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By Jonathan Tucker | Principal, Research & Development Tax Credits
Just after midnight on Thursday, May 22nd, a full House debate on the multi-trillion-dollar tax bill began, and the House narrowly passed this sweeping tax and spending package dubbed the “One Big Beautiful Bill Act” with a 215–214 vote, sending the legislation to the Senate.
KBKG Insight:
Two Republicans voted no, one Republican voted present, and two Republicans did not vote at all. Republicans originally could only lose 3 no votes to the pass the bill, but the passing of a Democratic Congressman earlier this week increased their margin to lose up to 4 no votes.
One Congressman who voted no stated: “Major provisions of the big beautiful bill are still being negotiated and written, yet we are being told we will vote on it today. Shouldn’t we take more than a few hours to read a bill this big and this consequential? It’s in our rules that we will have 72 [hours] to read every bill. Yet it’s been circumvented this week by a ‘manager’s amendment’ which substantially changes the bill but should only contain technical clarifications” This indicates that further changes are expected in the Senate as key details continue to be negotiated.
The bill includes approximately $4.5 trillion in tax cuts, including extensions of provisions from the 2017 tax law, the elimination of taxes on tips and overtime, and the temporary return of bonus depreciation and the Section 174 research and experimental deduction. To help offset the cost, the bill proposes roughly $2 trillion in cuts to federal programs such as Medicaid and food assistance. See here for more items in the bill (some minor changes have been made) and a summary matrix of big ticket items.
House Tax Bill Prioritizes 174 R&D Amortization Fix, Bonus Depreciation, SALT Cap, and more
“The One Big Beautiful Bill” expected changes for Tax Year 2025
Despite these offsets, the legislation is still projected to increase the national debt by nearly $3 trillion over the next decade, and if enacted into law and Congress takes no further action to address this deficit, that increase in the deficit would trigger mandatory cuts in Medicare (not currently in the bill) due to the sequestration rules. This has fueled concern among fiscal conservatives and moderates in the Senate about the long-term impact on the federal budget, economic stability, and seniors (a huge voting block).
Now in the Senate’s hands, the bill in its current form faces an uncertain future. While the bill will likely ultimately pass, Senate leadership has already indicated that changes will be made, signaling another round of intense negotiations. Differences between the House and Senate versions will need to be reconciled before the legislation can be sent to the President’s desk.
What’s Next
What’s Next: As the Senate prepares to take up the bill, all eyes are on the potential revisions, particularly around the spending cuts and the scope of the tax relief. Any changes made by the Senate will require the bill to return to the House for another vote, meaning the path forward remains complex and politically fraught. However, Republicans have been able to continue to walk that tightrope.
How KBKG Can Help
KBKG and its experts specialize in navigating complex tax legislation and translating policy shifts into practical, strategic solutions. Businesses and individuals with questions about current or proposed tax incentives, such as bonus depreciation or Section 174 treatment, are encouraged to contact a KBKG expert today for guidance tailored to their situation.
About the Author
Jonathan Tucker | Principal – Research & Development Tax Credits
Jonathan Tucker is based in Atlanta, GA, and has over 20 years of experience providing federal business tax advisory services, primarily in R&D tax credits, to clients in various industries including technology, manufacturing, transportation, healthcare, retail and consumer products, hospitality, media and entertainment, financial, and other professional services industries. Read More