Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Congressional research reportMay 27, 2025
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Tax Provisions in H.R. 1, the One Big
Beautiful Bill Act: House-Passed Version
May 27, 2025
Congressional Research Service
https://crsreports.congress.gov
R48550
SUMMARY
Tax Provisions in H.R. 1, the One Big Beautiful
Bill Act: House-Passed Version
On May 22, 2025, the House passed H.R. 1, the One Big Beautiful Bill Act. That act provides
for reconciliation pursuant to Title II of H.Con.Res. 14, the Concurrent Resolution on the
Budget for FY2025. Title XI of H.R. 1 contains tax provisions, which are identified as the “tax
provisions in the One Big Beautiful Bill Act” in this report.
R48550
May 27, 2025
Anthony A. Cilluffo,
Coordinator
Analyst in Public Finance
Many of the tax provisions are modifications or extensions of provisions of P.L. 115-97,
commonly known as the Tax Cuts and Jobs Act or TCJA. Several provisions in the TCJA are set to expire at the end of 2025,
or have changed within the last several years. These provisions include changes such as modified individual income tax rates,
a higher standard deduction and child tax credit, suspension of personal exemptions, a deduction for pass-through business
income, bonus depreciation for business investments, changes to how business research costs are recovered, and changes to
the limitation on deducting interest on indebtedness by certain businesses.
This report provides a section-by-section summary of the tax provisions in Title XI of H.R. 1, as passed by the House.
Specifically, a set of tables describes each provision in H.R. 1, by subtitle, and provides references to related CRS products.
A small number of Title XI provisions that are not directly related to tax policy are omitted.
Congressional Research Service
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Contents
Tables
Table 1. Subtitle A—Make American Workers and Families Thrive Again .................................... 4
Table 2. Subtitle B—Make Rural America and Main Street Grow Again ..................................... 33
Table 3. Subtitle C—Make America Win Again ........................................................................... 45
Table 4. Subtitle D—Increase in Debt Limit ................................................................................. 78
Contacts
Author Information........................................................................................................................ 80
Congressional Research Service
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
On May 22, 2025, the House passed H.R. 1, the One Big Beautiful Bill Act.1 That act provides for
reconciliation pursuant to Title II of H.Con.Res. 14, the Concurrent Resolution on the Budget for
FY2025.2 Title XI of H.R. 1 contains tax provisions, which are identified as the “tax provisions in
the One Big Beautiful Bill Act” in this report.
Earlier legislative consideration of what became H.R. 1 included a House Committee on Ways
and Means markup on May 13-14, 20253; House Committee on the Budget markups on May 16,
20254, and May 18, 20255; and a House Committee on Rules hearing on May 19, 2025.6
Many of the tax provisions are extensions or modifications of similar provisions in P.L. 115-97,
commonly known as the Tax Cuts and Jobs Act or the TCJA. For background on the TCJA
generally, and the expiring provisions in particular, see
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•
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CRS Report R47846, Reference Table: Expiring Provisions in the “Tax Cuts and
Jobs Act” (TCJA, P.L. 115-97), by Donald J. Marples and Brendan McDermott;
CRS Report R48286, Expiring Provisions of P.L. 115-97 (the Tax Cuts and Jobs
Act): Economic Issues, coordinated by Jane G. Gravelle; and
CRS Report R48485, Economic Effects of the Tax Cuts and Jobs Act, by Jane G.
Gravelle and Donald J. Marples.
This report summarizes the tax provisions in Title XI of the One Big Beautiful Bill Act, including
the following:
•
•
Subtitle A, Part 1, would extend many of the expiring TCJA provisions affecting
individuals and families, including reduced income tax rates, the increased
standard deduction, the elimination of personal exemptions, the expanded child
tax credit, increased exemptions for the estate and gift tax and alternative
minimum tax, the deduction for pass-through business income, and others.
Several of these provisions are increased beyond their levels in the TCJA,
including a temporary increase in the standard deduction and an increase in the
qualified business income deduction rate to 23%.
Subtitle A, Part 2, would provide additional individual-related tax reductions
beyond those in the TCJA, including new deductions for tip income, qualified
overtime pay, and car loan interest paid on vehicles assembled in the United
1 The text of H.R. 1, as it passed the House on May, 22, 2025, consisted of Rules Committee Print 119-3 as modified
by the Manager’s Amendment printed in H. Rept. 119-113. See House Committee on Rules, Rules Committee Print
119-3, https://rules.house.gov/sites/evo-subsites/rules.house.gov/files/documents/rcp_119-3_final.pdf and House
Committee on Rules, Providing for Consideration of the Bill (H.R. 1) to Provide for Reconciliation Pursuant to Title II
of H. Con. Res. 14, https://www.govinfo.gov/content/pkg/CRPT-119hrpt113/pdf/CRPT-119hrpt113.pdf.
2 For background on the budget resolution, see CRS Report R48532, H.Con.Res. 14: The Budget Resolution for
FY2025, by Drew C. Aherne and Megan S. Lynch.
3
Information on the markup is available at House Committee on Ways and Means, “Full Committee Markup of
Legislative proposals to comply with the reconciliation directive included in section 2001 of the Concurrent Resolution
on the Budget for Fiscal Year 2025, H. Con. Res. 14,” May 13, 2025, https://waysandmeans.house.gov/event/fullcommittee-markup-of-legislative-proposals-to-comply-with-the-reconciliation-directive-included-in-section-2001-ofthe-concurrent-resolution-on-the-budget-for-fiscal-year-2025-h-con-res-14/.
4 Information on this markup is available at House Committee on the Budget, “Markup Notice: House Committee on
the Budget,” May 16, 2025, https://budget.house.gov/hearing/markup-notice-house-committee-on-the-budget.
5 Information on this markup is available at House Committee on the Budget, “Reconvening Notice; House Committee
on the Budget,” May 18, 2025, https://budget.house.gov/hearing/reconvening-notice-house-committee-on-the-budget.
6 Documents related to the Rules Committee hearing are available at https://rules.house.gov/bill/119/hr-ORH-one-bigbeautiful-bill-act.
Congressional Research Service
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Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
•
•
•
•
•
•
•
States. Other changes would include an increased deduction for seniors,
extensions and expansions of the employer-provided child care tax credit and the
employer credit for paid family and medical leave, several provisions related to
education, and others.
Subtitle A, Part 3, would make changes to several health-related tax provisions. It
would create CHOICE arrangements, tax-advantaged arrangements that could be
used to purchase medical care and health coverage. It would also make a number
of changes to health savings accounts (HSAs)—another type of tax-advantaged
account—that would generally expand the number of people eligible for HSAs
and the expenses eligible to be paid through an HSA, and make HSA-related
changes.
Subtitle B, Part 1, would extend several of the expiring TCJA provisions for
businesses, including bonus depreciation, deductions for research and
experimental expenditures, a higher income limit for the deduction of business
interest, and extensions related to several international corporate tax provisions.
Subtitle B, Part 2, would provide additional business-related tax reductions
beyond those in the TCJA. These include extending bonus depreciation to
additional types of property, increasing the dollar limit for Section 179 expensing
(often used by small businesses), modifying the low-income housing tax credit,
increasing the dollar threshold for a statutory “small manufacturing” business,
and extending and reforming the Opportunity Zone tax program.
Subtitle C, Part 1, would make a number of changes, most of which are expected
to raise revenue. These changes include early termination of many energy-related
tax incentives, such as the tax credits for clean vehicles and the production and
investment tax credits for clean electricity. This part would provide for a state
and local tax (SALT) deduction cap of $40,000 in tax year 2026 for most
taxpayers, with reduced amounts for taxpayers with higher incomes. It would
also make several changes related to business deductions and regulatory excise
taxes.
Subtitle C, Part 2, would make several tax changes for individuals with certain
immigration statuses (including undocumented immigrants) that are expected to
raise revenue. These would include restricting health-related premium tax credit
eligibility, an excise tax on remittance transfers for non-U.S. citizens, and
requiring Social Security numbers for two education-related tax credits.
Subtitle C, Part 3, would make a number of changes related to tax administration
and enforcement that are generally expected to raise revenue. These would
include changes to the health-related premium tax credit, certification
requirements for the earned income tax credit (EITC), and several enforcement
changes and an early termination of the COVID employee retention credit
(COVID ERC).
Subtitle D would increase the maximum amount of allowable public debt (the
“debt ceiling”) subject to limit by $4.0 trillion.
The tables in this report provide a section-by-section summary of the tax provisions in H.R. 1, as
passed by the House, and provide links to relevant CRS reports.
•
Table 1 summarizes tax provisions in Subtitle A—Make American Workers and
Families Thrive Again;
Congressional Research Service
2
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
•
•
•
Table 2 summarizes tax provisions in Subtitle B—Make Rural America and
Main Street Grow Again;
Table 3 summarizes tax provisions in Subtitle C—Make America Win Again;
and
Table 4 summarizes the increase to the debt limit in Subtitle D—Increase in Debt
Limit.
Certain provisions in Title XI are not tax provisions, and are not included in this report.
Specifically, Tables 1-4 in this report do not include a summary of Sections 110214,
“Regulations”; 111201, “Expanding the Definition of Rural Emergency Hospital under the
Medicare Program”; 112103, “Limiting Medicare Coverage to Certain Individuals”; and 112204,
“Implementing Artificial Intelligence Tools for Purposes of Reducing and Recouping Improper
Payments under Medicare.”
Congressional Research Service
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Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Table 1. Subtitle A—Make American Workers and Families Thrive Again
Section Title
Description
CRS Resources
Part 1—Permanently Preventing Tax Hikes on American Families and Workers
Extension of Modification
of Rates
Section 110001 of the bill
Section 1 of the IRC
This provision would make permanent the
individual income tax rates that the TCJA
instituted through 2025. It would also raise the
income thresholds at which all brackets other than
the top 37% bracket begin by accounting for one
additional year of inflation (that which occurred
from 2016 to 2017) in the cost-of-living
adjustment calculation.
Under the TCJA, the marginal rates are 10%, 12%,
22%, 24%, 32%, 35%, and 37%.
The TCJA did not change the tax rates on capital
gains and dividends.
This provision is an extension of TCJA with
modifications.
This provision would apply from 2026 onward.
CRS Report RL34498, Federal
Individual Income Tax Brackets,
Standard Deduction, and
Personal Exemption: 1988 to
2025, by Brendan
McDermott.
CRS Report R48313, Overview
of the Federal Tax System in
2024, by Donald J. Marples
and Brendan McDermott.
Extension of Increased
Standard Deduction and
Temporary Enhancement
Section 110002 of the bill
Section 63 of the IRC
To calculate taxable income, taxpayers who do
not itemize their deductions subtract the standard
deduction from their adjusted gross income (AGI).
The TCJA increased the standard deduction
through 2025. Under current law, the standard
deduction in 2025 is generally $15,000 for single
filers, $22,500 for head of household filers, and
$30,000 for married joint filers.
This provision would make permanent the TCJA’s
increase to the standard deduction and raise it
further by accounting for one additional year of
inflation (that which occurred from 2016 to 2017)
in the cost-of-living adjustment calculation from
2026 onward.
This provision would also temporarily increase the
standard deduction by $1,000 for single filers,
$1,500 for head of household filers, and $2,000 for
married joint filers for 2025 through 2028 (not
indexed to inflation).
This provision is an extension of TCJA with
modifications.
This provision would generally apply from 2025
onward.
CRS Report RL34498, Federal
Individual Income Tax Brackets,
Standard Deduction, and
Personal Exemption: 1988 to
2025, by Brendan
McDermott.
CRS Report R48313, Overview
of the Federal Tax System in
2024, by Donald J. Marples
and Brendan McDermott.
Congressional Research Service
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Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Termination of Deduction
for Personal Exemptions
Section 110003 of the bill
Section 151 of the IRC
Before TCJA, to calculate taxable income,
taxpayers could subtract the appropriate number
of personal exemptions for themselves, their
spouse (if married), and their dependents from
their adjusted gross income (AGI). TCJA
temporarily suspended the deduction for personal
exemptions for tax years 2018 through 2025.
This provision would make permanent the TCJA’s
temporary suspension of personal exemptions
through 2025.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply from 2026 onward.
CRS Report RL34498, Federal
Individual Income Tax Brackets,
Standard Deduction, and
Personal Exemption: 1988 to
2025, by Brendan
McDermott.
CRS Report R48313, Overview
of the Federal Tax System in
2024, by Donald J. Marples
and Brendan McDermott.
Congressional Research Service
5
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Extension of Increased
Child Tax Credit and
Temporary Enhancement
Section 110004 of the bill
Sections 24 of the IRC
The child tax credit lets taxpayers reduce their
federal income tax liability by a maximum credit
amount of $2,000 per child. Taxpayers with little
or no federal income tax liability can potentially
receive the refundable portion of the credit, with
that portion being known as the additional child
tax credit, or ACTC.
