Senate Releases Draft of 'One Big Beautiful Bill'
On June 16, 2025, Senate leaders released their draft of the “One Big Beautiful Bill,” offering a detailed look at possible updates to federal tax policy, social program funding, and economic development incentives. While this version is still in draft form and has not been passed, it provides insight into how lawmakers may negotiate differences with the House bill, which was approved in May.
Proposed Tax Policy Changes
The Senate draft aims to make several provisions permanent from the 2017 tax cuts, including business tax breaks such as 100% bonus depreciation. Additionally, the Senate is proposing beneficial changes that make domestic research and development expenses deductible as they were prior to the TCJA, and base the 30% business interest expense limitation on EBITDA rather than EBIT.
A key area of debate is the cap on state and local tax (SALT) deductions. The Senate proposal maintains the current $10,000 limit, while the House draft raises it to $40,000. The SALT cap has been a major sticking point for some representatives from states with higher taxes, and this will be a major negotiating point over the coming weeks.
Qualified Business Income Deduction
Section 199A allows certain taxpayers to deduct 20% of their qualified business income. This 20% deduction was implemented with the 2017 tax cuts and is set to expire at the end of 2025. The House bill passed in May increased the allowable deduction to 23%, though the Senate version of the bill leaves the rate unchanged at 20%. There are also differences in certain phase-ins and the treatment of service businesses in the House and Senate bills that will need to be reconciled.
Energy Policy and Incentives
Unlike the House version, which calls for a sharp rollback of clean energy tax credits from the Inflation Reduction Act, the Senate draft would phase these out more gradually. It also adjusts eligibility rules so that more renewable energy projects can qualify before the credits expire.
Focus on Opportunity Zones
Another element of the Senate proposal is a permanent extension of the Opportunity Zone program, which offers tax incentives for investments in designated low-income areas. This program, originally set to sunset in 2026, would continue with a process to designate new zones every decade. Supporters view this as a way to encourage long-term private investment in economically distressed communities.
Next Steps and Outlook
Senate leaders have indicated an intention to move quickly, aiming to finalize the bill before the July 4 holiday. However, several points of disagreement remain — notably the SALT deduction limit, Medicaid adjustments, and the scope of energy incentives.
The final version will need to reconcile differences between the House and Senate drafts before advancing to the President’s desk for signature. As negotiations continue, CSH stakeholders are watching closely for updates that may impact tax planning. While our tax experts will continue to monitor the situation, feel free to connect with your CSH advisor if you have any questions.
