What Tax Provisions are in the House's Big Beautiful Bill?

Early on May 22, 2025, the House of Representatives passed H.R. 1, the One Big Beautiful Bill Act, by a vote of 215-214. This budget reconciliation bill incorporated provisions drafted by 11 House committees relating to taxes, agriculture, transportation, education, homeland security, armed services, energy, financial services, immigration, natural resources, and more. The bill passed with several key changes incorporated from a late-night manager’s amendment. This article highlights key tax-related provisions in the bill that passed the House. A separate article will summarize other provisions of interest to agricultural producers.

The Senate will now amend this bill or replace it with one of its own. The more changes the Senate makes to the bill, the more difficult it will be to again pass through the House. Stay tuned for updates!

Extensions to Current Provisions

Individual Income Tax Rates

The bill would permanently extend the tax rates and brackets enacted by the Tax Cuts and Jobs Act (TCJA). Additionally, it would add an extra year of inflation adjustments to all brackets, except the 37 percent (top) bracket. Without an extension, tax rates are set to move higher in 2026, with the income at which the higher rates are reached moving lower. Without an extension, 2026 tax rates for individuals are estimated to be as follows (charts courtesy of JCT):

If passed, the 2026 tax rates and brackets for individuals are estimated to change as depicted below.

Standard Deduction

The current standard deduction is $15,000 for singles and $30,000 for marrieds. That amount would be cut in half in 2026, absent congressional intervention. The bill would make permanent the increased standard deduction and add an extra $1,000 for singles and $2,000 for MFJ from 2025 – 2028.

Personal Exemption

In 2017, taxpayers could generally take a personal exemption of $4,050 for themselves, their spouse, and each of their dependents. The TCJA suspended the personal exemption from 2018 through 2025. Personal exemptions, indexed for inflation, are scheduled to return in 2026. The bill would permanently repeal the personal exemption.

Child Tax Credit and Other Dependent Credit

The TCJA raised the child tax credit from $1,000 to $2,000 per qualifying child for tax years 2018 through 2025. Of this credit, $1,700 per child is refundable in 2025. The TCJA also increased the income at which the child tax credit begins to phase out. Before the TCJA, the credit began to phase out at incomes of $75,000 for singles and $110,000 for those married filing jointly. The TCJA increased these phase-out threshold levels to $200,000 and $400,000, respectfully, from 2018-2025.

The bill would increase the child tax credit for qualifying children to $2,500 from January 1, 2025, through December 31, 2028. After that, the bill would make the $2,000 child tax credit permanent. The bill would also retain the current, higher income phase-out thresholds permanently. Additionally, the bill would make permanent the refundable portion of the credit (currently at $1,700, indexed for inflation) and the earned income threshold of $2,500.

The TCJA also created a new $500 nonrefundable credit for other dependents who do not qualify for the child tax credit, including dependent children over the age of 16.  The bill would make this $500 other dependent credit permanent.  

Qualified Business Income Deduction

For tax years 2018 through 2025, the TCJA allows most individuals receiving income from a sole proprietorship or a pass-through business—including an S corporation or a partnership—to take a 20% qualified business income deduction (QBI deduction).

Additionally, agricultural cooperatives are allowed to take an IRC § 199A(g) deduction or pass that deduction through to their patrons, similar to the prior domestic production activities deduction (DPAD) under IRC § 199.

The bill would increase the IRC § 199A deduction to 23 percent in 2026 and make it permanent. The bill would also modify the way the deduction is phased out for higher income taxpayers.

Estate and Gift Tax Exemption

The TCJA temporarily doubled the estate and gift tax lifetime exemption (basic exclusion) from 2018 through 2025.

This bill would permanently increase the exemption, beginning in 2026, to $15 million per person, indexed for inflation each year after that. The bill would also permanently increase the generation-skipping tax exemption to $15 million, indexed for inflation.

Alternative Minimum Tax

The TCJA temporarily increased alternative minimum tax exemptions and phaseout limits for individuals, ensuring that many fewer taxpayers are subject to the AMT through 2025. The bill would extend these provisions permanently.

Home Mortgage Interest Deduction

Through 2025, the TCJA lowered the home mortgage interest deduction from $1 million ($500,000 married filing separately) to $750,000 ($375,000 married filing separately).

The TCJA also suspended the deduction for interest paid on a home equity loan, unless that loan is used to buy, build, or substantially improve the taxpayer’s home that secures the loan.