The TCJA set the maximum child credit at $2,000
per child (it had previously been $1,000) and the
maximum ACTC at $1,700 per child (2025 figure,
adjusted for inflation). TCJA also temporarily
required the child for whom a taxpayer claims the
credit to have a work-eligible Social Security
number (SSN); created a $500 nonrefundable
credit (not adjusted for inflation) for dependents
who are not qualifying children; and raised the
income level at which the credit begins phasing
out, among other changes. All of these changes
apply through tax year 2025.
This provision would make permanent the TJCA’s
changes to the credit, raise the maximum credit to
$2,500 per child (adjusted for inflation) through
2028, index the maximum child credit to inflation
from 2029 onward, and account for one additional
year of inflation (that which occurred from 2016
to 2017) in the cost-of-living adjustment
calculation for the maximum ACTC. Whereas the
pre-TCJA credit began phasing out after $75,000
of income for single filers and $110,000 for
married couples, the TCJA reforms—which would
be made permanent in this bill—increased the
income limits to $200,000 for single filers and
$400,000 for married couples filing jointly.
This provision would also require the taxpayer to
provide a work-eligible SSN for themselves, their
spouse (if married), and the child for whom they
are claiming the credit.
The credit would generally be disallowed to those
married filing separately, with certain exceptions.
Additionally, this provision would count certain
dividend income of members of religious or
apostolic associations as earned income for
purposes of calculating the ACTC, which phases in
with earned income above $2,500.
This provision is an extension of TCJA with
modifications.
This provision would generally apply from 2025
onward.
CRS Report R41873, The
Child Tax Credit: How It Works
and Who Receives It, by
Brendan McDermott.
CRS In Focus IF12820,
Selected Issues in Tax Policy:
The Child Tax Credit, by
Brendan McDermott.
CRS Report R48312,
Noncitizen Eligibility for the
Child Tax Credit: In Brief,
coordinated by Abigail F.
Kolker.
Congressional Research Service
6
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Extension of Deduction for
Qualified Business Income
and Permanent
Enhancement
Section 110005 of the bill
Section 199A of the IRC
Pass-through business income is taxed according
to ordinary individual income tax rates. The TCJA
created a tax deduction equal to 20% of qualified
business income. The deduction is limited to the
greater of 50% of W-2 wages, or 25% of W-2
wages plus 2.5% multiplied by depreciable
property (equipment and structures).
Specified service trades or businesses (SSTBs)
generally may not claim the deduction except in
specific circumstances. The deduction limitation
and SSTB limitation do not apply if taxable income
is less than $197,300 (single) or $394,600
(married) in 2025. These limitations are phased in
over a $50,000 (single) and $100,000 (married)
range, and thus apply fully if a taxpayer's income is
at or above $247,300 (single) and $494,600
(married).
This provision would increase the deduction to
23%, modify the deduction limitation phase-ins to
reduce the deduction by $0.75 per dollar of
taxable income over the lower limitation
threshold, allow income from certain business
development companies to qualify for the
deduction, and change the inflation adjustment of
the limitation amount to account for an additional
year of inflation (2016 to 2017).
This provision is an extension of TCJA with
modifications.
This provision would apply starting after
December 31, 2025.
CRS In Focus IF11122, Section
199A Deduction for PassThrough Business Income: An
Overview, by Gary Guenther.
CRS In Focus IF12838,
Selected Issues in Tax Policy:
Section 199A Deduction for
Pass-Through Business Income,
by Mark P. Keightley
CRS Report R46402, The
Section 199A Deduction: How It
Works and Illustrative
Examples, by Gary Guenther.
CRS Report R46650, Section
199A Deduction: Economic
Effects and Policy Issues, by
Gary Guenther.
Extension of Increased
Estate and Gift Tax
Exemption Amounts and
Permanent Enhancement
Section 110006 of the bill
Sections 2010 of the IRC
Estates and gifts are taxed at 40% in excess of a
lifetime exemption. The lifetime estate and gift tax
exemption of $10 million (indexed for inflation and
currently $13.99 million) is scheduled to revert to
$5 million in 2026 (indexed for inflation and
currently projected at $7.14 million). This
provision would increase the lifetime estate and
gift exemption to $15 million per decedent who
dies after 2025. The exemption amount is indexed
for inflation.
This provision is an extension of TCJA with
modifications.
This provision would apply starting after
December 31, 2025.
CRS In Focus IF12846,
Selected Issues in Tax Reform:
The Estate and Gift Tax, by
Jane G. Gravelle
CRS Report R48183, The
Estate and Gift Tax: An
Overview, by Jane G. Gravelle
Congressional Research Service
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Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
Extension of Increased
Alternative Minimum Tax
Exemption and Phaseout
Thresholds
Section 110007 of the bill
Sections 55 of the IRC
The alternative minimum tax is imposed at fixed
rates (26% and 28%), on a broader base with a
larger exemption, and is paid if it exceeds the
regular tax. The exemption in 2025 is $137,000
for joint returns and $88,100 for single returns.
The higher rate of 28% is imposed on AMT taxable
income up to $239,000. These amounts are
indexed for inflation. These provisions will revert
to lower levels in 2026. Exemptions are projected
at $109,800 for joint returns and $70,600 for
single returns, and the 28% tax imposed at
$209,200 for joint returns and $156,900 for single
returns in that year.
This provision would make the increased individual
alternative minimum tax exemption amounts and
higher phaseout thresholds permanent.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply starting after
December 31, 2025.
Extension of Limitation on
Deduction for Qualified
Residence Interest
Section 110008 of the bill
Section 163 of the IRC
Taxpayers who itemize their deductions may
deduct interest paid on the first $750,000
($375,000 for married filing separately) of
mortgage debt (combined for first and second
homes). No deduction is allowed for interest
payments made for new or existing home equity
debt if such debt is used for purposes unrelated to
the property securing the loan. The limitation
applies to new loans incurred from December 15,
2017, through December 31, 2025.
Taxpayers with mortgage debt incurred outside of
that window and who itemize their deductions
may deduct interest on the first $1 million
($500,000 for married filing separately) of
combined mortgage debt. No deduction is allowed
for interest payments made for new or existing
home equity debt if such debt is used for purposes
unrelated to the property securing the loan.
This provision would make the lower mortgage
debt thresholds for new loans incurred after
December 15, 2017, permanent.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply starting after
December 31, 2025.
Congressional Research Service
CRS Resources
CRS In Focus IF12789,
Selected Issues in Tax Policy:
The Mortgage Interest
Deduction, by Mark P.
Keightley.
CRS Report R46429, An
Economic Analysis of the
Mortgage Interest Deduction,
by Mark P. Keightley.
CRS Report R46685, An
Analysis of the Geographic
Distribution of the Mortgage
Interest Deduction: Before and
After the 2017 Tax Revision
(P.L. 115-97), by Mark P.
Keightley.
8
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Extension of Limitation on
Casualty Loss Deduction
Section 110009 of the bill
Section 165 of the IRC
Taxpayers who itemize their deductions can
generally claim a deduction for uncompensated
personal casualty and theft losses, subject to
limitations.
This provision would make permanent the TCJA’s
limitation of this deduction to only losses
associated with a disaster declared by the
President under Section 401 of the Robert T.
Stafford Disaster Relief and Emergency Assistance
Act, which applies through 2025 under current
law.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply from 2026 onward.
CRS In Focus IF12574, The
Nonbusiness Casualty and Theft
Loss Deduction, by Brendan
McDermott.
Termination of
Miscellaneous Itemized
Deduction
Section 110010 of the bill
Section 67 of the IRC
The TCJA temporarily suspended the itemized
deduction for miscellaneous expenses for tax
years 2018 through 2025. Prior to enactment of
the TCJA, individuals who itemized their
deductions could deduct miscellaneous expenses
to the extent that such expenses exceeded 2% of
their adjusted gross incomes (AGIs). Expenses
subject to the 2% floor generally related to the
costs of accruing income or undertaking certain
financial transactions. Such expenses included
unreimbursed job expenses, home office expenses,
investment management fees, tax preparation fees,
convenience fees for debit and credit cards, dues
paid to a professional society or labor union, and
certain other expenses.
This provision would make the suspension of
miscellaneous itemized deductions permanent,
effectively repealing these deductions.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply to taxable years
beginning after December 31, 2025.
CRS Insight IN11119,
Unreimbursed Employee Job
Expenses and the Suspension of
the Miscellaneous Itemized
Deduction, by Gary Guenther.
CRS Report R42872, Tax
Deductions for Individuals: A
Summary, by Sean Lowry.
Congressional Research Service
9
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Limitation on Tax Benefit
of Itemized Deductions
Section 110011 of the bill
Section 68 of the IRC
Congressional Research Service
Individual taxpayers may claim itemized deductions
in place of the standard deduction. Itemized
deductions are specific “items” that taxpayers may
choose to deduct from their taxable incomes.
Itemized deductions are typically based on
taxpayer expenses, so for normal income tax
filings, only taxpayers with itemized expenses in
excess of the standard deduction will benefit from
itemizing their deductions.
The TCJA repealed the Pease limitation on overall
itemized deductions. Prior to the enactment of the
TCJA, the Pease limitation reduced a taxpayer’s
total itemized deductions amounts by 3% of the
difference between the taxpayer’s adjusted gross
income (AGI) and a threshold amount ($261,500
for single filers and $313,800 for married couples
in 2017). The Pease limitation was not allowed to
reduce a taxpayer’s itemized deductions more
than 80%, and it did not apply to the deductions
for wagering losses, casualty and theft losses, outof-pocket medical and dental expenses, or
investment interest.
This provision would modify the Pease limitation
so that it would differ from both pre-TCJA law
(full Pease limitation) and the TCJA (no Pease
limitation).
The provisions would treat deductions claimed
under IRC section 164 differently from other
itemized deductions. IRC section 164 describes
deductions for certain tax payments, including
deductions for SALT payments and generationskipping transfer (GST) taxes.
Under the provision, taxpayers with taxable
incomes above the income cutoff for the top 37%
marginal tax bracket would have their section 164
itemized deductions reduced by 5/37ths. For
taxpayers with AGIs above the cutoff but taxable
incomes below the cutoff, section 164 itemized
deductions would be reduced by 5/37ths of the
excess section 164 deductions above the top 37%
marginal tax bracket income cutoff.
Taxpayers with taxable incomes above the income
cutoff for the top 37% marginal tax bracket would
have their other itemized deductions reduced by
2/37ths. If a taxpayer has (1) an AGI above the
cutoff, (2) a level of taxable income below the
cutoff, and (3) a combination of AGI and section
164 deductions above the income cutoff, then the
taxpayer’s other itemized deductions are reduced
by 2/37ths. For taxpayers with (1) AGIs above the
cutoff, (2) taxable incomes below the cutoff, and
(3) a combination of AGI and section 164
deductions below the income cutoff, then the
taxpayer’s other itemized deductions would be
reduced by 2/37ths of the excess other itemized
deductions above the top 37% marginal tax
bracket income cutoff.
This provision is applied after the application of
any other limitations on specific itemized
CRS Insight IN12517, Selected
Issues in Tax Reform: Itemized
Deductions, by Nicholas E.
Buffie.
CRS In Focus IF11091, 2019
Tax Filing Season (2018 Tax
Year): Itemized Deductions, by
Sean Lowry.
CRS Report R43012, Itemized
Tax Deductions for Individuals:
Data Analysis, by Sean Lowry.
CRS Report R42872, Tax
Deductions for Individuals: A
Summary, by Sean Lowry.
CRS In Focus IF12893,
Selected Issues in Tax Reform:
The Deduction for State and
Local Taxes, by Grant A.
Driessen.
CRS Report R46246, The
SALT Cap: Overview and
Analysis, by Grant A.
Driessen.
CRS Report R48183, The
Estate and Gift Tax: An
Overview, by Jane G. Gravelle.
10
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
deductions, such as limitations on the SALT
deduction, the charitable contributions deduction,
and the medical and dental expenses deduction.
This provision is an extension of TCJA with
modifications.
This provision would apply to all tax years starting
in tax year 2026.
Termination of Qualified
Bicycle Commuting
Reimbursement Exclusion
Section 110012 of the bill
Section 132 of the IRC
Before the enactment of the TCJA, individuals
could deduct up to $20 per month of qualified
employer reimbursements for bicycle commuting
expenses from their taxable wages (potentially
lowering both their income taxes and their payroll
taxes). The TCJA began counting such
reimbursements as taxable wage income for the
employee; however, the employers providing such
reimbursement may count it as a deductible
business expense and thereby decrease their tax
payments.
This provision would permanently extend the
suspension of the qualified bicycle commuting
reimbursement exclusion, effectively repealing it.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply to taxable years
beginning after December 31, 2025.
Extension of Limitation on
Exclusion and Deduction
for Moving Expenses
Section 110013 of the bill
Sections 132 and 217 of the
IRC
Prior to the enactment of the TCJA, all
taxpayers—including taxpayers claiming the
standard deduction and taxpayers itemizing their
deductions—could deduct moving expenses from
their taxable incomes if the purpose of the move
was to relocate for work. The deduction was
subject to certain restrictions based on the
individual's employment status and the distance of
the move, though these restrictions did not apply
to members of the Armed Forces. The TCJA
suspended this deduction for tax years 2018-2025
for all taxpayers except for members of the
Armed Forces.
