Senate Finance Committee’s Take on the One Big Beautiful Bill Act

Following our prior alert on the House Ways & Means Committee version of the One Big Beautiful Bill Act (“OBBBA”), the House passed its version of the OBBBA (“House Bill”) on May 22, 2025, and on June 17, 2025 the Senate Finance Committee (“Senate Finance”) released its own proposed version of the legislation. While both versions share the same overarching goals, the Senate Finance version introduces several significant changes that could materially affect individuals, businesses, and tax planning strategies.

The following is a high-level summary of certain key differences between the House Bill and the Senate Finance version.

I. Provisions Affecting Individual Business Owners / Investors

1. Individual Tax Rate Structure. No material differences; both versions permanently extend the 37% top marginal rate.
2. State and Local Taxes (SALT). While the House Bill would increase the SALT deduction to $40,000, subject to phaseout (down to $10,000) for single taxpayers earning over $250,000 and married taxpayers earning over $500,000, the Senate Finance version would permanently extend the existing $10,000 SALT deduction cap. In addition, while the House Bill would completely deny pass-through entity tax (PTET) deductions for individuals in various fields of service (e.g., law, accounting, consulting, investment management, etc.), the Senate Finance version would permit individual owners to deduct the unused portion of their SALT cap plus the greater of (i) $40,000 of their PTET allocation or (ii) 50% of their PTET allocation. These changes could significantly affect planning strategies for pass-through entity owners.             
   We anticipate that this provision will continue to be heavily negotiated among the House and Senate members, as Republicans from high-tax states in both chambers are pushing to increase the SALT deduction cap for their constituents.
3. Estate and Gift Taxes. No material differences in the Senate Finance version, as both versions would increase the lifetime estate and gift tax exemption to $15 million ($30 million for married couples).
4. Carried Interests. As with the House Bill, the Senate Finance version does not propose any change to the current carried interest rules.
5. Excise Tax. While both the House Bill and Senate Finance version would impose a 3.5% excise tax on remittance transfers collected by non-US transfer providers who are secondarily liable if unpaid, the Senate Finance version exempts transfers funded through certain US financial institutions or US-issued debit / credit cards.
6. Unfair Foreign Taxes. Both the House Bill and Senate Finance version add a new Section 899 that will (i) increase US federal income and withholding tax rates for foreign persons that are sufficiently connected to any foreign country with “unfair foreign taxes” (e.g., extraterritorial or discriminatory taxes) and (ii) modify the application of the base erosion and anti-abuse tax (BEAT) to non-publicly held US corporations that are more than 50% owned by such foreign persons (the so-called Super BEAT).[1] Although both versions would also explicitly override the tax exemption provided in Section 892(a)(1) for foreign governments (including sovereign wealth funds) of such foreign countries, the Senate Finance version differs from the House Bill with respect to the types of unfair foreign taxes that may cause an increase in tax rates. The Senate Finance version also clarifies that the new Section 899 would not override existing exceptions for “portfolio interest” and bank deposit interest among certain other items.
7. Qualified Small Business Stock (QSBS) Gain Exclusion. Current law allows eligible taxpayers to exclude 100% of their gain on QSBS held for over five years up to the greater of $10 million or 10 times such taxpayer’s basis in their QSBS. In order to be eligible, the corporate issuer must not have a gross asset value exceeding $50 million at any time prior to, or immediately after, such issuance. Although the House Bill did not make any modifications to the QSBS rules, the Senate Finance version made significant revisions to these rules, as follows:

For more information on the Senate Finance Committee’s proposed changes to the QSBS tax benefits, please see QSBS Benefits Expanded Under Senate Finance Proposal.