The bill would permanently extend these provisions.

Casualty Loss Deduction

For tax years 2018 through 2025, casualty or theft losses of personal-use property are deductible only if the loss is attributable to a federally declared disaster. Personal casualty and theft losses attributable to a federally declared disaster are subject to the $100 per casualty and 10% of adjusted gross income (AGI) reductions unless they are attributable to a qualified disaster loss. Personal casualty and theft losses attributable to a qualified disaster loss are not subject to the 10% of the AGI reduction, but the $100 reduction is increased to $500. These limitations are scheduled to end in 2026.

The bill would permanently extend the limitations for personal casualty losses enacted by the TCJA.

Miscellaneous Itemized Deductions

For tax years 2018 through 2025, the TCJA suspended all miscellaneous itemized deductions subject to the 2% floor, including, for example, unreimbursed employee expenses, hobby expenses, and investment fees. These deductions are scheduled to return in 2026.

The bill would permanently repeal miscellaneous itemized deductions.

Pease Limitation

The TCJA suspended the Overall Limit on Itemized Deductions (Pease limitation), which is scheduled to return in 2026.

The bill replaces the Pease limitation with a new two-pronged limit on the tax benefit allowed from itemized deductions.

Qualified Bicycle Commuting Reimbursement

The bill would permanently end the exclusion for a qualified bicycle commuting reimbursement that was in place before the TCJA. 

Moving Expenses

The bill would permanently repeal the deduction for moving expenses (except in the case of certain Armed Forces personnel) and would permanently end the exclusion from income for moving expense reimbursements (except for certain active-duty personnel in the Armed Forces).

Additional Tax Relief Provisions

Deduction for Qualified Tips

Presently, all tip income is taxable. The bill would provide a federal income tax deduction in the amount of “qualified tips” included on a Form W-2, 1099-K, 1099-NEC, or reported by the taxpayer on Form 4317.

The bill defines “qualified tips” as any cash tip received by an individual in an occupation that “traditionally and customarily” received tips on or before December 31, 2024. The Secretary of the Treasury is to publish a list of these occupations within 90 days of enactment. The tip deduction would not be allowed for highly compensated employees, for those in specified service trades or businesses, or if the tip is not completely voluntary.

Deduction for Qualified Overtime Compensation

The bill would create a federal income tax deduction for qualified overtime compensation received during the year. Qualified overtime compensation is overtime pay required under the Fair Labor Standards Act. This deduction does not apply to highly compensated employees or tip income. Qualified overtime must be reported separately on a W-2, and a social security number must be included on the tax return.

Enhanced Deduction for Seniors

For tax years 2025-2028, the bill would provide seniors (those 65 years of age and older) with an additional $4,000 deduction, called a “senior bonus amount.” If seniors are married, each spouse would be entitled to the senior bonus. The senior bonus would begin to phase out for taxpayers with incomes of $75,000 (single) or $150,000 (MFJ). The bonus deduction would be available for seniors who take the standard deduction and for those who itemize deductions. Taxpayers must have a social security number to claim this amount.

Car Loan Interest Deduction

Under current tax law, interest paid to finance personal-use property is generally not deductible. The bill would create a new deduction for “qualified passenger vehicle loan interest.” This deduction would be in place for tax years 2025-2028. Generally, qualified passenger vehicle loan interest would be interest paid or accrued on debt incurred after December 31, 2024, for the purchase of (and secured by a first lien on) an applicable passenger vehicle for personal use.  Deductible interest per year would be capped at $10,000.

This deduction phases out when the taxpayer’s modified adjusted gross income exceeds $100,000 (singles) or $200,000 (MFJ) and is totally eliminated when MAGI reaches $150,000 (singles) or $250,000 (MFJ).

An applicable passenger vehicle must be manufactured for use primarily on public streets, roads, and highways and have at least two wheels. Final assembly of the vehicle must occur in the United States. An all-terrain vehicle designed for use on land is an applicable passenger vehicle, as is a recreational trailer or camper.

Charitable Deduction for Non-Itemizers

The bill would instate a charitable deduction for those who do not itemize deductions. This deduction would be limited to $150 for singles and $300 for MFJ and would be available for tax years 2025-2028.

