Senate Finance Committee Presents Its Tax Relief Proposals

The Senate Finance Committee has released details on its version of the budget reconciliation bill, which would permanently extend many of the tax cuts introduced in the 2017 Tax Cuts and Jobs Act.

Although the committee’s proposal builds on the One Big Beautiful Bill Act already passed by the House of Representatives in May, there are a few differences. The Senate version, for example, would make deductions for research and development and other expenses, such as machinery purchases, permanent. The House bill, on the other hand, only extended those deductions temporarily. The Senate bill also proposes that the pass-through deduction for small businesses be set at 20 percent, less than the 23 percent in the House version of the legislation.

Elsewhere, the Senate bill would only raise the nonrefundable Child Tax Credit to $2,200 starting in 2025, $300 less than the House bill. The Senate version also places a $25,000 cap on the nontaxable tipped income.

Business advocacy groups and trade associations praised the Senate Finance Committee’s work. “We commend Sen. Crapo’s (R-ID) legislative language that protects millions of small and family-owned businesses, raises the estate tax exemption to preserve generational enterprises and restores key incentives that drive long-term economic growth,” NAW said. Noting that S-corporations and other pass-through businesses make up 95 percent of all businesses, NAW urged legislators to stick with the Houses' more generous pass-through deduction. “We encourage the Senate to go further to include provisions that will strengthen Main Street, such as raising the 199A deduction back to 23 percent and ensuring SALT parity for pass-through businesses to maintain parity between S corporations and their corporate competitors.

“Permanently extending and enhancing these policies is the clearest path to restoring economic opportunity, protecting working families and helping America’s small businesses continue to serve as the engine of our economy,” NAW said. “We look forward to continue working with lawmakers and the administration to pass the One Big Beautiful Bill Act into law.”