By Amy L. Sandlin, CPA, Tax Quality at Blue & Co.
The “One Big Beautiful Bill Act” (H.R. 1) narrowly passed the House on May 22, 2025, and headed to the Senate before Congress recessed for the Memorial Day holiday. This 1,100+ page bill is the 2025 budget reconciliation bill; therefore, it covers a wide range of government programs and policies, including the Republican Party and President Trump’s legislative priorities.
The legislative finish line for this bill isn’t yet in sight; expect the Senate’s version to differ from the House’s. Therefore, today’s article will provide a general overview of the bill’s structure and themes, and we will offer a more comprehensive analysis as the final bill language becomes clearer.
Ground Rules
This topic is, unavoidably, political. However, our tax legislation analysis is always designed to be educational and impartial. We provide the facts and observations on taxpayer impact as a trusted tax resource, so you can form your own opinions and make informed decisions as a taxpayer and constituent.
The bill is organized by title, representing the legislation and oversight responsibilities of 11 congressional committees. The provisions that affect or are affected by the Internal Revenue Code (“IRC”) are scattered throughout the bill. The amendments to the IRC are in Title XI—Committee on Ways and Means, “The One, Big, Beautiful Bill,”¹ which clocks in at 389 pages. Title XI will be the focus of this article (referred to as “Title XI” throughout).
In broad terms, the tax provisions in Title XI fall into two categories, which are the underlying framework for our understanding of the legislative impact:
- extended, modified, expanded, restricted, recycled, and terminated code sections; and
- new tax code sections.
The Only Two Certainties in Life are Death and Taxes
That is the abridged version of the tax story; the unabridged version would go something like this, “The only two certainties in life are death and taxes, and no tax law is truly permanent.” This nuance is significant – keep this in mind as you form conclusions about the impact of legislation.
That being said, reference to temporary and permanent tax code is standard practice, and they are used frequently throughout Title XI.
“Temporary” tax law has a set beginning and ending date – “extenders” and “sunset” are often used in reference to temporary tax provisions.
“Permanent” tax law has a set beginning date but no end date, typically ending through Congressional action.
Nothing Lasts Forever: Permanent and Temporary Tax Provisions
Regardless of the outcome of the election last November, your tax advisor was certain of one thing: the tax code was going to be different in 2026. This future was set in motion on Dec. 22, 2017, when the Tax Cuts & Jobs Act (“TCJA”) was signed into law.
A Brief Tax Code History Lesson – TCJA
TCJA passed through the budget reconciliation process; therefore, the provisions were limited by budget restraints. As a result, many tax provisions in the bill were temporary, most set to expire or change after Dec. 31, 2025. If Congress did nothing after passing TCJA in 2017, the tax code in effect would change on Jan. 1, 2026; if Congress did something (passed new legislation), the tax code would change.
Next time you see claims about the bill raising or lowering taxes for specific taxpayers, remember: whether someone will pay more or less in taxes if this bill becomes law depends on the version of the tax code used for this baseline comparison. Will they pay less in 2026 than they would have if Congress did nothing, or will they pay less in 2026 than in 2025 (all else being equal)?
TCJA Extensions
Title XI makes many TCJA provisions permanent; the legislative mechanics delete the current IRC language prescribing an end date for a particular code section.
Example
Title XI also includes temporary amendments to the IRC, extending provisions from the TCJA and other prior legislation. The legislative mechanics replace references to dates for the applicable code section.
Example
Title XI refers to IRC amendments being made permanent throughout; for example, Subtitle A, Part I is primarily focused on TCJA provisions set to expire after Dec. 31, 2025. Many sections have extension in the title, signifying the intent to extend TCJA amendments permanently, such as:
- modified individual income tax brackets and rates,
- increased child tax credit,
- increased standard deduction,
- increased estate and gift tax exemption amounts,
- increased alternative minimum tax exemption and phase-out thresholds,
- termination of personal exemptions,
- termination of miscellaneous itemized deductions, and
- the qualified business income deduction.
In contrast, Title XI, Subtitle B, Part I provides “temporary” extensions of TCJA provisions such as 100% bonus depreciation, deduction for domestic research & experimental expenditures, and international tax provisions like the GILTI deduction.
Everything Old Is New Again
In addition to the temporary and permanent extensions, there are numerous types of modifications to a wide range of existing tax code sections.
Examples
- Calculation changes – business interest and excess business loss limitations, qualified business income deduction, individual state and local tax deduction, 179 expense, child tax credit, and deduction for seniors
- Expanded application – tip credit, fitness expenses as medical costs, special depreciation for qualified production property, interest deduction for specified passenger vehicles, opportunity zones, contributions and rollovers to tax-favored plans (HSA, 529 plans, retirement, and ABLE accounts), and cash method for qualified small manufacturers
- Benefits restrictions – education and premium tax credits, Medicare eligibility, and amortization deduction for sports franchise acquisition costs
- Recycled provisions – limitation on itemized deductions, expensing of domestic research & experimental expenditures, and limited charitable contributions for taxpayers who do not itemize
- Terminations – energy credits and other green-energy tax benefits, primarily from the Inflation Reduction Act; excise tax on indoor tanning services; free IRS Direct File Program; $200 excise tax on firearms silencers; tax benefits for taxpayers with Individual Taxpayer Identification Numbers; tax benefits for parents of adopted children that have an Adoption Taxpayer Identification Number, and 1099 reporting for annual payments less than $2,000
Many of these are temporary amendments that are included alongside permanent changes to the same code and located in the section of the bill denoted as permanent. The child tax credit is one example: it’s under Part 1 – Permanently Preventing Tax Hikes on American Families and Workers.
