On July 1, 2025, the Senate passed its version of the “One Big Beautiful Bill” (OBBB), a major tax and spending package that originated in the House earlier this year. This follows the release of a draft from the Senate Finance Committee on June 16. While the final Senate version retained many core tax provisions, it also included several key changes—some driven by budget rules and others by political negotiations.
Below, we review the differences between the June 16 committee version and the final Senate-passed version, compare the House and Senate bills, and outline next steps in the legislative process.
Key Changes Since the June 16 Senate Committee Draft
The bill passed on July 1 includes several revisions made after the Senate Parliamentarian removed provisions that violated reconciliation rules. To gain support and maintain budget compliance, Senate Republicans made the following changes:
- SALT Deduction — The final bill increases the cap on the state and local tax (SALT) deduction to $40,000 from 2025 through 2029. This change replaces the previous placeholder of $10,000 and brings the Senate bill in line with the House version.
- Medicaid and Social Spending Adjustments — Provisions requiring work for Medicaid eligibility and capping provider taxes were either softened or removed due to reconciliation constraints. The Senate also added:
- $25 billion in support for rural hospitals
- A delay in planned cuts to provider tax allowances
- Modified food assistance and Puerto Rico border enforcement provisions
- Energy Tax Credit Reductions — Several clean energy tax credits were rolled back more aggressively than in the original Senate draft to offset the cost of other changes.
- Foreign Investment Tax — A proposed tax on certain foreign investments was dropped from the final version.
- Technical Adjustments — Additional changes were made to income phaseouts and indexing formulas to meet budget targets.
Comparing the Senate and House Versions
While the House passed its version of the OBBB on May 21, the Senate has now passed a similar—but not identical—bill. Below is a summary of the major differences:
| Provision | House Version | Senate Version |
| SALT Deduction | $40,000 cap with phase-out at higher incomes | Same $40,000 cap, but temporary (2025–2029) |
| Senior Standard Deduction | $4,000 | $6,000, with 6% phase-out over $75,000/$150,000 MAGI |
| Qualified Business Income (QBI) Deduction | Increased from 20% to 23% | Remains at 20%, with adjusted phase-in |
| Child Tax Credit | $2,500, refundable up to $1,400 | $2,200, fully refundable, indexed for inflation |
| Energy Credits | Phased out over time | More immediate rollbacks to reduce cost |
| Medicaid Changes | Moderate reforms | Stricter work requirements and tax caps (some softened or delayed) |
| Business/Investment Incentives | Includes agriculture and chemical plant bonuses | Drops many of these provisions |
What Happens Next?
Although the Senate has passed its version of the bill, the legislative process is not yet complete:
- House Consideration — The bill now returns to the House. House Republicans must decide whether to accept the Senate’s revisions. Points of disagreement—especially around the SALT cap, Medicaid provisions, and energy tax credit reductions—may lead to pushback from House fiscal conservatives.
- Reconciliation or Conference Committee — If the House amends the Senate bill, a conference committee may be required to negotiate a final version. Alternatively, the House could vote to pass the Senate version without changes.
- Final Passage and Presidential Signature — Once both chambers pass the same version of the bill, it will go to the President for signature. Lawmakers have expressed interest in completing the process quickly, with some aiming for passage before the July 4 recess.
- Implementation and Guidance — Most tax provisions in the bill would take effect in 2025 or 2026. Treasury and IRS guidance will follow to clarify details such as phaseout thresholds, inflation adjustments, and administrative procedures.
The Senate’s passage of the “One Big Beautiful Bill” marks a significant step in advancing a sweeping tax and spending overhaul. Although many provisions remain consistent with earlier drafts—such as individual tax relief and reforms to the Child Tax Credit—the final Senate version includes notable changes in SALT policy, healthcare funding, and energy tax incentives.
Looking Ahead
Taxpayers and businesses should stay informed as the House takes up the amended bill. Whether through swift adoption or a reconciliation process, the final version of the OBBB is expected to emerge in the coming weeks. Once enacted, further regulatory guidance will be essential to implementing the new law’s provisions.
Nick Lagoditz, CPA, joined ARB in 2016 as an associate and became a tax manager in 2022. He provides tax preparation and business advisory services, with a focus on partnerships, real estate professionals, and construction businesses. Previous to ARB, Nick worked at a large international firm for nearly two years.
