Tax Legislation
Watch

Date: 5/19/25 | Author: Darko Naumoski, CPA

As the legislative process is in the early stages of development and changes are sure to follow, below we outline the major international provisions of the new “One Big, Beautiful Bill” as proposed by the House Ways and Means Committee.

• GILTI (Global Intangible Low-Taxed Income): 50% GILTI deduction made permanent (Effective rate of 10.5% before foreign tax credits).
  • New law excludes certain Virgin Island services income from “tested income” and GILTI.
• FDII (Foreign-Derived Intangible Income): 37.5% FDII deduction made permanent (Effective rate of 13.125%).
• BEAT (Base Erosion and Anti-Abuse Tax): 10% BEAT rate made permanent (11% for banks/dealers).
• New Section 899 – Remedies against “Unfair Foreign Taxes”
  • Increased tax rates on certain foreign companies and individuals who are residents in a country with an “unfair foreign tax” (up to 20%).
  • Modified BEAT rules for US corporations majority-owned by foreign persons in a country with an “unfair foreign tax”.
• Disallowed Foreign Real Property Taxes: The law essentially disallows the deduction of foreign real property taxes except when accrued, incurred, or paid by an active trade or business in the course of its business operations.
  • It does not include foreign income, war profits, and excess profits taxes
• Excise tax of 5% on remittances sent to foreign transferees unless the transferor is a US citizen.  Remittance excise tax is treated as refundable credit on the transferor’s US personal tax return.

We will continue to monitor the legislation surrounding the international provisions and provide updates as more details emerge.

Date: 5/16/2025 | Author: Bridget Uribe, CPA

Among the handful of provisions in the House draft legislative package, called “The One, Big, Beautiful Bill,” is a long-awaited change to the treatment of research and experimental (R&E) expenditures under Section 174. The proposal would repeal the amortization requirement introduced by the Tax Cuts and Jobs Act (TCJA) and restore the ability for businesses to immediately expense domestic research and development (R&D) costs, reverting to the rules in place before 2022.

Under the TCJA, starting in tax year 2022, businesses have been required to capitalize and amortize domestic R&E costs over five years (fifteen years for foreign research), a significant departure from the longstanding rule of fully expensing R&D costs under Section 174.

The proposal would:

• Allow full expensing of domestic Section 174 R&E costs for tax years beginning after December 31, 2024, and before January 1, 2030
• Foreign R&D expenses are unchanged and must continue to be capitalized over a 15-year period

Notably absent from the bill is any guidance on whether taxpayers will be able to expense costs that have been already capitalized under the current rules for the tax years 2022-2024.

The proposal has been well received by industry groups and tax professionals, but its fate in the Senate remains uncertain.

We are closely monitoring this legislation and will continue to provide updates as more details emerge.

Date: 5/15/2025 | Author: Ryan Moore, CPA

As part of the House’s initial draft of the legislative package known as “The One, Big, Beautiful Bill,” lawmakers have proposed increasing the federal cap on the state and local tax (SALT) deduction from $10,000 to $30,000. For taxpayers filing jointly and earning over $400,000, the higher cap would be gradually reduced, but it would not drop below the current $10,000 limit.

The SALT deduction cap, originally implemented under the Tax Cuts and Jobs Act (TCJA) of 2017, has remained a point of contention, especially in high-tax states such as New York, New Jersey, and California. Under the TCJA, for the first time in U.S. tax history, a hard cap of $10,000 was imposed on the deduction for state and local income, sales, and property taxes. Many taxpayers in high-tax states exceed this threshold early in the year, making the limitation particularly impactful.

While the proposed increase represents a potential relief for some taxpayers, it has drawn criticism from lawmakers on both sides. A group of Republican representatives from high-tax states have argued that the $30,000 cap does not go far enough and have signaled they may withhold support for the bill unless the cap is raised further. With at least five House Republicans expressing opposition, the SALT provision may pose a significant hurdle to the bill’s advancement, particularly given the narrow GOP majority in the House.

We are closely monitoring this legislation and will continue to provide updates as more details emerge.

Date: 5/13/2025 | Author: Stephanie Holston, CPA

House Republicans have revealed the tax portion of the “Big, Beautiful Bill”, as promised.

Much of the bill is an extension of the Tax Cuts and Jobs Act of 2017.

The bill proposes to make the TCJA tax rate cuts permanent.

It also extends and enhances the 199A deduction.

The bill also includes President Trump’s promise to reduce the tax on overtime, retirement income, and tips. These are all capped and subject to phase-out.

The SALT cap still stands, although the $10,000 cap is raised to $15,000 for individuals and $30,000 for married filing jointly (MFJ).