II. Provisions Affecting Domestic and Foreign Business and Organizations

1. Qualified Business Income Deduction (Section 199A). While both the House Bill and Senate Finance version would make permanent the deduction for certain qualified business income from pass-through entities, the Senate Finance version maintains the rate at 20%, whereas the House Bill increases it to 23%.
2. Business Interest Expense Deductions (Section 163(j)). Both the House Bill and Senate Finance version would increase the cap on the deductibility of business interest expense for taxable years beginning after December 31, 2024 by determining such cap based on 30% of EBITDA (which is more taxpayer-favorable than EBIT under current law), but the Senate Finance version includes a new provision that would treat certain capitalized interest expense as subject to the Section 163(j) limitation.
3. Bonus Depreciation (Section 168(k)). While both the House Bill and Senate Finance version would restore 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025, the Senate Finance version would make the provision permanent.
4. Research and Experimental Expenditures (Section 174). Both the House Bill and Senate Finance versions allow immediate expensing of domestic research or experimental (R&D) expenditures starting in 2025, while continuing 15-year amortization for foreign R&D. However, the Senate Finance version would make the provision permanent and would (i) permit small businesses (under $31 million in gross receipts) to retroactively apply this provision for tax years beginning after December 31, 2021 and (ii) allow all taxpayers to elect to accelerate any remaining deductions for domestic expenditures made between January 1, 2022 and December 31, 2024 over a one- or two-year period.
5. Global Intangible Low-Taxes Income (GILTI) and Foreign-Derived Intangibles Income (FDII). Both the House Bill and Senate Finance version adjust the Section 250 deduction but take different approaches. The House Bill fully restores the higher deduction rates—50% for GILTI and 37.5% for FDII—on a permanent basis starting in 2026. In contrast, the Senate Finance version sets the rates at 40% for GILTI and 33.34% for FDII while containing modifications for the calculations of GILTI and FDII different from the House Bill.
6. Base Erosion and Anti-Abuse Tax (BEAT). Both the House Bill and Senate Finance version modify the BEAT regime, but in significantly different ways. The House Bill simplifies the approach by permanently reducing the BEAT rate from the scheduled 2026 rate of 12.5% to 10.1% and preserving the current treatment of tax credits beyond 2025. The Senate Finance version takes a broader approach, raising the rate to 14%, lowering the base erosion percentage threshold from 3% to 2%, limiting credit modifications, and exempting certain high-taxed foreign payments, while also expanding what counts as a base erosion payment.
7. Limitation Against Downward Attribution. The Senate Finance version reintroduces Section 958(b)(4), which was removed by the Tax Cuts and Jobs Act of 2017 (TCJA). Section 958(b)(4) limits the circumstances in which a US corporation could be treated as constructively owning stock of a foreign corporation held by such US corporation’s foreign shareholders (i.e., downward attribution). The elimination of Section 958(b)(4) significantly expanded the number of foreign corporations treated as “controlled foreign corporations” (CFCs) and, as a result, the number of US shareholders of such CFCs that were currently taxed on the earnings of such CFCs. The Senate Finance version’s reintroduction of Section 958(b)(4) would provide welcome relief to many US persons who became subject to the CFC rules, not as a result of direct or indirect ownership of such foreign corporation, but as a result of the TCJA’s requiring downward attribution of foreign corporation stock from foreign persons to US corporations held by such foreign persons.

III. Provisions Affecting Renewable Energy Businesses

1. Clean Electricity Production Credit (Section 45Y) and Clean Electricity Investment Credit (Section 48E). The Senate Finance version would phase out these credits for wind and solar projects beginning construction after 2025, fully eliminating the credits for such projects that begin construction after 2027. For other technologies (e.g., nuclear, geothermal, and hydropower), the Senate Finance version would phase out the credits for projects that begin construction after 2033, with the credit being completely phased out for projects beginning construction after 2035. The House Bill adopts a more aggressive phaseout, allowing these credits only for facilities that (i) begin construction no more than 60 days after enactment of the OBBBA and (ii) are placed in service prior to January 1, 2029.
2. Zero-Emission Nuclear Power Production Credit (Section 45U). Although the original draft from the Ways & Means Committee would have subjected this credit to a phaseout beginning in 2029, both the House Bill and Senate Finance version eliminate the phaseout and follow current law. The Senate Version would, however, add a fuel-origin restriction disallowing credits if nuclear fuel is produced by covered nations or entities, effective for taxable years after 2027.
3. Advanced Manufacturing Production Credit (Section 45X). The House Bill accelerates the phaseout of the advanced manufacturing tax credit, eliminating wind components sold after 2027 and all other components sold after 2031. The Senate Finance version follows the House Bill with respect to wind components by eliminating the credit for such components sold after 2027, but adds a phaseout for the creditability of sales of critical minerals (under current law, critical minerals are not subject to the Section 45X phaseout).
4. Transfer of Tax Credits (Section 6418). Unlike the House Bill, which repeals the tax credit transferability provision with respect to certain types of tax credits either two years after enactment of the OBBBA or in 2028 (depending on the type of credit), the Senate Finance version does not repeal tax credit transferability.

IV. Final Thoughts

While the House Bill and Senate Finance version of the OBBBA reflect shared policy goals, and we can see the tax package that will ultimately be delivered to President Trump for signature starting to come together, they diverge on key provisions that could materially affect taxpayers across various sectors and create some obstacles that the House and Senate will need to overcome for this tax package to be enacted.

The House and Senate will begin to negotiate in an effort to pass a comprehensive bill by the July 4 deadline set by Republican leadership (although we anticipate that deadline to slip further into the summer), with the SALT deduction cap and energy tax credits certain to be a few of the many subjects of those negotiations. The tax team at Mintz is closely monitoring the development of the proposals and will provide further updates as the OBBBA advances. Please reach out to Gregg Benson, Tim Santoli, Ari Feder, or your Mintz relationship attorney if you have any questions regarding the OBBBA.

Subscribe To Viewpoints