Is There No Such Thing As A New Idea?
There are “new” additions to the IRC in Title XI; these tend to have headline-grabbing names, such as “no tax on…” (tips, overtime, and auto loan interest), and “MAGA” (MAGA accounts and MAGA accounts pilot program).
New tax law is inherently uncertain regardless of who sponsored, voted for, or signed the bill. The level of uncertainty generally depends on its similarities to existing or historical statutes. Considering several new tax benefits in Title XI, the Mark Twain quote rings true, “There is no such thing as a new idea. It is impossible. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope.” Yes, they are new, but the mechanics are not all that dissimilar to code we’ve seen before.
Similarity to other law is not a qualitative metric – it does not indicate a policy is fair, unfair, good, or bad. It’s a predictive metric – the more similarities, the more likely you can accurately predict future interpretation and administration of the law by the IRS and the courts.
Where Expertise Meets Clarity in Tax Policy
I promised a fact-based article about the impact of proposed legislation purporting to be singular, large, and aesthetically pleasing.² It is difficult (arguably impossible) to fact-check claims of beauty in most contexts – beauty is subjective. So, for our purposes here, beauty means sound tax policy and can be evaluated using the Tax Foundation’s principles of sound tax policy – simplicity, transparency, neutrality, and stability.
Simplicity: how easy is it for taxpayers to comply and for the government to administer and enforce the tax?
Transparency: is the tax clearly defined (who is subject to the tax, when is the tax due), and is the tax structure straightforward (how is the tax calculated, is the tax burden hidden in complex policy)?
Neutrality: does the tax policy encourage or discourage economic decisions; and does it favor or punish specific taxpayers, transactions, or industries?
Stability: is the tax policy consistent (permanent) and predictable (prospective)?
A beautiful tax bill implements sound tax policy – simple, transparent, neutral, and stable.
How Beautiful Is This Bill?
Is it simple?
No. It would not be 389 pages if it was simple. Look no further than the 17 pages devoted to modifying individual taxpayer deductions for state and local taxes, restricting the use of passthrough entity tax as a workaround for an unpopular TCJA provision (the $10,000 SALT cap). A restriction to a workaround would be moot if Congress did nothing and let this TCJA provision expire Dec. 31, 2025.
Is it transparent?
No. I would go so far as to say every section that starts with “no tax on” is duplicitous and will have predictably bad outcomes for the average taxpayer who has a limited knowledge of the IRC.
Is it neutral?
No, but to be fair, there’s a long history of the US tax code not being neutral. Congress uses tax legislation to implement policy by influencing behavior and economic outcomes. However, the overt escalation of preferential treatment of certain taxpayers, and the use of ideological language that does not directly correlate to current IRC or (in many cases) proposed IRC throughout Title XI is concerning.
Furthermore, as one example, incentivizing a taxpayer who earns $100,000 or less to incur a level of indebtedness that would result in an annual interest cost of $10,000 to purchase personal-use vehicles, campers, motorcycles, and ATVs is irresponsible.
Is it stable?
No. Permanent tax law is stable; temporary and retroactive tax law is not.
While Title XI touts permanence, this bill will be restricted by the budget reconciliation rules, much like TCJA. Various permanent provisions seem destined for the temporary sections when the bill crosses the finish line.
In terms of sound tax policy, Title XI is not beautiful – it is complex, contains numerous temporary and retroactive provisions, favors narrow groups of taxpayers, and the impact on taxpayers is opaque.
How Does This Bill Affect You?
The short answer is that it is too early to tell with any certainty. The TCJA extenders are more likely to pass. Preferential treatment for tip income is a solid bet, as the Senate passed a separate, standalone tips bill by unanimous consent (it’s significantly different from what is in Title XI). Title XI is expensive, so don’t expect the final bill to be more taxpayer-friendly.
I am skeptical the GOP will meet their July 4th self-imposed deadline, but there will be no complaints here if legislators pass something early enough for taxpayers to adjust their tax plan accordingly.
Stay tuned as we continue to track the fate of the One Big Beautiful Bill Act. With the House passing it and the GOP eyeing a July 4th deadline, the next few weeks could bring key developments. Will the bill clear the final hurdles, or will unexpected challenges arise? Keep an eye out for our next article, where we’ll break down the latest updates and what they mean for the future of this legislation.
In the meantime, as with any tax legislation, if you support or oppose any of the proposals, contact your legislators!
¹The short title of H.R. 1 is “One Big Beautiful Bill Act,” and the name of Title XI includes “One, Big, Beautiful Bill,”.
²It is common for federal legislation to have official or unofficial titles that signal the legislative goal. The “Patient Protection and Affordable Care Act” is an example of the former, and the “Tax Cuts and Jobs Act” is an example of the latter. What is unusual about H.R. 1 is that it is a budget reconciliation bill, and it has a formal title signaling an opaque legislative goal.