Trump Accounts

The bill establishes a new type of tax-preferred savings account for children. The account must be established before the child turns eight. The beneficiary and the trustee for these accounts must have a social security number. The contribution limit is $5,000 per year, although certain exceptions apply. Contributions, which may begin in 2026, are allowed until the beneficiary is 18 years old. Earnings from Trump accounts are not subject to tax until the money is distributed. The portion of a distribution that is attributable to the initial investment is excluded from income. Qualified distributions (see below) are taxed at capital gains rates. Non-qualified distributions are subject to ordinary income treatment. Non-qualified distributions before the age of 31 are subject to a 10 percent penalty.

No distributions from the account are permissible until the account holder reaches 18. At that time (before age 25), aggregate distributions may not exceed half of the cash value of the account. The distributions must be used for qualified expenses, such as qualified higher education expenses, qualified post-secondary credentialling expenses, certain small business expenses, or amounts used to purchase a first home. As noted above, distributions for these purposes are taxed at capital gains rates. For ages between 25 and 30, distributions can be used for other purposes, but non-qualified distributions are subject to ordinary income tax and a 10 percent penalty. At age 31, the account is no longer a Trump account, and it is distributed to the account holder, subject to the distribution tax rules.

The bill would also establish a pilot program where the Secretary of the Treasury would make a $1,000 credit to the Trump account of each qualifying child (U.S. citizens born 2025-2028). If a Trump account has not been established for such a child, the Secretary will create the account and notify the taxpayer responsible for the child. The Trump account can be declined. To receive the $1,000 credit, the taxpayer with the qualifying child must include the social security number of themselves and their child on their tax return.

Tax Provisions for “Rural America and Main Street”

Additional First Year (Bonus) Depreciation

The TCJA allowed 100 percent bonus depreciation through 2022 for qualifying property acquired and placed into service after September 27, 2017. It then established a phase-out over the next four years, in increments of 20%. For assets placed in service in 2025, the phase-out limits the bonus depreciation deduction to 40% of the basis. Bonus depreciation is scheduled to end in 2027.

The bill would increase bonus depreciation to 100 percent of basis for property acquired and placed in service after January 19, 2025, and before January 1, 2030. This includes trees and vines planted or grafted after January 19, 2025, and before January 1, 2030.

Research Expenses

Beginning in 2022, research and development expenses are not currently deductible under I.R.C. § 174. Instead, the expenses must be amortized over five years. This was a change made by the TCJA, but it was not effective until 2022. This change has been particularly difficult for software development companies and other businesses that devote teams of employees to developing and launching new products.

The bill would restore a present deduction for domestic research or experimental expenses paid or incurred in taxable years beginning after December 31, 2024, and before January 1, 2030. 

Business Interest Deduction Limit

The TCJA restricted business interest deductions generally to 30% of adjusted taxable income (ATI), beginning in 2018, for those taxpayers that meet the gross receipts test of I.R.C. § 448(c). In 2025, this means that the average annual gross receipts of the business for the prior three years were $31 million or more. Until 2022, taxpayers subject to the limit could add back depreciation, amortization, and depletion to their ATI, thereby increasing the amount of their allowable business interest deduction. Beginning in 2022, ATI does not include depreciation, amortization, or depletion. As such, business interest deductions are reduced, especially for capital intensive businesses such as agribusinesses. Although a “farming business” (as defined in IRC § 263A(e)(4)), can elect not to be subject to the business interest limitation, the electing farm business is then required to use the alternative depreciation system (ADS) to depreciate any farming assets with a recovery period of 10 years or more. This also means the farmer cannot use bonus depreciation on those assets. Once this election is made, it is irrevocable.  

The bill would calculate ATI without a deduction for depreciation, amortization or depletion for tax years beginning after December 31, 2024, and before January 1, 2030.

100 Percent Depreciation Deduction for Qualified Production Property

Under current law, nonresidential real property is commercial property for which straight line depreciation is taken over a 39-year recovery period. An exception to this rule is “qualified improvement property,” which is an improvement to the interior of nonresidential real property placed in service after the building is placed in service. Qualified improvement property has a 15-year class life and is eligible for bonus depreciation and Section 179. Nonresidential real property does not include farm buildings (20-year class life) or residential real property (27.5-year class life).

