cost recovery for qualified clean energy facilities, property, and technology | ||
45Y | Sec. 112008 | Sec. 70512 | Phase-out and restrictions on clean electricity production credit | |
48E | Sec. 112009 | Sec. 70513 | Phase-out and restrictions on clean electricity investment credit | |
45Z 6426 40A | Sec. 112010
| Sec. 70521 | Extension and modification of clean fuel production credit; termination of the sustainable aviation fuel excise tax credit; extension and modification of the small agri-biodiesel producer credit | |
45Q | Sec. 112011 | Sec. 70522 | Restrictions on carbon oxide sequestration credit | |
56A | Sec. 70523 | Intangible drilling and development costs taken into account for purposes of computing adjusted financial statement income | ||
45U | Sec. 112012 | Secs. 70510 and 70512 | Modifications of zero emission nuclear power production credit | |
45V | Sec. 112013 | Sec. 70511 | Termination of clean hydrogen production credit | |
45X | Sec. 112014 | Sec. 70514 | Phase-out and restrictions on advanced manufacturing production credit | |
48 | Sec. 112015 | Phase-out of credit for certain energy property | ||
7704 | Sec. 112016 | Sec. 70524 | Income from hydrogen storage, carbon capture added to qualifying income of certain publicly traded partnerships treated as corporations | |
6435 | Sec. 70525 | Allow for payments to certain individuals who dye fuel | ||
197 | Sec. 112017 | Limitation on amortization of certain sports franchises | ||
164 | Sec. 112018 | Sec. 70120 | Limitation on individual deductions for certain state and local taxes, etc. (SALT) and addressing SALT workarounds | |
162 | Sec. 112019 | Sec. 70604 | Excessive employee remuneration from controlled group members and allocation of deduction | |
4960 | Sec. 112020 | Sec. 70416 | Expanding application of tax on excess compensation within tax-exempt organizations | |
4968 | Sec. 112021 | Sec. 70415 | Modification of excise tax on investment income of certain private colleges and universities | |
4940 | Sec. 112022 | Increase in rate of tax on net investment income of certain private foundations | ||
4943 | Sec. 112023 | Certain purchases of employee-owned stock disregarded for purposes of foundation tax on excess business holdings | ||
512 | Sec. 112024 | Unrelated business taxable income increased by amount of certain fringe benefit expenses for which deduction is disallowed | ||
512 | Sec. 112025 |
| Exclusion of research income limited to publicly available research | |
461 | Sec. 112026 | Sec. 70602 | Limitation on excess business losses of noncorporate taxpayers | |
170 | Sec. 112027 | Sec. 70426 | 1-percent floor on deduction of charitable contributions made by corporations | |
Sec. 112028 |
| Enforcement of remedies against unfair foreign taxes | ||
5811 5821 | Sec. 112029 | Sec. 70436 | Remove silencers from the National Firearms Act | |
707 | Sec. 112032 | Sec. 70603 | Treatment of payments from partnerships to partners for property or services | |
N/A |
| Third party litigation funding reform | ||
4475 | Sec. 112104 | Sec. 70604 | Excise tax on certain remittance transfers | |
3134 | Sec. 112205 | Sec. 70605 | Enforcement provisions with respect to COVID-related employee retention credits | |
N/A | Sec. 112207 | Sec. 70607 | Task force on the termination of Direct File | |
6103 | Sec. 112208 | Sec. 70615 | Increase in penalties for unauthorized disclosures of taxpayer information | |
N/A | Sec. 112209 | Restriction on regulation of contingency fees with respect to tax returns, etc. | ||
3134 6676 | Sec 112205 | Sec. 70605 | Blocking ERTC credit or refund claims filed in 2024 | |
14002 | Secs. 70421, 70422, 70433 | Provisions relating to certain economic development and housing programs |
| |
170 |
| Sec. 70425 | 60% limitation on individual charitable contribution deductions | |
45B | Sec. 110101 | Sec. 70201 | Extension of tip credit to beauty service business | |
129 |
| Sec. 70404 | Enhancement of dependent care assistance program | |
45F | Sec. 110105 | Sec. 70401 | Employer provided child care credit | |
460 |
| Sec. 70430 | Exception to percentage of completion method of accounting for certain residential construction contracts |
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