Tax Bill Passes House: Key Highlights and Legislative Timeline

  • Tax strategies
  • 5/22/2025
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Key insights

  • The House passed the tax bill on May 22.
  • As the tax bill makes its way through the legislative process, several steps must happen before it would land on the president’s desk to be signed into law.
  • The proposed tax bill includes significant changes, from extending current tax rates to enhancing business deductions, and more.
  • Stay informed and connected as the tax bill progresses. These potential tax changes could significantly impact your individual and business tax strategy.

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The proposed tax bill is poised to extend tax rates and bring significant changes to deductions and credits, impacting both individuals and businesses. Understanding these changes and staying informed throughout the legislative process is crucial for effective tax planning, navigating potential impacts, and making informed decisions.

Latest tax bill updates

On May 22 the House passed the tax bill, known as the One Big Beautiful Bill (OBBB), by a mostly party-line vote of 215 to 214 (with one person voting “present”).

Late-stage amendments were made to various tax sections of the OBBB by the House Rules Committee, including increases to the SALT cap and modification to Inflation Reduction Act (IRA) credit phase-out dates. The OBBB will be taken up by the Senate next month.

What is the process for turning the tax bill into law?

Now that the House has passed the tax bill, there are several legislative steps that follow:

  • The House’s budget reconciliation package (tax inclusive) now heads to the Senate where it will undergo a similar markup process, likely during the month of June
  • Once the Senate passes its own version of the budget reconciliation package, the House and Senate will need to reconcile their differences
  • The House and Senate separately vote on and pass the reconciled version
  • Congress sends the bill to President Donald Trump for signature

CLA Insight:

When could the tax bill be passed?

On the optimistic side, this process could be completed by July 4, as mentioned by Treasury Secretary Scott Bessent a couple weeks ago. But more realistically, assuming there are no major speed bumps, the likely completion date is the end of July or early August. Regardless of timing, a lot can change between now and the time President Trump signs the final tax bill.

Potential tax changes in the proposed bill

Some key tax highlights in the House’s OBBB, in addition to the TCJA extensions and President Trump’s campaign promises, include:

  1. Extending current tax rates: The current income tax rates and brackets for individuals, estates, and trusts will continue (adjusted for inflation).
  2. Bigger tax break for owners of pass-through businesses: The tax deduction for owners of qualified pass-through businesses will increase from 20% to 23%, starting with the 2026 tax year. This effectively reduces the top rate on qualified business income (QBI) from 29.60% to 28.49%.
  3. Higher limit for state and local tax deductions for individuals, estates, and trusts: The SALT cap was raised to $40,000 ($20,000 for married filing separately) for filers with modified adjusted gross income (AGI) up to $500,000 ($250,000 for married filing separately) before phasing down. Both the SALT cap and the modified AGI levels will increase by 1% annually through 2033. Taxpayers in the 37% tax bracket may have their SALT deduction further limited by the Pease limitation.
  4. SALT cap workarounds curbed: The deduction for state income taxes paid by pass-through entities (i.e., PTET taxes) will be limited with exceptions for qualified trades or businesses (starting with the 2026 tax year).
  5. Larger estate and gift tax exemption: The amount you can give away during your lifetime without paying estate or gift taxes will increase to $15 million, adjusted for inflation, starting from the 2026 tax year.
  6. Changes to tax credits: Various tax credits under the IRA will be significantly changed and phased out.
  7. Enhanced expensing of certain property: Businesses can fully deduct the cost of certain property and equipment with enhanced bonus depreciation starting January 19, 2025, and increased Section 179 expensing starting January 1, 2025.
  8. Restoration of full deduction for research and development costs: Beginning in 2025, companies can fully deduct their domestic research and development expenses. Previously capitalized costs incurred in prior years would still be required to be amortized.
  9. Increased business interest deduction: Beginning in 2025, businesses may be able to deduct more interest expense due to the reinstatement of the depreciation and amortization addback when computing the Section 163(j) business interest limitation.
  10. Changes to the employee retention credit (ERC): The time period for the IRS to challenge an ERC claim would be extended to at least six years from the date the claim is filed. The IRS will stop processing refunds for Employee Retention Credit claims filed after January 31, 2024.
  11. Renewed opportunity zone program: The program that encourages investment in economically distressed areas will be renewed and modified.
  12. Expanded access to simpler accounting methods for manufacturers: Currently, small manufacturing businesses can use simpler accounting methods and have fewer tax restrictions. The threshold on eligibility to qualify for this flexibility would rise from $31 million to $80 million in average annual gross receipts beginning in 2026.
  13. End of de minimis tariff exemption: Eliminates de minimis exemption (currently $800) to U.S. tariffs on imports.

What can you do now to prepare for the coming tax bill?

Take these proactive steps to manage the tax bill’s effect on your personal and professional circumstances:

  • Stay calm — The tax bill is still in the early stages of the legislative process and could be significantly modified by the Senate.
  • Stay informed — Visit our Tax Policy Watch page for updated insights on various aspects of the House tax bill to give you a more in-depth look at changes that may impact your families and businesses.
  • Stay connected — Subscribe to our tax policy newsletter to stay up to date and prepared regardless of where trade and tax policy lands.

How CLA can help with potential tax law changes

With customized tax strategies and comprehensive analysis on tax policy, CLA’s tax team can help you navigate tax planning and make informed decisions this year and beyond.

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