This provision would permanently extend the
suspension of the exclusion and deduction for
moving expenses, effectively permanently limiting
the deduction to members of the Armed Forces.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply to taxable years
beginning after December 31, 2025.
Congressional Research Service
11
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
Extension of Limitation on
Wagering Losses
Section 110014 of the bill
Section 165 of the IRC
Under current law, taxpayers with gambling
income may be able to deduct gambling losses
from that income. Casual gamblers may only
deduct losses from the gambling activity itself
(such as losing bets) up to the amount of gambling
income, and only if the taxpayer itemizes
deductions. Professional gamblers may additionally
claim other allowable business deductions (such as
the cost of travel), but all deductions together
(gambling losses and business deductions) are
limited by the amount of gambling income.
This provision would permanently extend the
limitation on gambling losses for professional
gamblers.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply starting after
December 31, 2025.
Extension of Increased
Limitation on
Contributions to ABLE
Accounts and Permanent
Enhancement
Section 110015 of the bill
Section 529A of the IRC
ABLE accounts are tax-advantaged savings
accounts for qualifying individuals with disabilities
(“designated beneficiaries”). Generally, an ABLE
account cannot receive aggregate contributions in
a given year in excess of the annual gift tax
exemption, which is $19,000 in 2025.
The TCJA allowed designated beneficiaries who
are employed to contribute to their ABLE account
an additional amount above the annual gift-tax
exclusion through 2025. This additional amount is
the lesser of (1) the applicable federal poverty
level for a one-person household in the prior year,
or (2) the beneficiary’s compensation for the year.
A beneficiary cannot contribute this additional
amount for the year if any contribution is made on
their behalf to certain defined contribution plans.
This provision would make permanent the TCJA’s
additional contribution amount. It would also
increase the standard contribution limit, currently
the gift tax exclusion, by calculating it as the level
of the gift tax exclusion adjusted to account for
one additional year of inflation (that occurred
from 1996 to 1997).
This provision is an extension of TCJA with
modifications.
This provision would apply from 2026 onward.
Congressional Research Service
CRS Resources
CRS In Focus IF10363,
Achieving a Better Life
Experience (ABLE) Programs, by
William R. Morton and
Kirsten J. Colello.
CRS Report R47492, TaxAdvantaged Savings Accounts:
Overview and Policy
Considerations, by Brendan
McDermott.
12
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Extension of Savers Credit
Allowed for ABLE
Contributions
Section 110016 of the bill
Section 25B of the IRC
The Savers Credit is a nonrefundable credit of up
to $1,000 for those who make qualifying
contributions to specific savings vehicles such as
qualifying retirement accounts. The TCJA let
designated beneficiaries of ABLE accounts claim
the saver’s credit for qualifying contributions to
their ABLE accounts through 2025. Lawmakers
scheduled the saver’s credit to expire from 2027
onward, when a new benefit, a “Saver’s Match,”
would take effect (P.L. 117-328), for which
contributions to ABLE accounts would not qualify
under current law.
This provision makes permanent the TCJA’s
allowance of the saver’s credit to ABLE account
beneficiaries. As such, from 2027 onward, only
contributions to ABLE accounts by ABLE account
designated beneficiaries would qualify for the
saver’s credit.
This provision is an extension of TCJA with
modifications.
This provision would apply from 2026 onward.
CRS In Focus IF10363,
Achieving a Better Life
Experience (ABLE) Programs, by
William R. Morton and
Kirsten J. Colello.
CRS In Focus IF11159, The
Retirement Savings Contribution
Credit and the Saver’s Match,
by Brendan McDermott.
CRS Report R47492, TaxAdvantaged Savings Accounts:
Overview and Policy
Considerations, by Brendan
McDermott.
Extension of Rollovers
from Qualified Tuition
Programs to ABLE
Accounts Permitted
Section 110017 of the bill
Section 529 of the IRC
This provision would make permanent the TCJA’s
allowance of tax-free rollovers from a qualified
tuition plan (also known as a “529 plan”) account
to an ABLE account, subject to the standard ABLE
account contribution limit, provided that the
accounts have the same designated beneficiary (or
the designated beneficiaries of the two accounts
are members of the same family). Under current
law, this provision is in effect through 2025.
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply from 2026 onward.
CRS In Focus IF10363,
Achieving a Better Life
Experience (ABLE) Programs, by
William R. Morton and
Kirsten J. Colello.
CRS Report R47492, TaxAdvantaged Savings Accounts:
Overview and Policy
Considerations, by Brendan
McDermott.
Congressional Research Service
13
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
Extension of Treatment of
Certain Individuals
Performing Services in the
Sinai Peninsula and
Enhancement to Include
Additional Areas
Section 110018 of the bill
Sections 2, 112, 692, 2201,
3401, 4253, 6013, and
7508 of the IRC
Under current law, members of the Armed Forces
serving in a combat zone (and their families) are
entitled to several tax benefits, including certain
exemptions from income, payroll, and estate taxes,
and an extension of certain tax deadlines.
Typically, an area must be designated as a combat
zone by the President by executive order under
Section 112 for these tax benefits to apply. TCJA
created a temporary statutory presumption that
military duty performed in the Sinai Peninsula is in
a combat zone.
This provision would extend this statutory
presumption that military duty performed in the
Sinai Peninsula is in a combat zone. It would also
extend similar treatment to military duty
performed in Kenya, Mali, Burkina Faso, and Chad.
These extensions would be permanent, as long as
any member of the Armed Forces is entitled to
special pay for duty subject to hostile fire or
imminent danger in that location.
This provision is an extension of TCJA with
modifications.
This provision would apply starting on January 1,
2026.
Extension of Exclusion
from Gross Income of
Student Loans Discharged
on Account of Death or
Disability
Section 110019 of the bill
Section 108 of the IRC
Under current law, taxpayers can exclude all
discharged student loans from income through
2025.
This provision would permanently extend the
TCJA’s exclusion from gross income of student
loans discharged due to the death or total
disability of the student, but would not extend the
general exclusion, which was added after the
TCJA. It would also require that the student (and
their spouse, if married filing jointly) have a workeligible Social Security number to qualify.
This provision is an extension of TCJA with
modifications.
This provision would apply from 2026 onward.
Congressional Research Service
CRS Resources
CRS Report R41967, Higher
Education Tax Benefits: Brief
Overview and Budgetary Effects,
by Margot L. Crandall-Hollick
and Brendan McDermott.
14
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Part 2—Additional Tax Relief for American Families and Workers
No Tax on Tips
Section 110101 of the bill
New Section 224 of the IRC
Congressional Research Service
This provision would create a new income tax
deduction for qualified tip income. Qualified tip
income would be cash tips received through work
in an occupation that traditionally and customarily
receives tips. Such tips must be paid voluntarily,
determined by the payor, and not subject to
negotiation, among other rules. Tips earned by
non-employee workers (such as independent
contractors) could qualify to the extent they
exceed the cost of goods sold and other expenses,
losses, or deductions allocable to the service
provided. Taxpayers could not claim the deduction
if they receive earned income in excess of the
highly compensated employee threshold ($160,000
in 2025) or if they work in a specified service
trade or business for purposes of the qualified
business income deduction. Tip income used to
claim this deduction could not also be used to
claim the qualified business income deduction.
The deduction would only be available to
taxpayers if they (and their spouses, if married
filing jointly) have work-eligible SSNs, and would
generally be disallowed to those married filing
separately, with exceptions. The provision would
only be available if tips are reported separately
from other income on an information return.
Taxpayers could claim this deduction in addition
to the standard deduction.
The deduction would effectively exempt qualified
income from income tax. However, that tip
income would still be subject to payroll taxes
(such as for Social Security and Medicare hospital
insurance).
Under permanent law, food and beverage
businesses at which tipping is customary can
receive a credit (the “tip credit”) against their
income tax liability for payroll taxes paid on tips
exceeding the amount needed to meet a wage of
$5.15 per hour for each tipped employee. This
provision would extend the tip credit to certain
beauty service businesses, and would calculate it in
such industries based on the tips needed to meet
the federal minimum wage during the month in
which the tips were received.
This provision would apply from 2025 through
2028.
CRS In Focus IF12728,
Taxation of Tip Income, by
Brendan McDermott.
15
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
No Tax on Overtime
Section 110102 of the bill
New Section 225 of the IRC
This provision would create a new income tax
deduction for qualified overtime compensation,
meaning the additional 50% of the regular rate of
pay that employers must pay for overtime under
Section 7 of the Fair Labor Standards Act.
Qualified overtime compensation would not
include the regular rate of pay, any qualified tip
income, or income received by highly
compensated employees.
The deduction would only be available to
taxpayers if they (and their spouse, if married)
have work-eligible SSNs and would generally be
disallowed to those married filing separately, with
exceptions. Claimants must have qualified
overtime compensation accounted for separately
on information returns. Taxpayers could claim this
deduction in addition to the standard deduction.
Qualified overtime compensation would still be
subject to payroll taxes (such as for Social Security
and Medicare hospital insurance).
This provision would apply from 2025 through
2028.
CRS Report R42713, The Fair
Labor Standards Act (FLSA): An
Overview, by Sarah A.
Donovan.
Enhanced Deduction for
Seniors
Section 110103 of the bill
Section 63 of the IRC
Currently, taxpayers who are blind or aged 65 and
older can receive an additional standard deduction.
In 2025, this current additional deduction is $1,600
per qualifying individual for those married filing
jointly for whom both spouses are blind or elderly,
and $2,000 for qualifying taxpayers who are
unmarried and not surviving spouses.
This provision would increase the additional
standard deduction for the blind and elderly by
$4,000 per qualifying individual (not adjusted for
inflation). This additional amount would decrease
by 4% of the amount by which a taxpayer’s
modified adjusted gross income exceeds $75,000
($150,000 for those married filing jointly). The
increase to the additional deduction would only be
available to taxpayers if they (and their spouses, if
married filing jointly) have work-eligible SSNs.
Unlike the current additional deduction, this
additional deduction would also be available to
taxpayers who itemize their deductions.
This provision would apply from 2025 through
2028.
CRS Report RL34498, Federal
Individual Income Tax Brackets,
Standard Deduction, and
Personal Exemption: 1988 to
2025, by Brendan
McDermott.
CRS Report R48313, Overview
of the Federal Tax System in
2024, by Donald J. Marples
and Brendan McDermott.
Congressional Research Service
16
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
No Tax on Car Loan
Interest
Section 110104 of the bill
Section 163 of the IRC
This provision would provide an above-the-line
deduction for up to $10,000 of interest paid on
indebtedness incurred after December 31, 2024,
and used to purchase a car, minivan, van, SUV,
pickup truck, motorcycle, ATV, or RV the final
assembly of which occurs within the United States.
The deduction would phase out at a rate of $200
for each $1,000 of modified adjusted gross income
above $100,000 (or $200,000 if married filing
jointly).
This provision would be available for tax years
2025 through 2028.
Enhancement of EmployerProvided Child Care
Credit
Section 110105 of the bill
Section 45F of the IRC
Under current law, employers that offer child care
services to employees can claim a tax credit of up
to $150,000. The credit is worth 25% of qualified
child care expenditures plus 10% of qualified child
care resource and referral service expenditures.
This provision would raise the maximum credit to
$500,000 ($600,000 in the case of an eligible small
business; both figures adjusted for inflation) and
the credit rate for child care expenditures to 40%
(50% in the case of an eligible small business).
The provision would also make expenses to thirdparty intermediaries that contract with child care
facilities qualified child care expenditures.
Additionally, expenditures on child care facilities
that are jointly owned by the taxpayer and others
would newly qualify for the credit.
This provision would apply from 2026 onward.
Congressional Research Service
CRS Resources
CRS In Focus IF12379, The
45F Tax Credit for EmployerProvided Child Care, by
Brendan McDermott, Margot
L. Crandall-Hollick, and
Conor F. Boyle.
17
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Extension and
Enhancement of Paid
Family and Medical Leave
Credit
Section 110106 of the bill
Section 45S of the IRC
Under current law, employers can receive a tax
credit for paid leave wages paid to certain
employees. The credit is 12.5% of paid leave wages
if the wages are 50% of the employee’s usual
wages, increasing up to 25% of paid leave wages
for 100% wage replacement. Only paid leave wages
paid to employees who worked for the employer
for one year with wages at or below $93,000 in
2024 (the amount adjusts each year) qualify. The
employer’s policy must cover all eligible
employees, including part-time workers who only
work a few hours a week, and meet minimum
benefits requirements. Benefits paid pursuant to a
state or local government requirement are
disregarded for both the credit amount and the
minimum benefits requirement, which means
employers in areas with paid leave requirement
laws would be unlikely to qualify for the credit,
even if they provide benefits above the legal
minimum.
