Senate Finance Committee Releases Its Bill

On June 16, the SFC released legislative text, a summary, a bill overview, and a section-by-section analysis of portions of the OBBB covering tax, Medicaid, and the debt ceiling. The bill addresses expiring provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) and includes other GOP tax priorities. While the overall framework of the House bill remains intact, the SFC version makes numerous changes, both large and small. The SFC version of the bill now is being considered by the full Senate and will undergo scrutiny within that chamber as well as in the House.

Crowe observation

For the OBBB to get to the president’s desk by July 4, both chambers will need to find consensus soon so the final version of the bill can be voted on by both the House and Senate before that date.

A few of the notable tax changes made by the SFC include:

• Retaining the TCJA’s $10,000 cap on state and local tax deductions, far lower than the $40,000 cap included in the House bill. However, this number still is subject to ongoing negotiations.
• Fixing Section 174 and Section 163(j) and reinstating 100% bonus depreciation. The House bill includes these provisions, but they are set to expire after 2028. The SFC version makes the changes permanent.
• Changing international tax provisions, including increasing certain effective tax rates and providing limited relief for the Section 899 tax.
• Making the 20% Section 199A pass-through business deduction permanent. The House bill also makes that provision permanent but increases the deduction to 23%.
• Easing some of the House’s accelerated termination dates for certain energy tax credits.

The SFC version of the bill also includes provisions that further tighten the rules for Medicaid and increase the debt ceiling by $5 trillion (the House version increases the debt ceiling by $4 trillion).

Looking ahead

The Republicans have a small majority in the House and Senate, which creates challenges for enactment of a bill as comprehensive and expensive as the OBBB. So far, leadership has been successful in shepherding the giant bill through the reconciliation process. However, divergent viewpoints continue to make reaching a consensus difficult. As negotiations continue, the final version of the bill will come into focus.