The bill creates an elective 100 percent depreciation allowance for “qualified production property,” defined as any portion of nonresidential real property that meets the following requirements:

• subject to depreciation under IRC § 168,
• used by the taxpayer as an integral part of a qualified production activity,
• placed in service in the United States or any possession of the United States,
• original use commences with the taxpayer,
• construction begins after January 19, 2025, and before January 1, 2029,
• subject to an election by the taxpayer to treat such portion as qualified production property, and
• placed in service after the date of enactment and before January 1, 2033.

Qualified production activity includes the manufacturing, production, or refining of tangible personal property. “Production” is limited to agricultural production and chemical production. Qualified production property does not include the portion of nonresidential real property used for offices, administrative services, lodging, parking, sales activities, software engineering activities, or other functions unrelated to manufacturing, production, or refining of tangible personal property.  It appears this provision would apply to new manufacturing plants. Only those portions of the plant dedicated to the production or manufacturing process, however, would be covered.

Section 179 Expense Enhancements

A taxpayer may generally elect to treat the cost of any Section 179 property as an expense, deductible for the tax year in which the property is placed into service. The maximum I.R.C. § 179 deduction for 2025 is $1,250,000, with an investment limit of $3,130,000. These higher amounts ($1,000,000 / $2,500,000) were enacted by the TCJA. They are adjusted for inflation each year.

The bill would increase the maximum Section 179 deduction to $2,500,000 and increase the phaseout threshold amount to $4,000,000 for taxable years after 2024. These amounts would be indexed for inflation after 2025.

1099-K Requirements

Under current law, third party settlement organizations (the organization that allows customers to make payments through third party payment networks) must report transactions with any payee where the amount of the transactions exceeded $600. Because of this low threshold, the IRS has implemented rules temporarily increasing the de minimis exception. In 2025, for example, third party settlement organizations are required to report if the total payment to a payee exceed $2,500, regardless of the number of transactions. In 2026, however, the IRS plans to enforce the $600 limit.

The bill would codify a rule based on IRS guidance from 2022-2023.  Under the bill, a third-party settlement organization would not be required to report unless the aggregate value of third-party network transactions with respect to a particular payee for the year exceeds $20,000 and the aggregate number of such transactions exceeds 200.   This rule would apply to returns made after 2021.

1099-MISC and 1099-NEC Requirements

Current law requires those engaged in a trade or business to file an information return if they make payments to any person totaling $600 or more in the course of the trade or business. A copy of the Form 1099-NEC or 1099-MISC must also be provided to the payee.

The bill would increase the payment threshold for these information returns to $2,000 per payee, beginning with payments made in 2026. The bill would also ensure that backup withholding requirements correspond to the new threshold.

Exclusion of Interest on Certain Ag Loans

The bill would allow banks insured under the Federal Deposit Insurance Act, domestic entities owned by a bank holding company, State or Federally regulated insurance companies, domestic entities owned by a State law insurance holding company, and the Federal Agricultural Mortgage Corporation (“Farmer Mac”) to exclude from gross income 25 percent of interest income derived from loans made after the date of enactment and before January 1, 2029, if the loans are secured by:

• domestic real property that is substantially used to produce agricultural products or a leasehold mortgage on such property;
• domestic real property that is substantially used in the trade or business of fishing or seafood processing or a leasehold mortgage on such property; and
• any domestic aquaculture facility or a leasehold mortgage on such facility.

Increased Gross Receipts Threshold for Certain Manufacturers

Generally, a C corporation or a partnership that has a C corporation as a partner may not use the cash method of accounting, unless their average annual gross receipts for the prior three years do not exceed $25 million, indexed for inflation. In 2025, this amount is $31 million.

The bill would increase the $25 million threshold for the gross receipts test to $80 million for a “manufacturing taxpayer” (other than a tax shelter), for tax years beginning after December 31, 2025. This amount would be indexed for inflation.

A “manufacturing taxpayer” is a corporation or partnership if, during the three taxable year period ending with the taxable year preceding such taxable year, substantially all of the gross receipts of the taxpayer are derived from the lease, rental, sale, license, exchange, or other disposition of “qualified products.” “Qualified products” include any tangible personal property produced or manufactured by the taxpayer in a manner that results in substantial transformation of the property comprising the product.

These taxpayers could also apply the new limit for purposes of the business interest deduction limit, uniform capitalization rules, and when accounting for inventories.

Clean Energy Credits

The bill would repeal or scale back many of the clean energy credits implemented by the Inflation Reduction Act. Several of these restrictions were added by the manager’s amendment to the bill just before passage.