This provision would permanently extend the
credit while making several changes. It would allow
employers to apply premiums paid on a paid leave
insurance policy toward the credit, regardless of
whether an employee claimed leave under that
policy that year. It would allow benefits required
by a state or local government to apply toward
meeting the minimum benefits requirement, but
not toward the amounts paid for calculating the
credit. Leave wages paid to employees who only
worked for their employer for six months could
qualify at the employer’s choice. Part-time
employees would be eligible employees required
to be covered by the policy only if the employee
customarily works at least 20 hours per week.
This provision is an extension of TCJA with
modifications.
This provision would apply starting after
December 31, 2025.
CRS In Focus IF11141,
Employer Tax Credit for Paid
Family and Medical Leave, by
Anthony A. Cilluffo
CRS Report R44835, Paid
Family and Medical Leave in the
United States, by Sarah A.
Donovan
Enhancement of Adoption
Credit
Section 110107 of the bill
Section 23 of the IRC
In 2025, taxpayers can receive a nonrefundable tax
credit equal to their qualifying adoption expenses.
In 2025, the maximum adoption tax credit is
$17,280 per adoption (adjusted for inflation).
This provision would make up to $5,000 (adjusted
for inflation) of the credit refundable.
This provision would apply from 2025 onward.
CRS Report R44745, Adoption
Tax Benefits: An Overview, by
Margot L. Crandall-Hollick.
Congressional Research Service
18
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Recognizing Indian Tribal
Governments for Purposes
of Determining Whether a
Child Has Special Needs
for Purposes of the
Adoption Credit
Section 110108 of the bill
Section 23 of the IRC
Under current law, if a state welfare agency (but
not an Indian tribal government agency)
determines that a child meets the definition of
having special needs, the adoptive parents qualify
for the maximum adoption tax credit regardless of
actual adoption expenses.
This provision would let Indian tribal governments
make special needs determinations for purposes of
the adoption tax credit.
This provision would apply from 2025 onward.
CRS Report R44745, Adoption
Tax Benefits: An Overview, by
Margot L. Crandall-Hollick.
Scholarship-Granting
Organizations
Section 110109 of the bill
New Sections 25F and 139J
of the IRC
This provision would create a nonrefundable
income tax credit for charitable contributions
made by a taxpayer to scholarship-granting
organizations. Scholarship-granting organizations
must be tax-exempt, may not be private
foundations, and must devote substantially all of
their activities to the provision of scholarships for
elementary and secondary education expenses for
eligible students, defined as individuals who are
part of a household with an annual income less
than 300% of the area median gross income and
who are eligible to enroll in a public elementary or
secondary school. Any contribution that receives a
credit may not also be claimed as a charitable
contribution through IRC Section 170.
Credit amounts may not exceed $5,000 or 10% of
a taxpayer’s aggregate gross income. The credit
may be claimed against regular and alternative
minimum tax income.
Credit amounts are allocated by the Secretary of
Treasury, generally on a first-come, first-serve
basis, and subject to an annual, nationwide volume
cap. The volume cap is set to $5 billion in each
year from 2026 through 2029 and $0 in each
subsequent year. Ten percent of the annual
volume cap would be divided evenly among the
states, with individuals residing in a state eligible
for that portion of the cap. The cap would be
increased by 5% of the specified level in the year
after a year where more than 90% of the cap was
allocated.
Scholarships provided by scholarship-granting
organizations would be excluded from income by
the taxpayer claiming the recipient as a dependent.
Additionally, the provision also includes
prohibitions on using this provision to control
scholarship-granting organizations, the actions or
participation of nonpublic (including faith-based)
schools in the program, and a right for any parent
of an eligible student to intervene in any state or
federal court case challenging the constitutionality
of this provision.
The provision would apply starting after
December 31, 2025, although the volume cap for
allocation of the credit is $0 for years after 2029.
CRS Report R45922, Tax
Issues Relating to Charitable
Contributions and
Organizations, by Jane G.
Gravelle, Donald J. Marples,
and Molly F. Sherlock
Congressional Research Service
19
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Additional Elementary,
Secondary, and Home
School Expenses Treated
as Qualified Higher
Education Expenses for
Purposes of 529 Accounts
Section 110110 of the bill
Section 529 of the IRC
Current law allows families to save for education
using tax-advantaged qualified tuition programs, as
provided for in Section 529 of the IRC (also
known as 529 plans). Up to $10,000 per
beneficiary per year may be withdrawn and used
for tuition at an elementary or secondary school.
Withdrawals for expenses that do not qualify are
subject to tax plus a 10% penalty tax.
This provision would expand the list of eligible
expenses to cover curricular materials, books or
other instructional materials, online education
materials, tutoring materials, home school
expenses, fees for certain tests, and fees for dual
enrollment in institutions of higher education.
The provision is effective for distributions made
after the date of enactment.
CRS Report R42807, TaxPreferred College Savings Plans:
An Introduction to 529 Plans, by
Brendan McDermott.
Certain Postsecondary
Credentialing Expenses
Treated as Qualified
Higher Education Expenses
for Purposes of 529
Accounts
Section 110111 of the bill
Section 529 of the IRC
Current law allows families to save for education
using tax-advantaged qualified tuition programs, as
provided for in Section 529 of the IRC (also
known as 529 plans). Withdrawals for expenses
that do not qualify are subject to a 10% penalty.
This provision would expand the list of eligible
expenses to include qualified postsecondary
credentialing expenses, defined as tuition, fees,
books, and other supplies required for enrollment
or attendance in a program designed to provide
certain qualified postsecondary employment
credentials.
The provision is effective for distributions made
after the date of enactment.
CRS Report R42807, TaxPreferred College Savings Plans:
An Introduction to 529 Plans, by
Brendan McDermott.
Reinstatement of Partial
Deduction for Charitable
Contributions of
Individuals Who Do Not
Elect to Itemize
Section 110112 of the bill
Section 170 of the IRC
Under current law, taxpayers generally may only
deduct charitable contributions if they itemize
their deductions. Most taxpayers do not itemize
deductions, so few taxpayers are able to deduct
charitable contributions. A limited deduction for
taxpayers who do not itemize was available in
2020 and 2021 only.
This provision would create a limited deduction
for charitable contributions for taxpayers who do
not itemize deductions. Married filing jointly
taxpayers may deduct up to $300, while all other
taxpayers may deduct up to $150.
This provision would apply for tax years 2025
through 2028.
CRS Report R45922, Tax
Issues Relating to Charitable
Contributions and
Organizations, by Jane G.
Gravelle, Donald J. Marples,
and Molly F. Sherlock.
Congressional Research Service
20
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Exclusion for Certain
Employer Payments of
Student Loans Under
Educational Assistance
Programs Made Permanent
and Adjusted for Inflation
Section 110113 of the bill
Section 127 of the IRC
Under current law, up to $5,250 in annual qualified
educational assistance may be excluded from
taxable income by both the employee and the
employer. Qualifying assistance includes tuition,
fees, books, supplies, equipment, and principal or
interest on a qualified educational loan. Only
student loan payments made before January 1,
2026, qualify as educational assistance.
This provision would allow student loan payments
made after December 31, 2025, to qualify as an
eligible education assistance expense. The
proposal would also inflation adjust the maximum
exclusion amount for all qualified educational
assistance for years beginning in 2027.
The provision is effective for payments made after
December 31, 2025.
CRS Report R41967, Higher
Education Tax Benefits: Brief
Overview and Budgetary Effects,
by Margot L. Crandall-Hollick
and Brendan McDermott
Extension of Rules for
Treatment of Certain
Disaster-Related Personal
Casualty Losses
Section 110114 of the bill
Section 165 of the IRC
Under permanent law, the nonbusiness casualty
and theft loss deduction is available only to those
who itemize deductions; only to the extent each
casualty exceeds $100; and only to the extent the
deduction exceeds 10% of adjusted gross income
(AGI).
This provision would retroactively extend an
expansion of the deduction implemented by P.L.
116-260. Under that expansion, taxpayers could
take the casualty deduction in addition to the
standard deduction, without the 10% of AGI
limitation, and with the per-casualty limitation
raised from $100 to $500.
Losses could qualify if they resulted from a major
disaster that began between December 28, 2019,
and the date of enactment, and for which the
President declared a major disaster between
January 1, 2020, and 60 days after the date of
enactment. P.L. 118-148 previously extended this
expansion through December 12, 2024, meaning
this provision would in practice apply to casualties
from major disasters beginning since that date.
This provision would apply from December 12,
2024, through the date of enactment.
CRS In Focus IF12574, The
Nonbusiness Casualty and Theft
Loss Deduction, by Brendan
McDermott.
CRS Report R45864, Tax
Policy and Disaster Recovery, by
Brendan McDermott and
Jennifer Teefy.
Congressional Research Service
21
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Trump Accounts
Section 110115 of the bill
New Section 530A and
existing Sections 1, 4973,
6103 and 6693 of the IRC
This provision would create a new type of taxadvantaged savings account for young people,
called a Trump account. The account must be
established before the beneficiary reaches eight
years of age. Contributors may contribute up to
$5,000 per year (this amount is adjusted annually
for inflation) in cash (not assets such as stocks)
until the beneficiary is age 18, starting in 2026.
Distributions are not allowed before the
beneficiary turns age 18, and no more than half of
the balance at age 18 may be distributed before
age 25. The account must be invested in a
diversified index fund of U.S. stocks and must
minimize fees and expenses. Upon distribution for
an eligible purpose, the portion of the distribution
related to the contribution is exempt from tax,
and the portion of the distribution related to
earnings on investments is taxed at capital gains
rates.
Eligible uses include higher education expenses,
certain credential expenses, certain small business
expenses, and first-time homebuyer expenses. Any
distributions for a non-eligible use are taxed at
ordinary tax rates and may be subject to a 10%
penalty. The account terminates when the
beneficiary turns age 31, and the full amount is
considered distributed and is taxed at ordinary tax
rates, but is not subject to the 10% penalty. The
individual establishing the account (likely a parent,
grandparent, or guardian) and the beneficiary (the
child) must both provide Social Security numbers.
The government would be required to establish a
program where a 501(c) tax-exempt organization
may contribute to the accounts of a large number
of unrelated children, such as all children in a
certain community.
This provision would apply after December 31,
2024.
CRS Report R47492, TaxAdvantaged Savings Accounts:
Overview and Policy
Considerations, by Brendan
McDermott.
Trump Accounts
Contribution Pilot Program
Section 110116 of the bill
New Sections 6434 and
6659 and existing Section
6213 of the IRC
This provision would create a new one-time tax
credit of $1,000 for each qualifying child that
would be contributed to the Trump account
established by Section 110115 of the bill. If the
child does not already have a Trump account, the
government would choose an account trustee (a
company that maintains the account) and open a
Trump account on the child’s behalf. To be eligible
for the one-time tax credit, the child must be born
from 2025 to 2028 and be a U.S. citizen at birth.
Additionally, the taxpayer claiming the child, the
taxpayer’s spouse (if applicable), and the child all
need to have a Social Security number. The
provision would also establish penalties for
improper claims for the credit.
This provision would apply after December 31,
2024.
CRS Report R47492, TaxAdvantaged Savings Accounts:
Overview and Policy
Considerations, by Brendan
McDermott.
Congressional Research Service
22
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Part 3—Investing in Health of American Families and Workers
Treatment of Health
Reimbursement
Arrangements Integrated
with Individual Market
Coverage
Section 110201 of the bill
Section 9815 of the IRC
A health reimbursement arrangement (HRA) is a
tax-advantaged arrangement that reimburses
individuals for qualified health care costs. The
payments are not subject to individual income and
payroll taxes. Regulations issued in 2019 permitted
individual coverage health reimbursement
arrangements (ICHRAs), which can be used to
purchase individual market health insurance
policies without violating the rules regarding
employer group health plans.
This provision would establish custom health
option and individual care expense (CHOICE)
arrangements, which would be a type of
arrangement that is inclusive of ICHRAs and has
features similar to those established in ICHRA
regulations.
The provision would be effective for tax years
beginning after December 31, 2025.
CRS Report R47041, Health
Reimbursement Arrangements
(HRAs): Overview and Related
History, by Ryan J. Rosso.
CRS Report R46782, A
Comparison of Tax-Advantaged
Accounts for Health Care
Expenses, by Ryan J. Rosso.
Participants in CHOICE
Arrangement Eligible for
Purchase of Exchange
Insurance Under Cafeteria
Plan
Section 110202 of the bill
Section 125 of the IRC
Cafeteria plans are salary-reduction plans that
allow employees to choose between cash
compensation and a tax-favored benefit, including
health coverage under a flexible spending
arrangement. Under current law, most employees
cannot choose to use cafeteria plans to purchase
individual insurance on the exchanges because this
benefit was limited to certain small employers
providing for health insurance in the small group
market.
This provision would allow individuals enrolled in a
CHOICE arrangement plan to also be eligible to
use a cafeteria plan to purchase individual
insurance through an exchange.
The provision would be effective for tax years
beginning after December 31, 2025.
CRS Report R46782, A
Comparison of Tax-Advantaged
Accounts for Health Care
Expenses, by Ryan J. Rosso.