The bill is scheduled for markup today. It remains to be seen what changes will be made in the House before it moves to the Senate.

Stay tuned for more updates and a deeper dive into the bill’s contents.

Date: 4/30/2025 | Author: Bill McDevitt, CPA

In a surprising announcement yesterday, Treasury Secretary Scott Bessent called full expensing “one of the most powerful parts of President Trump’s 2017 tax bill” and revealed plans to make it retroactive to January 20th. But that’s not all—it’s expanding.

“We’re also looking to add full expensing for factories,” Bessent said. “So bring your factory back. You can fully expense the equipment and the building.”

The takeaway? This proposal appears to be narrowly focused on incentivizing businesses to reshore manufacturing operations. Whether it becomes law—and under what conditions—remains to be seen, but the potential tax benefit is significant.

Date: 4/24/2025 | Author: Bill McDevitt, CPA

House Republicans are planning to bring Tax Legislation to the floor during the week of May 19, which is the final week the House is in session before the Memorial Day recess.

This timeline makes it unlikely that the Tax Legislation will reach the President’s desk before Memorial Day—a target date that few considered realistic to begin with. It remains to be seen whether the package will be ready for a  floor vote by the week of May 19, as significant work remains. Drafting the legislative language is only part of the challenge; reaching consensus on what to include and exclude is often more difficult.

The working title of the Republican reconciliation package is the “Renewing the American Dream Act.” It is yet to be determined whether President Trump will accept this title or its acronym, RADA.

Date: 4/4/2025 | Author: Bill McDevitt, CPA

This week, Senate Republicans unveiled a new version of the budget reconciliation bill. Key points include:

• $3 Billion in immediate spending cuts, with an expected total of $1.5-$2 Trillion in cuts.
• Tax cuts potentially totaling up to $5.2 Trillion.
• A $5 Trillion increase in the debt ceiling.

The Senate sets a $1.5 Trillion cap on tax cuts. Republicans plan to use the “current policy baseline” tactic to suggest that extending Trump’s 2017 tax cuts will cost nothing.

The GOP aims for the $5 Trillion debt ceiling increase to last until after the 2026 midterms.

The House and Senate must adopt identical budget resolutions before they can draft and pass the whole law. The Senate hopes to pass the modified bill this weekend, to have the House adopt it before their two-week Easter recess.

Speaker Mike Johnson aims to get the package to President Trump’s desk by Memorial Day, though some GOP senators believe it will take longer.

Time will tell—stay tuned!

Date: 3/12/2025 | Author: Bill McDevitt, CPA

Speaker Johnson said today that he plans to get a vote in the House on the so-called “Big Beautiful Bill” by Easter, April 20, 2025.

He hopes that the bill can be passed by the Senate and signed into law by Memorial Day, May 26, 2025.

This is very ambitious timing, but given the speed at which things are happening in Washington now, it may be possible.

Time will tell…

Date: 3/5/2025 | Author: Stephanie Holston, CPA

The budget advanced by the House contains approval for $4.5 trillion in tax cuts. However, the Trump administration has an ambitious agenda regarding tax policy, which quickly adds up to more than what’s been approved.

The estimated costs of some of the proposals are:

• Extension of the TCJA provisions – $4 trillion
• Removal of the SALT deduction cap – $200 billion
• Exemption of tips from income – $100 billion
• Exemption of overtime from income – $300 billion
• Exemption of all social security payments from income – $600 billion

The total of the above comes to $5.2 trillion—and these are just some of the proposals. Now begins the negotiations, so it remains to be seen what will be in and what will be out.

In addition to that tug of war, how these tax cuts are scored also matters. We will continue to keep you informed as the budget moves through Congress.

Date: 2/27/2025 | Author: Bill McDevitt, CPA

Last week, the House and the Senate each passed a budget bill that contains a budget resolution framework.

The bills were passed on a partisan line, with razor-thin margins.

The Senate approach is a small bill that does not address changes to tax law; they intend to address tax changes in the second bill later this year.

The approach in the House is much more comprehensive. The so-called “One Big Beautiful Bill” addresses many subjects, including tax reform.

The President prefers the “One Big Beautiful Bill” path.

So, what happens now?

At some point, the two chambers will need to agree on a single framework; let the arm-twisting and “Horse Trading” commence.

Author: Bill McDevitt, CPA

Trump met with House GOP leadership yesterday. The stated goal of the House is to outline the main points of the bill by the end of the day today. Hold hearings next week and pass the legislation in April. Ambitious goals… Senate leadership is meeting with the President at Mar-a-Lago today. The Senate has stated that they first want to pass legislation to fund Trump’s deportation plan and complete the border wall. The Senate plans to take up tax legislation later this year.

Bill McDevitt

CPA, CVA