Clean Vehicle Credits

The bill would repeal all clean vehicle credits—including the 30D clean vehicle credit, the 25E previously-owned clean vehicle credit, and the 45W commercial clean vehicle credit. The previously-owned clean vehicle credit would expire for all vehicles purchased after December 31, 2025. The clean vehicle credit would expire for vehicles purchased after December 31, 2026, but for vehicles placed in service in 2026, the credit would apply only to the first 200,000 "covered vehicles" per manufacturer sold in the U.S. from 2010 to 2025. The commercial clean vehicle credit would expire for vehicles purchased after December 31, 2025, except for commercial vehicles for which a written binding contract was in effect before May 12, 2025.

The bill would also repeal the alternative fuel vehicle refueling property credit under IRC § 30C after 2025.

Home Energy Credits

The bill would repeal the energy efficient home improvement credit under IRC § 25C for property placed in service after 2025. This credit applies to energy efficient windows, doors, HVAC property, and home energy audits.

Likewise, the bill would terminate the residential clean energy credit after 2025. This is a 30 percent credit applying to the installation of solar, small wind, and geothermal heat pump property in a home.

The bill would also repeal the new energy efficient home credit available to contractors after 2025, unless construction of the home began before May 12, 2025. In the event of the latter, the credit expires in 2026.

Clean Fuel Production Credit

The bill would extend the clean fuel credit under IRC § 45Z through 2031 (currently scheduled to end for fuel sold after 2027) and restrict the credit to fuel produced from domestic feedstocks.  Transferability of the credit would end in 2028.

Clean Electricity Production Credit

The bill would terminate the IRC § 45Y clean electricity production credit for any facilities with construction beginning after 60 days from the date of enactment of the law. If construction had begun within 60 days, the credit would be unavailable for facilities placed into service after 2028.  

Clean Electricity Investment Credit

The bill would likewise terminate the IRC § 48E clean electricity investment tax credit for any facilities for which construction is started more than 60 days after the enactment of the law. If construction has begun within 60 days, the credit would be unavailable for facilities placed in service after 2028.

The bill would retain the IRC § 48 investment credit for geothermal only, through 2031. The credit, however, would begin to phase out in 2030. Transferability of this credit would be repealed for facilities that begin construction more than two years after the enactment of the law.

Carbon Oxide Sequestration Credit

The bill would largely leave the current IRC § 45Q carbon oxide sequestration credit intact. It is not scheduled to expire until 2033. The bill would prevent specified foreign entities from claiming the credit and terminate transferability of the credit for carbon capture facilities where construction begins after the date that is two years after the date of enactment.

State and Local Tax Deduction

The TCJA restricted the federal deduction for state and local taxes to $10,000. This was a revenue raiser. This provision is set to expire at the end of this year, again allowing all state and local taxes to be deducted. The House bill would increase the SALT deduction limit to $40,000 beginning in 2025. This deduction would begin to phase out when modified adjusted gross income reaches $500,000. For tax years 2026 through 2033, the deduction limit and the income threshold would be increased by 1 percent each year. The bill would also restrict the SALT deduction workarounds many states have put in place through pass-through entity taxes. Partnerships and S corporations that are specified service trades or businesses would not be eligible for the PTET deduction.

Excess Business Loss Limit

The TCJA implemented the noncorporate excess business loss rule that replaced (and expanded upon) the excess farm loss rule. Under I.R.C. § 461(l)(3)(A), an “excess business loss” is one that exceeds $500,000 (married filing jointly) or $250,000 (single). These limit amounts have been indexed for inflation, so that in 2025, loss limits are $626,000 for MFJ and $313,000 for singles. Currently, any loss disallowed by this rule is treated as a net operating loss and subject to NOL carryover rules. Although 2025 was originally the last year for this provision, intervening legislation has further extended this provision through December 31, 2028.

The bill would make the excess business loss limit permanent for taxpayers other than corporations. Additionally, the bill would modify the law so that excess business losses would be carried forward as excess business losses, rather than as net operating losses. This would prevent the use of the loss until the taxpayer has additional business income.

Contingency Fee Arrangements

The bill would prevent the Secretary of the Treasury from regulating, prohibiting, or restricting the use of a contingency fee in connection with the preparation of tax returns, claims for refund, or documents in connection with these matters on behalf of a taxpayer.

Increase in Debt Limit

The bill would increase the statutory debt limit by $4 trillion.