Employer Credit for
CHOICE Arrangement
Section 110203 of the bill
New Section 45BB and
existing Sections 38 and
4980H of the IRC
This provision would create a tax credit for
employers of $100 per month per employee for
the first year of enrollment in a CHOICE plan and
half as much in the second year. The credit would
be available for employers with fewer than 50 full
time workers during the preceding calendar year
and 50 or more during less than 120 days if the
additional employees are seasonal workers.
The credit would be part of the general business
credit (GBC) and subject to its rules. Unused
GBCs may be carried back one year or forward up
to 20 years. Any credit not used by the end of the
20-year carry-forward period may be deducted in
its entirety in the next tax year. Employers can
take the credit against both the regular income
and alternative minimum taxes.
The provision would be effective for tax years
beginning after December 31, 2025.
Congressional Research Service
23
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Individuals Entitled to Part
A of Medicare by Reason
of Age Allowed to
Contribute to Health
Savings Accounts
Section 110204 of the bill
Section 223 of the IRC
A health savings account (HSA) is a tax-advantaged
account that individuals can use to save and pay
for unreimbursed medical expenses. Individuals are
eligible to establish and contribute to an HSA if
they have coverage under an HSA-qualified highdeductible health plan (HDHP), do not have
disqualifying coverage, and cannot be claimed as a
dependent on another person's tax return.
Individuals who are enrolled in Medicare are not
allowed to establish or contribute to their HSA,
regardless of whether they also are enrolled in an
HSA-qualified HDHP.
Account holders may make tax-free HSA
withdrawals to pay qualified medical expenses for
themselves, their spouse, or their dependents.
Two HSA withdrawal rules apply differently to
those aged 65 or older (irrespective of Medicare
enrollment) than to most individuals under the age
of 65. First, although health insurance premiums
generally are not considered an HSA-qualified
medical expense, this restriction does not apply to
individuals aged 65 years and older; these
individuals may treat any health insurance
premiums as qualified medical expenses. Second,
although withdrawals not used to pay for qualified
medical expenses must be included in an
individual's gross income and generally are subject
to a 20% penalty, the penalty does not apply if
made after an individual reaches the age of 65.
This provision would allow HSA-qualified HDHP
enrollees aged 65 and older to enroll in Medicare
Part A and retain their ability to contribute to an
HSA. While these individuals would be eligible to
contribute to an HSA, they would no longer be
able to use their HSA to pay for health insurance
premiums and they would pay a 20% penalty for
any amounts withdrawn for nonqualified medical
expenses.
This provision would apply to months beginning
after December 31, 2025.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi,
CRS In Focus IF11425, Health
Savings Accounts (HSAs) and
Medicare, by Ryan J. Rosso.
Congressional Research Service
24
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Treatment of Direct
Primary Care Service
Arrangements
Section 110205 of the bill
Section 223 of the IRC
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses. Individuals are
eligible to establish and contribute to an HSA if
they have coverage under an HSA-qualified HDHP,
do not have disqualifying coverage, and cannot be
claimed as a dependent on another person's tax
return. Account holders may make tax-free HSA
withdrawals to pay qualified medical expenses for
themselves, their spouse, or their dependents.
Health insurance premiums generally are not
considered an HSA-qualified medical expense.
Depending on the features of a direct primary care
arrangement, it may be considered disqualifying
coverage for purposes of HSA-eligibility, and may
not be a qualified medical expense for HSA
purposes.
This provision would exclude direct primary care
arrangements from being considered disqualifying
coverage. Direct primary care arrangement would be
defined as an arrangement where primary care
practitioners solely provide primary care services
and solely for a fixed periodic fee. Primary care
services would specifically exclude procedures that
require general anesthesia, prescription drugs
(other than vaccines), and laboratory services not
typically administered in an ambulatory primary
care setting. An individual’s total monthly fees for
all direct primary arrangements would not be able
to exceed $150 (or $300 if any arrangement
covers more than one person). The dollar
limitations would be adjusted for inflation. This
provision also would allow direct primary care
arrangements to be considered a qualified medical
expense.
This provision would apply to months beginning
after December 31, 2025. The inflation adjustment
would apply to taxable years beginning in a
calendar year after 2026.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
CRS In Focus IF12818, Health
Savings Account (HSA) Qualified
Medical Expenses, by Ryan J.
Rosso.
Congressional Research Service
25
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Allowance of Bronze and
Catastrophic Plans in
Connection with Health
Savings Accounts
Section 110206 of the bill
Section 223 of the IRC
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses. Individuals are
eligible to establish and contribute to an HSA if
they have coverage under an HSA-qualified HDHP,
do not have disqualifying coverage, and cannot be
claimed as a dependent on another person's tax
return. To be HSA qualified, an HDHP must meet
several tests: it must have a deductible above a
certain minimum threshold, it must limit out-ofpocket expenditures for covered benefits to no
more than a certain maximum threshold, and it
can cover only preventive care services and
certain insulin products before the deductible is
met.
In an individual exchange, eligible consumers can
compare and purchase nongroup insurance for
themselves and their families. Most health plans
sold through the exchanges must provide coverage
with one of four levels of actuarial value (AV),
which corresponds to an estimated percentage of
medical care costs that the plan will pay (relative
to the enrollee) and a precious metal designation.
The four AV levels are 90% for platinum, 80% for
gold, 70% for silver, and 60% for bronze.
Catastrophic plans do not meet AV requirements
and are available only to limited populations.
Metal level plans can be considered HSA-qualified
only if the generally applicable HSA-qualified
HDHP criteria are met. Catastrophic plans
currently are not considered HSA-qualified
HDHPs.
This provision would allow any bronze or
catastrophic plan available through an individual
exchange to be considered an HSA-qualified
HDHP regardless of whether it meets other HSAqualified HDHP criteria.
This provision would apply to months beginning
after December 31, 2025.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
CRS Report R44065, Health
Insurance Exchanges and
Qualified Health Plans:
Overview and Policy Updates,
by Vanessa C. Forsberg.
Congressional Research Service
26
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
On-Site Employee Clinics
Section 110207 of the bill
Section 223 of the IRC
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses. Individuals are
eligible to establish and contribute to an HSA if
they have coverage under an HSA-qualified HDHP,
do not have disqualifying coverage, and cannot be
claimed as a dependent on another person's tax
return. An on-site employee clinic would be
considered disqualifying coverage if it provides
significant medical care beyond disregarded
coverage (e.g., coverage [through insurance or
otherwise] for accidents, disability, vision care,
dental care) and preventive care.
This provision would exclude from disqualifying
coverage qualified items and services received at a
healthcare facility located at a site that is owned or
leased by the individual’s (or their spouse’s)
employer or provided at a healthcare facility
operated primarily for the benefit of the
individual’s (or their spouse’s) employer. Qualified
items and services would be defined as physical
examinations, immunizations, drugs or biologicals
(other than a prescribed drug), treatment for
injuries occurring in the course of employment,
certain preventive care for chronic conditions,
drug testing, and hearing or vision screening and
related services.
This provision would apply to months in taxable
years beginning after December 31, 2025.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
Congressional Research Service
27
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Certain Amounts Paid for
Physical Activity, Fitness,
and Exercise Treated as
Amounts Paid for Medical
Care
Section 110208 of the bill
Section 223 of the IRC
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses for themselves,
their spouse, or their dependents. HSA qualified
medical expenses include most items and services
that would be considered medical care for the
medical and dental expenses itemized deduction,
as described in IRC Section 213(d), menstrual care
products, and over-the-counter medications and
drugs without a prescription. Personal expenses
that are merely beneficial to the general health of
the individual, such as gym memberships, generally
would not be considered an HSA-eligible expense.
This provision would expand the definition of
HSA-qualified medical expenses to include up to
$500 (or $1,000 for joint or head of household
returns) in qualified sports and fitness expenses, with
a monthly limit that is 1/12 of that amount. The
dollar limitations would be annually adjusted for
inflation. Qualified sports and fitness expenses would
be defined as amounts paid for the sole purpose of
participating in a physical activity, including
membership at a specified type of fitness facility
and participation or instruction in physical exercise
or physical activity. It would not include amounts
paid for one-on-one personal training; remote or
virtual instructions (unless the instruction is live);
videos, books, or similar materials; one-day fitness
facility memberships; or single sessions of physical
activities or exercise.
This provision would apply to taxable years
beginning after December 31, 2025. The inflation
adjustment would apply to taxable years beginning
in a calendar year after 2026.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
CRS In Focus IF12818, Health
Savings Account (HSA) Qualified
Medical Expenses, by Ryan J.
Rosso.
Congressional Research Service
28
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Allow Both Spouses to
Make Catch-up
Contributions to the Same
Health Savings Account
Section 110209 of the bill
Section 223 of the IRC
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses for themselves,
their spouse, or their dependents. Spouses are
prevented from having joint HSA accounts. If both
spouses are HSA-eligible and at least one spouse is
covered by a family coverage HSA-eligible HDHP,
then the collective maximum HSA contribution
amount that the couple can make is to be split
evenly between the spouses' HSAs, unless both
agree on a different division. For those aged 55 or
older, the maximum annual amount an individual
can contribute to his or her HSA is increased by
$1,000 (i.e., a catch-up contribution). If both
spouses are aged 55 or older and eligible to make
these catch-up contributions, each spouse must
make such a contribution to his or her own
account; one spouse cannot make catch-up
contributions to his or her own HSA on behalf of
the other spouse.
This provision would allow HSA-eligible spouses
to agree to a different division of catch-up
contributions between the spouses’ HSAs in
situations where at least one spouse is covered by
a family coverage HSA-eligible HDHP and both
spouses are aged 55 or older. In other words,
eligible spouses would no longer be required to
make catch-up contributions into their own HSAs.
This provision would apply to taxable years
beginning after December 31, 2025.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
Congressional Research Service
29
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
FSA and HRA
Terminations or
Conversions to Fund HSAs
Section 110210 of the bill
Sections 106, 223, and 6051
of the IRC
Congressional Research Service
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses. In 2025, the
maximum annual contribution limit is $4,300 for
self-only coverage and $8,550 for family coverage.
These amounts are adjusted for inflation annually.
In addition, account holders who are at least 55
years of age may contribute an additional catch-up
contribution of $1,000 each year, which is not
indexed for inflation.
Health flexible spending arrangements (FSAs) are
employer-established benefits that reimburse
employees for certain medical expenses. Health
reimbursement arrangements (HRAs) are
employer-established accounts that can be used to
pay or reimburse employees and/or former
employees for qualified medical expenses,
including (in some instances) health insurance
premiums.
Individuals cannot retain the ability to contribute
to an HSA if they are enrolled in both an HSAeligible HDHP and disqualifying coverage.
Disqualifying coverage generally is considered any
health plan that is not an HDHP and that provides
coverage for any benefit covered under the
HDHP. Health FSAs and HRAs would generally fall
within the definition of disqualifying coverage,
unless offered in an HSA-compatible way.
Individuals are not currently allowed to transfer
(or roll over) amounts from an FSA or HRA to an
HSA, which is referred to as a qualified HSA
distribution. Previous rules temporarily allowed
such health FSA or HRA rollovers, but qualified
HSA distributions have not been allowed since
January 1, 2012.
This provision would allow the transfer of FSA or
HRA balances to an HSA if (1) the individual is
establishing coverage under an HSA-qualified
HDHP, and (2) the FSA or HRA transitions to an
HSA-compatible FSA or HRA after the qualified
HSA distribution. As part of this requirement, the
individual could not have been enrolled under an
HSA-qualified HDHP during the four years prior
to enrollment in the HSA-qualified HDHP.
Qualified HSA distributions would reduce an
individual’s HSA annual contribution limit. Other
previously used rules for qualified HSA
distributions would continue to apply.
The aggregate amount of FSA and HRA
distributions to an HSA cannot exceed $3,300 for
individuals with single coverage, or $6,600 for
individuals with family coverage. These amounts
would be indexed for inflation in future years.
This provision would also require qualified HSA
distributions to be reported on Form W-2.
This provision would apply to distributions made
after December 31, 2025.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
CRS Report R46782, A
Comparison of Tax-Advantaged
Accounts for Health Care
Expenses, by Ryan J. Rosso.
30
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Special Rule for Certain
Medical Expenses Incurred
Before Establishment of
Health Savings Account
Section 110211 of the bill
Section 223 of the IRC
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses. HSA withdrawals
are exempt from federal income taxes if used to
cover qualified medical expenses for the account
holder, the account holder's spouse, or the
account holder's dependents. Withdrawals not
used to pay for qualified medical expenses must be
included in the account holder's gross income
when determining federal income taxes and
generally are subject to a 20% penalty. HSA
withdrawals used to pay expenses incurred before
the HSA was established would not be considered
to be made for a qualified medical expense (even if
the type of expense would otherwise have been
allowable).
This provision would allow eligible medical
expenses incurred after the start of an HSAqualified HDHP plan year to be considered a
qualified medical expense for an HSA established
within 60 days of the start of the plan year. In
other words, withdrawals from an HSA
established within 60 days of the start of an HSAqualified HDHP plan year could be made on a taxadvantaged basis for eligible medical expenses
incurred after the start of the plan year and before
the account was established.
This provision would apply to coverage starting
after December 31, 2025.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
Contributions Permitted if
Spouse Has Health Flexible
Spending Arrangement
Section 110212 of the bill
Section 223 of the IRC
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses. Health FSAs are
employer-established benefits that reimburse
employees for certain medical expenses.
Individuals cannot retain the ability to contribute
to an HSA if they are enrolled in both an HSAeligible HDHP and any other disqualifying coverage.
Disqualifying coverage generally is considered any
health plan that is not an HDHP and that provides
coverage for any benefit covered under the
HDHP. Health FSAs generally would fall within the
definition of disqualifying coverage. As such, an
individual would not be considered HSA-eligible if
he or she were enrolled in an HSA-eligible HDHP
and had coverage under a health FSA (including
under a spouse’s health FSA offered by the
spouse’s employer).
This provision would allow an otherwise HSAeligible individual who is covered by a spouse’s
FSA to retain HSA eligibility (if total
reimbursements from the FSA do not exceed the
total eligible expenses of the non-HSA-eligible
individual(s) covered by the FSA).
This provision would apply to plan years starting
after December 31, 2025.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
CRS Report R46782, A
Comparison of Tax-Advantaged
Accounts for Health Care
Expenses, by Ryan J. Rosso.
Congressional Research Service
31
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Increase in Health Savings
Account Contribution
Limitation for Certain
Individuals
Section 110213 of the bill
Sections 106 and 223 of the
IRC
An HSA is a tax-advantaged account that
individuals can use to save and pay for
unreimbursed medical expenses. Individuals,
employers, or both may contribute to HSAs, but
the aggregate amount of contributions is subject
to an annual limit. In 2025, the maximum annual
contribution limit is $4,300 for self-only coverage
and $8,550 for family coverage. These amounts
are adjusted for inflation annually. In addition,
account holders who are at least 55 years of age
may contribute an additional catch-up contribution
of $1,000 each year, which is not indexed for
inflation.
This provision would increase the maximum
annual HSA contribution limit for contributions by
$4,300 for self-only coverage and $8,550 for family
coverage for individuals below certain income
thresholds. In other words, this would double the
2025 maximum contribution limit (excluding catchup contributions) for certain populations.
For those who have self-only coverage or those
who do not file returns as married filing jointly,
the maximum increase would be available to those
with modified adjusted gross income at or beneath
$75,000. For those who have family coverage and
are filing married filing jointly returns, the
maximum increase would be available to those
with modified adjusted gross incomes at or
beneath $150,000. Additional contribution
amounts must be made by the individual and not
the employer.
The increased contribution limit would be phased
out for those who have self-only coverage or
those who are not filing married filing jointly
returns, from $75,000 to $100,000, and for those
who have family coverage and who are filing
married filing jointly returns, from $150,000 to
$200,000.
The increased contribution amounts and modified
adjusted gross income amounts would be indexed
for inflation.
This provision would apply the increased
contribution limit to taxable years starting after
December 31, 2025. The inflation adjustment
would apply to taxable years starting after
December 31, 2026.
CRS Report R45277, Health
Savings Accounts (HSAs), by
Ryan J. Rosso and Alice Y.
Choi.
Source: CRS analysis of H.R. 1 as it passed the House on May 22, 2025. This text consisted of Rules Committee
Print 119-3 as modified by the Manager’s Amendment printed in H. Rept. 119-113. See House Committee on
Rules, Rules Committee Print 119-3, https://rules.house.gov/sites/evosubsites/rules.house.gov/files/documents/rcp_119-3_final.pdf and House Committee on Rules, Providing for
Consideration of the Bill (H.R. 1) to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14,
https://www.govinfo.gov/content/pkg/CRPT-119hrpt113/pdf/CRPT-119hrpt113.pdf.
Notes: “IRC” is the Internal Revenue Code. “TCJA” is P.L. 115-97, commonly referred to as the Tax Cuts and
Jobs Act (TCJA). Within the description, “Section” citations refer to the section within the IRC, unless otherwise
noted.
Congressional Research Service
32
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Table 2. Subtitle B—Make Rural America and Main Street Grow Again
Section Title
Description
CRS Resources
Part 1—Extension of Tax Cuts and Jobs Act Reforms for Rural America and Main Street
Extension of Special
Depreciation Allowance
for Certain Property
Section 111001 of the bill
Section 168(k) of the IRC
Congressional Research Service
Assets such as equipment and buildings are
depreciated over time. Prior to the TCJA, bonus
depreciation for equipment, purchased software,
and structures with recovery periods no more
than 20 years allowed an immediate deduction of
50% for assets placed in service in 2017, 40% in
2018, and 30% in 2019. Long-lived property was
not eligible. The phasedown was delayed for
certain property, including property with a long
production period
The TCJA allowed full and immediate expensing
(100% bonus depreciation) through 2022; the
bonus percentage is reduced by 20% per year for
four years starting in 2023. The TCJA excluded
regulated public utilities (but eliminated the
interest limit for these assets) and added theatrical
movies and television programs to eligible assets.
The phasedown was delayed for property with a
long production period. This provision also applies
to computer software. Expensing is not available
to real estate and farming businesses that elect out
of the limit on interest deductions.
This provision would provide for 100% bonus
depreciation for property acquired and placed in
service after January 19, 2025, and before January
1, 2030 (January 1, 2031, for longer production
period property and certain aircraft).
This provision is an extension of TCJA with no or
minor modifications.
This provision would apply to property acquired
and placed in service after January 19, 2025, and
before January 1, 2030 (January 1, 2031, for longer
production period property and certain aircraft).
CRS Report RL31852, The
Section 179 and Section 168(k)
Expensing Allowances: Current
Law, Economic Effects, and
Selected Policy Issues, by Gary
Guenther.
CRS Report R48153, Marginal
Effective Tax Rates on
Investment and the Expiring
2017 Tax Cuts, by Jane G.
Gravelle and Mark P.
Keightley.
33
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Deduction of Domestic
Research and Experimental
Expenditures
Section 111002 of the bill
Sections 174 and 280C of
the IRC
Prior to the TCJA, research expenditures could be
deducted immediately (expensed). Research
expenditures are also eligible for a credit, and the
amount expensed was reduced by this credit
(called a basis adjustment). The TCJA required,
effective in 2022, that costs be amortized and
recovered in equal amounts over five years. It also
altered the basis adjustment in a way that
appeared to effectively eliminate it.
The provision would restore the expensing and
full basis adjustment rules that applied before 2022
for tax years beginning after December 31, 2024,
and before January 1, 2030.
This provision is an extension of TCJA with
modifications.
This provision would apply to tax years beginning
after December 31, 2024, and before January 1,
2030.
CRS Report RL31181, Federal
Research Tax Credit: Current
Law and Policy Issues, by Gary
Guenther.
CRS In Focus IF12815, How
the “Tax Cuts and Jobs Act”
(TCJA, P.L. 115-97) Changed
Cost Recovery and the Tax
Credit for Research, by Jane G.
Gravelle and Mark P.
Keightley.
Congressional Research Service
34
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Modified Calculation of
Adjusted Taxable Income
for Purposes of Business
Interest Deduction
Section 111003 of the bill
Section 163 of the IRC
Prior to the TCJA, the deduction for net interest
was limited to 50% of adjusted taxable income for
firms with a debt-equity ratio above 1.5. (Adjusted
taxable income is income before taxes, interest
deductions, and depreciation, amortization, or
depletion deductions.) Interest above the
limitation could be carried forward indefinitely.
The TCJA limited deductible interest to 30% of
adjusted taxable income for businesses with gross
receipts greater than $25 million. The provision
also had an exception for floor plan financing
(often used by automotive dealers) for motor
vehicles.
Under prior law and the temporary provisions of
the TCJA, this interest limit applies to earnings
(income) before interest, taxes, depreciation,
amortization, or depletion (referred to as
EBITDA). After 2021, the TCJA changed the
measure of income to earnings (income) before
interest and taxes (referred to as EBIT). Because
EBIT is after the deduction of depreciation,
amortization, and depletion, it results in a smaller
base and thus a smaller amount of eligible interest
deductions. The temporary broader base
(EBITDA), which expired in 2021, allowed more
interest deductions. The more generous rules for
measuring the adjusted taxable income base are
more beneficial to businesses with depreciable
assets, although affected businesses might be able
to avoid some of the change in the deduction rules
by leasing assets from financial institutions, such as
banks, that generally have interest income.
This provision would temporarily reinstate
EBITDA as the basis for the 30% limit on interest
deducted as a share of income for 2025 through
2029 and expand the definition of “motor vehicle”
for purposes of deducting interest on floor plan
finance to include certain trailers and campers.
This provision is an extension of TCJA with
modifications.
This provision would apply starting after
December 31, 2024.
CRS Report R48286, Expiring
Provisions of P.L. 115-97 (the
Tax Cuts and Jobs Act):
Economic Issues, coordinated
by Jane G. Gravelle.
CRS Report R48153, Marginal
Effective Tax Rates on
Investment and the Expiring
2017 Tax Cuts, by Jane G.
Gravelle and Mark P.
Keightley.
CRS Report RL32254, Small
Business Tax Benefits: Current
Law, by Gary Guenther.
Congressional Research Service
35
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Extension of Deduction for
Foreign-Derived Intangible
Income and Global
Intangible Low-taxed
Income
Section 111004 of the bill
Section 250 of the IRC
Current law imposes a minimum tax on global
intangible low-taxed income (GILTI) of controlled
foreign corporations (CFCs), after allowing a
deduction for 10% of tangible assets and 50% of
the remainder. A deduction is also allowed for
foreign-derived intangible income (FDII) for 10% of
tangible assets and 37.5% of the remainder. These
deduction amounts for the remainder are
scheduled to fall to 37.5% for GILTI and 21.875%
for FDII after 2025. With the current 21% tax
rate, these deductions result in a rate of 10.5%
(13.125% after 2025) for GILTI and 13.125%
(16.4% after 2025) for FDII.
The combined GILTI and FDII deductions are
limited to taxable income, and any unused
deduction cannot be carried back or forward.
This provision would reduce the 50% deduction
for GILTI to 49.2% and the 37.5% deduction for
FDII to 36.5% and make these deductions
permanent. These deductions would create
permanent rates of 10.668% for GILTI and
13.335% for FDII.
This provision is an extension of TCJA with
modifications.
This provision would apply starting after
December 31, 2025.
CRS Report R45186, Issues in
International Corporate
Taxation: The 2017 Revision
(P.L. 115-97), by Jane G.
Gravelle and Donald J.
Marples, and
CRS Report R47003,
Corporate Income Taxation in a
Global Economy, by Jane G.
Gravelle, Mark P. Keightley,
and Donald J. Marples.
Extension of Base Erosion
Minimum Tax Amount
Section 111005 of the bill
Section 59A of the IRC
Under current law, the base erosion and antiabuse tax (BEAT) provides for an alternative
calculation of tax by adding certain payments to
related foreign parties (such as interest and
royalties) and taxing this income at 10%. Payments
for the cost of goods sold are not included. BEAT
does not allow tax credits, including the foreign
tax credit, except for a temporary allowance of
the research credit along with 80% of the lowincome housing credit and two energy credits.
After 2025, the BEAT rate will rise to 12.5% and
no credits will be allowed.
The provision would increase the 10% rate to
10.1% and make this rate and current treatment of
credits permanent.
This provision is an extension of TCJA with
modifications.
This provision would apply starting after
December 31, 2025.
CRS Report R45186, Issues in
International Corporate
Taxation: The 2017 Revision
(P.L. 115-97), by Jane G.
Gravelle and Donald J.
Marples, and
CRS Report R47003,
Corporate Income Taxation in a
Global Economy, by Jane G.
Gravelle, Mark P. Keightley,
and Donald J. Marples.
Congressional Research Service
36
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
Exception to Denial of
Deduction for Business
Meals
Section 111006 of the bill
Section 274 of the IRC
TCJA included a provision with delayed
implementation that would deny a deduction for
certain meals provided to employees for the
convenience of the employer starting after
December 31, 2025. Currently, this restriction has
not yet been implemented.
This provision would modify the denial of
deduction to allow a deduction for expenses
related to goods or services sold for adequate and
full value, such as an employee paying the same
rate charged to the general public.
This provision would apply to amounts paid or
incurred after December 31, 2025.
CRS Resources
Part 2—Additional Tax Relief for Rural America and Main Street
Special Depreciation
Allowance for Qualified
Production Property
Section 111101 of the bill
Section 168 of the IRC
Congressional Research Service
Under current law, the cost of nonresidential real
property is depreciated over 39 years and the cost
of residential real property is recovered over 27.5
years, both using the straight-line method. Certain
qualified nonresidential improvement property is
recovered over 15 years and eligible for bonus
depreciation.
When property is sold, a portion of the property
that reflects depreciation deductions is recaptured,
that is, added to income and taxed at ordinary
rates rather than capital gains tax rates. For
tangible assets (called Section 1245 property), such
as equipment, all depreciation is recaptured. For
real property (Section 1250 property),
depreciation in excess of straight line is
recaptured. Real property acquired after 1986 is
subject to straight-line depreciation and, therefore,
not subject to recapture except for bonus
depreciation for improvement property.
This provision would provide for an elective 100%
bonus depreciation for nonresidential property
used in manufacturing, production, or refining of
tangible property where original use begins with
the taxpayer. Production includes only agricultural
and chemical production. Qualified production
property does not include space not used for
manufacturing, production, or refining, such as
office space, parking lots, and sales floors.
Depreciation is recaptured in full upon sale
(Section 1245 rules apply). If within the first 10
years, the property is no longer used as
production property, depreciation is recaptured at
that time.
This provision applies to property acquired after
January 19, 2025, and before January 1, 2029, and
applies to property placed in service after the date
of enactment.
37
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Renewal and Enhancement
of Opportunity Zones
Section 111102 of the bill
Section[s] 1400Z-1 and
1400Z-2 of the IRC
This provision would extend the Opportunity
Zone (OZ) program and modify the definition of
low-income community and the tax incentives. The
modified definition of low-income community
would be narrower than the current definition and
be used for a second round of OZ designations
that would go into effect at the beginning of 2027
(the existing designations would end at the end of
2026). The second-round OZ designations would
be conducted in a manner similar to the original
OZ designations, but would also be required to
have one-third of designations be entirely rural
areas—an area with a population of 50,000 or
fewer inhabitants that is not adjacent to a city with
a population of more than 50,000 inhabitants—and
census tracts with median income greater than
125% of the area median income or adjacent to
eligible low-income communities would not be
eligible.
Capital gains invested in qualified opportunity
funds are eligible for deferral until the earlier of
December 31, 2033, or when the OZ investment
is sold. Capital gains held in a qualified opportunity
fund for five years receive a 10% increase in basis
(30% if held in a qualified rural opportunity fund
for five years) and gains on the OZ investment are
excluded from tax, if the investment is held at least
10 years.
Other modifications to the OZ program include
allowing taxpayers to invest up to $10,000 in aftertax income in qualified opportunity funds,
reporting requirements for funds and businesses,
and Treasury reporting on the use of this
provision.
This provision is an extension of TCJA with
modifications.
This provision would apply to second-round OZ
designations beginning on January 1, 2027, and
ending on December 31, 2033.
CRS Report R45152, Tax
Incentives for Opportunity
Zones, by Donald J. Marples
Increased Dollar
Limitations for Expensing
of Certain Depreciable
Business Assets
Section 111103 of the bill
Section 179 of the IRC
Under Section 179, taxpayers may expense
(deduct the full amount of) investment in qualified
long-life property (tangible personal property,
software, and qualified improvement property) up
to $1 million. The eligible amount is phased out
after investment reaches $2.54 million. These
amounts are indexed for inflation and are $1.25
million and $3.13 million in 2025. Because of the
investment amount limitation, Section 179 is
mostly used by smaller businesses.
The provision would permanently increase these
amounts to $2.5 million and $4.0 million, with
amounts indexed for inflation after 2025.
This provision would apply to property placed into
service after December 31, 2024.
CRS Report RL31852, The
Section 179 and Section 168(k)
Expensing Allowances: Current
Law, Economic Effects, and
Selected Policy Issues, by Gary
Guenther.
Congressional Research Service
38
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Repeal of Revision to De
Minimis Rules for Third
Party Network
Transactions
Section 111104 of the bill
Sections 3406 and 6050W
of the IRC
Under current law, third party settlement
organizations (TPSOs) must report aggregate
information about users’ transactions on their
platforms to the IRS. A variety of entities qualify as
TPSOs, including online marketplaces (such as
eBay and Etsy), payment services (such as PayPal
and Venmo), and gig economy services (such as
Uber and Airbnb). Section 6050W required
information reporting for all taxpayers with
aggregate transactions of more than $600 starting
in 2022. However, the IRS has offered transition
relief in 2022 and every year since, and plans to
implement the $600 requirement starting in 2026.
This provision would permanently change the
information reporting threshold to its level before
2021, which includes two parts. First, the total
transaction amount must exceed $20,000. Second,
the user must have had at least 200 transactions.
The TPSO does not need to send information to
the IRS if the user does not meet both
requirements. This change does not modify the tax
requirements related to TPSO income. It would
also exempt users with transactions below these
limits from backup withholding requirements.
The change to the de minimis threshold would
apply as if included in the American Rescue Plan
Act of 2021 (P.L. 117-2). The change to backup
withholding requirements would apply in 2025 and
later.
CRS In Focus IF12095,
Payment Settlement Entities and
IRS Reporting Requirements, by
Anthony A. Cilluffo, and
CRS In Focus IF11896, Tax
Treatment of Gig Economy
Workers, by Anthony A.
Cilluffo.
Increase in Threshold for
Requiring Information
Reporting with Respect to
Certain Payees
Section 111105 of the bill
Sections 3406, 6041, and
6041A of the IRC
Under current law, businesses generally must file
an information return (using a form from the Form
1099 series) with the IRS for business payments of
$600 or more. Taxpayers who do not provide the
payer with their tax identification number (usually
either a Social Security number or IRS-issued
employer identification number) may be subject to
backup withholding.
This provision would permanently increase the
reportable payments threshold to $2,000, and
provide for an annual inflation adjustment. This
new threshold would apply to most general
business payments and to nonemployee
compensation for services. It would also apply the
same minimum to the requirement for backup
withholding.
This provision would apply to payments made
after December 31, 2025.
Congressional Research Service
39
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
Exclusion of Interest on
Loans Secured by Rural or
Agricultural Real Property
Section 111107 of the bill
New Section 139K of the IRC
This provision would allow for an exclusion of 25%
of interest received by a lender on a loan secured
by rural or agricultural real estate. This provision
would likely only apply to commercial loans,
because the real estate securing the loan must be
(1) used for the production of one or more
agricultural products; (2) used in the trade or
business of fishing or seafood processing; or (3) an
aquaculture facility. The property must be located
within the United States, but not necessarily within
a rural area if it is used for one of the qualifying
business uses. Loans made to specified foreign
entities are not eligible for the exclusion.
This provision would apply to interest on loans
originated after enactment and before January 1,
2029.
Treatment of Certain
Qualified Sound Recording
Productions
Section 111108 of the bill
Sections 168 and 181 of the
IRC
Under current law, production costs for sound
recordings generally must be recovered (deducted
from income) over multiple years. Under Section
167, taxpayers are allowed “a reasonable
allowance” for exhaustion, wear and tear, and
obsolescence. Calculating this allowance for sound
recordings is complex, and likely requires making
assumptions about the future income generation
of the recording in order to use the income
forecast allowance method.
This provision would provide alternative cost
recovery options for sound recordings. First, for
sound recordings commencing in 2025, creators
could immediately deduct up to $150,000 in U.S.based production costs in the year incurred. It
would also allow larger productions and
productions starting after 2025 but before 2029 to
receive faster cost recovery by applying U.S.-based
production costs to bonus depreciation under
Section 168(k).
This provision would apply to productions starting
in tax years ending after the date of enactment.
Congressional Research Service
CRS Resources
40
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Modifications to LowIncome Housing Credit
Section 111109 of the bill
Section 42 of the IRC
The low-income housing tax credit is a subsidy for
the construction or rehabilitation of rental housing
meeting statutorily determined rent and income
limits. To receive the credit a taxpayer must
receive an award of “competitive” or “9%” credits
from the state in which the investment is made.
Alternatively, a taxpayer may receive
“noncompetitive” or “4%” credits if at least 50% of
the investment is financed by tax-exempt bonds
that are subject to limit on private activity bonds.
This provision would increase state low-income
housing credit allocation authority for calendar
years 2026 through 2029 by 12.5%. This provision
would also reduce the 50% tax-exempt bond
financing requirement to 25% for bond obligations
issued in calendar years through 2029. Last, this
provision would modify the definition of difficult
development areas (DDAs) for purposes of the
low-income housing tax credit to include "Indian
areas” through 2029.
This provision would apply to calendar years 2026
through 2029.
CRS Report RS22389, An
Introduction to the Low-Income
Housing Tax Credit, by Mark P.
Keightley.
CRS In Focus IF11335, The
Low-Income Housing Tax Credit:
Policy Issues, by Mark P.
Keightley.
Increased Gross Receipts
Threshold for Small
Manufacturing Business
Section 111110 of the bill
Section 448 of the IRC
This provision would allow manufacturers with
average annual gross receipts (over the last three
years) of less than $80 million to use the cash
method of accounting. These manufacturers may
also be exempt from the business interest
limitation, certain capitalization rules, and certain
inventory account rules. Under current law, the
gross receipts threshold is $25 million for all
taxpayers.
This provision would apply starting after
December 31, 2025.
CRS Report RL32254, Small
Business Tax Benefits: Current
Law, by Gary Guenther.
Global Intangible LowTaxed Income Determined
Without Regard to Certain
Income Derived from
Services Performed in the
Virgin Islands
Section 111111 of the bill
Sections 951A and 469 of
the IRC
U.S. shareholders of controlled foreign
corporations (CFCs) are subject to a minimum tax
on global intangible low-taxed income (GILTI),
after allowing for certain deductions. Certain
income is excluded. These rules treat income
derived from U.S. possessions in the same way as
income derived from foreign countries.
This provision would exclude certain income
earned from services provided in the Virgin
Islands. The exclusion is available to U.S.
shareholders who are individuals, trusts, estates,
or closely held C corporations (where more than
50% of stock is owned by no more than five
individuals).
This provision would be effective for taxable years
beginning after the date of enactment.
CRS Report R45186, Issues in
International Corporate
Taxation: The 2017 Revision
(P.L. 115-97), by Jane G.
Gravelle and Donald J.
Marples
Congressional Research Service
41
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Extension and Modification
of Clean Fuel Production
Credit
Section 111112 of the bill
Section 45Z of the IRC
Congressional Research Service
The clean fuel production credit (CFPC), as
enacted under the Inflation Reduction Act of 2022
(IRA; P.L. 117-169), subsidizes the costs of
producing transportation fuels with low lifecycle
greenhouse gas emissions. Fuels qualifying for the
credit must be deemed suitable for use as a fuel in
a highway vehicle or aircraft and must be sold to
"unrelated persons" as defined in IRC Section
52(b). In Notice of Proposed Rulemaking (NPRM)
2025-10, the IRS states that "actual use as a fuel in
a highway vehicle or aircraft is not required"; the
NPRM clarifies that certain fuels ordinarily used to
power ships may qualify for the CFPC if they meet
the criterion of being “suitable for use” in highway
vehicles or aircraft.
Two other criteria define eligibility for the CFPC.
First, production facilities used to claim the credit
must be located in the United States or its
possessions (i.e., Puerto Rico, Guam, and other
territories). Second, to be considered clean, fuel
produced at such facilities must have a lifecycle
emissions rate of no more than 50 kilograms of
CO2 or CO2 equivalent per 1 million British
Thermal Units (mmBTU). Lifecycle emissions are
meant to measure the total impact of a fuel on
greenhouse gas emissions (not just the emissions
when the fuel is burned), including emissions
associated with producing the fuel and with
producing feedstocks (i.e., raw materials, including
from plants or animal waste) used to make the
fuel. For greenhouse gases other than CO2, the
term CO2 equivalent refers to the quantity of
CO2 that would produce the same amount of
global warming as the given non-CO2 greenhouse
gas.
For fuel production meeting the criteria described
above, the credit operates on a sliding scale in
which fuels with lifecycle greenhouse gas emissions
rated closer to zero receive larger credits. Credit
amounts also differ according to taxpayers’
compliance with prevailing wage and
apprenticeship (PWA) requirements and whether
the fuel is aviation fuel or nonaviation fuel. For
aviation fuel producers, the CFPC has a maximum
value of $1.75 per gallon for firms meeting PWA
requirements and $0.35 for firms not meeting
PWA requirements. For nonaviation fuel
producers, the CFPC has a maximum value of
$1.00 per gallon for firms meeting PWA
requirements and $0.20 for firms not meeting
PWA requirements.
Under current law, the CFPC may be claimed for
fuel produced after December 31, 2024, and sold
on or before December 31, 2027. The CFPC, in
effect, consolidated and replaced several credits
for specific fuels that expired at the end of 2024,
including credits for biodiesel, biodiesel mixtures,
agri-biodiesel, renewable diesel, second-generation
biofuel, mid-level ethanol blends, sustainable
CRS In Focus IF12502, The
Section 45Z Clean Fuel
Production Credit, by Nicholas
E. Buffie.
42
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
aviation fuel, alternative fuels, and alternative fuels
mixtures.
This provision would modify the CFPC in various
ways. First, it would require feedstocks used in
eligible fuels sold after 2025 to be sourced from a
feedstock that is produced or grown in the United
States, Mexico, or Canada.
Second, the provision would modify the emissions
rates tables used to determine lifecycle
greenhouse gas emissions in two ways: (1) it
would prohibit the effects of indirect land use
changes from being counted in lifecycle emissions
estimates (which could affect emissions
calculations for agriculture-based fuels such as
corn ethanol); and (2) it would require the
Secretary of the Treasury (who is tasked with
publishing new emissions rate tables every year
under current law) to publish distinct emissions
rates for fuels using dairy manure, swine manure,
poultry manure, and such other sources as are
determined appropriate. These changes to the
emissions rate tables would apply to taxable years
beginning after December 31, 2025.
Third, this provision would add foreign entity
restrictions based on the definitions of specific
foreign entity and foreign-influenced entity in Section
112008 of the bill. (Section 112008 modifies the
clean electricity production tax credit.) For taxable
years beginning after the date of the bill’s
enactment, specific foreign entities—including
foreign entities of concern, as defined in
subparagraphs (A), (B), (D), or (E) of Section
9901(8) of the William M. (Mac) Thornberry
National Defense Authorization Act for Fiscal
Year 2021—cannot receive the CFPC. For taxable
years beginning at least two years after the date of
the bill’s enactment, foreign-influenced entities are
barred from receiving the tax credit.
Additionally, this provision would extend eligibility
for the credit to all otherwise-eligible fuels sold on
or before December 31, 2031. This represents a
four-year extension of the credit relative to
current law.
This provision would generally apply to fuel sold
between 2026 and 2031.
Congressional Research Service
43
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Restoration of Taxable
REIT Subsidiary Asset Test
Section 111113 of the bill
Section 856 of the IRC
A real estate investment company (REIT) is a
corporation that would otherwise be taxed as a
corporation, except that it meets certain tests and
faces a number of restrictions, including assets and
income that are primarily derived from real estate.
Distributions to shareholders are deductible and
are taxed as ordinary income, making the tax
treatment equivalent to other pass-throughs, such
as partnerships.
REITs are allowed to have taxable subsidiaries to
carry out nonpassive functions, such as services to
tenants. No more than 20% of the assets of a REIT
may be held in taxable REIT subsidiaries. The share
was reduced from 25% to 20% in 2016.
This provision increases the allowable share of
assets in taxable subsidiaries to 25%.
This provision would apply starting after
December 31, 2025.
CRS Report R44421, Real
Estate Investment Trusts
(REITs) and the Foreign
Investment in Real Property Tax
Act (FIRPTA): Overview and
Recent Tax Revisions, by Jane
G. Gravelle.
Source: CRS analysis of H.R. 1 as it passed the House on May 22, 2025. This text consisted of Rules Committee
Print 119-3 as modified by the Manager’s Amendment printed in H. Rept. 119-113. See House Committee on
Rules, Rules Committee Print 119-3, https://rules.house.gov/sites/evosubsites/rules.house.gov/files/documents/rcp_119-3_final.pdf and House Committee on Rules, Providing for
Consideration of the Bill (H.R. 1) to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14,
https://www.govinfo.gov/content/pkg/CRPT-119hrpt113/pdf/CRPT-119hrpt113.pdf.
Notes: “IRC” is the Internal Revenue Code. “TCJA” is P.L. 115-97, commonly referred to as the Tax Cuts and
Jobs Act (TCJA). Within the description, “Section” citations refer to the section within the IRC, unless otherwise
noted.
Congressional Research Service
44
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Table 3. Subtitle C—Make America Win Again
Section Title
Description
CRS Resources
Part 1—Working Families Over Elites
Termination of Previously
Owned Clean Vehicle
Credit
Section 112001 of the bill
Section 25E of the IRC
Congressional Research Service
The credit for previously owned clean vehicles,
commonly referred to as the used clean vehicle
credit or UCVC, was enacted as part of the
Inflation Reduction Act of 2022 (IRA; P.L. 117169). The UCVC provides a tax credit of up to
$4,000 for purchases of used electric vehicles,
used plug-in hybrid vehicles, or used fuel cell
vehicles. Qualifying used vehicles must be sold for
$25,000 or less and are subject to additional
restrictions. Qualifying taxpayers must have
modified adjusted gross income (MAGI) at or
below certain thresholds for either the current
year or the previous year. The thresholds are
$150,000 for married couples, $112,500 for
heads of household, and $75,000 for single filers
and others. Under current law, the credit applies
to vehicles acquired on or before December 31,
2032.
Since the beginning of 2024, taxpayers have been
allowed to transfer their credits to vehicle
dealers. Transferred credits may exceed
taxpayers' income tax liabilities, effectively making
transferred tax credits fully refundable.
This provision would require that qualifying used
vehicles be acquired no later than December 31,
2025, in effect repealing the credit starting in
2026.
This provision would apply to vehicles acquired
after December 31, 2025.
CRS In Focus IF12600, Clean
Vehicle Tax Credits, by Donald
J. Marples and Nicholas E.
Buffie.
CRS In Focus IF12570, Clean
Vehicle Tax Credit Transfers to
Car Dealers, by Nicholas E.
Buffie.
45
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Termination of Clean
Vehicle Credit
Section 112002 of the bill
Section 30D of the IRC
Congressional Research Service
The clean vehicle credit (CVC) in Section 30D of
the IRC was enacted under the Energy Policy Act
of 2005 (EPACT05; P.L. 109-58) and most
recently modified by the IRA. Individuals
purchasing a new clean vehicle—including new
electric vehicles, plug-in hybrids, and fuel cell
vehicles—may claim a CVC of up to $7,500 for
vehicles acquired before the end of 2032. The
maximum potential credit ($7,500) is the sum of
two amounts: the critical mineral amount
($3,750) and the battery component amount
($3,750), both of which went into effect for
vehicles acquired on or after April 18, 2023. (Fuel
cell vehicles without batteries that meet other
requirements are eligible for the full $7,500
credit.) To claim the critical mineral portion of
the credit, a car's battery must have (at least) a
certain percentage of its critical minerals that
were extracted or processed in the United States
or in a country with which the United States has
a free trade agreement, or that were recycled in
North America. The minimum percentage is 60%
in 2025 and will rise to 80% for 2027 and later
years. To claim the battery component portion of
the credit, (at least) a certain percentage of an
electric vehicle battery's component parts must
be manufactured or assembled in North America.
The minimum percentage is 60% in 2025 and
rises to 100% for 2029 and later years. In
addition, none of the applicable critical minerals
or battery components in a qualifying vehicle’s
battery may come from a foreign entity of concern
(FEOC). FEOCs are broadly defined but include
companies with jurisdiction in China, North
Korea, Russia, or Iran as well as companies with
25% or higher ownership (measured based on
board seats, voting rights, or equity interests)
from certain current or former senior foreign
political figures in those four countries.
In addition to the critical minerals and battery
component requirements, qualifying clean
vehicles must meet other criteria. These
additional criteria include a manufacturer's
suggested retail price (MSRP) limit ($80,000 for
vans, SUVs, and pickup trucks; $55,000 for other
vehicles); a required gross vehicle weight rating
(GVWR) of less than 14,000 pounds; and a
battery capacity of at least 7 kilowatt hours.
Additionally, all qualified vehicles must undergo
final assembly in North America.
To claim the CVC, taxpayers' MAGI for either
the current or previous year must be at or below
certain thresholds: $300,000 for married couples,
$225,000 for heads of household, and $150,000
for single filers.
Since the beginning of 2024, taxpayers have been
allowed to transfer their credits to vehicle
dealers. Transferred credits may exceed
CRS In Focus IF12600, Clean
Vehicle Tax Credits, by Donald
J. Marples and Nicholas E.
Buffie.
CRS Insight IN12322, Foreign
Entity of Concern Requirements
in the Section 30D Clean
Vehicle Credit, by Nicholas E.
Buffie.
CRS In Focus IF12570, Clean
Vehicle Tax Credit Transfers to
Car Dealers, by Nicholas E.
Buffie.
CRS In Focus IF12603, The
Tax Credit Exception for Leased
Electric Vehicles, by Nicholas E.
Buffie.
46
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
taxpayers' income tax liabilities, effectively making
transferred credits fully refundable.
This provision would eliminate the CVC for all
vehicles acquired after December 31, 2026. In
addition, special rules would apply to vehicles
acquired in 2026. These special rules stipulate
that only manufacturers which manufactured
200,000 or fewer covered vehicles sold for use in
the United States between December 31, 2009,
and December 31, 2025, would maintain eligibility
for the tax credit. A similar rule was in place
prior to the enactment of the IRA in August
2022.
The provision would define covered vehicle in one
of two ways. First, covered vehicles would
include all new qualified plug-in electric drive motor
vehicles—as defined in IRC Section 30D(d)(1) as
in effect on December 31, 2022—that were
acquired before 2023. Second, covered vehicles
would include all new clean vehicles as currently
defined in IRC Section 30D(d)(1). If the sum of a
manufacturer’s new qualified plug-in electric drive
motor vehicles and new clean vehicles exceeds
200,000, then the manufacturer will be deemed
to have crossed the covered vehicle threshold, and
its vehicles will not be eligible for the CVC in
2026. Taxpayers treated as a single employer
under IRC Sections 52(a), 52(b), 414(m), or
414(o) would be treated as a single manufacturer,
subject to restrictions described in IRC Section
30B(f)(4).
This provision would apply to vehicles placed in
service after December 31, 2025.
Congressional Research Service
47
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Termination of Qualified
Commercial Clean Vehicles
Credit
Section 112003 of the bill
Section 45W of the IRC
Congressional Research Service
The credit for qualified commercial clean
vehicles, sometimes referred to as the 45W
credit based on its section of the IRC, allows
businesses purchasing new electric vehicles, new
plug-in hybrid vehicles, or new fuel cell vehicles
to reduce their federal income tax liabilities. Taxexempt organizations may claim a cash payment
of equivalent value to the 45W credit under the
IRA’s direct payments mechanism. The 45W
credit was enacted as part of the IRA in August
2022.
The credit has a maximum value of $7,500 for
vehicles with a GVWR of less than 14,000
pounds and a maximum of $40,000 for heavier
vehicles. For plug-in hybrid vehicles, the credit
equals the lesser of the incremental cost of the
vehicle (the difference between its price and the
price of a gas- or diesel-powered vehicle of
similar size and use) or 15% of the vehicle's cost
basis. For electric vehicles and fuel cell vehicles,
the credit equals the lesser of the incremental
cost of the vehicle or 30% of its cost basis.
Among other restrictions, qualifying vehicles
must have a battery capacity of at least 7 kilowatt
hours if the GVWR is less than 14,000 pounds or
15 kilowatt hours otherwise, and must be either
mobile machinery as defined in IRC Section
4053(8) or a motor vehicle for use on public
roads for purposes of Title II of the Clean Air
Act. Mobile machinery is defined to include
vehicles such as electric tractors while excluding
vehicles such as electric golf carts.
The 45W credit is nonrefundable, meaning that
businesses may not claim tax credits in excess of
their income tax liabilities (again with the
exception of tax-exempt organizations claiming a
direct cash payment). Any unused credits may be
carried back one year or carried forward up to
20 years to offset other years' tax liabilities.
Businesses may claim the commercial clean
vehicle credit for vehicles leased to customers. In
some cases, dealers have reportedly claimed
credits for leased passenger vehicles, then used
these credits to lower customers' down
payments by $7,500. This tax credit exception or
leased vehicles loophole allows customers to
save up to $7,500 even if the vehicle does not
match the MSRP restrictions or domestic content
rules from the CVC. (The Section 45W credit
does not contain any domestic content or
domestic manufacturing requirements.)
Taxpayers who are above the CVC income limits
can also benefit from the loophole/exception.
Under current law, the 45W credit only applies
to vehicles acquired before the end of 2032.
This provision would eliminate the 45W credit
for most vehicles acquired after December 31,
2025. Between 2026 and 2032, vehicles would
only be eligible for the credit if they were
CRS In Focus IF12600, Clean
Vehicle Tax Credits, by Donald
J. Marples and Nicholas E.
Buffie.
CRS In Focus IF12603, The
Tax Credit Exception for Leased
Electric Vehicles, by Nicholas E.
Buffie.
48
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
purchased in a written binding contract entered
into before May 12, 2025.
This provision would apply to vehicles acquired
after December 31, 2025.
Termination of Alternative
Fuel Vehicle Refueling
Property Credit
Section 112004 of the bill
Section 30C of the IRC
Congressional Research Service
The alternative fuel vehicle refueling property
credit (AFVRPC) is a nonrefundable income tax
credit that may be claimed by individuals or
businesses installing alternative fuel vehicle
refueling property at the taxpayer’s principal
residence or place of business. Clean fuel
refueling property is generally any tangible
equipment (such as a pump) used to dispense a
fuel into a vehicle’s tank. Qualifying property
includes fuel storage and dispensing units and
electric vehicle recharging equipment. A clean
fuel is defined as any fuel at least 85% of the
volume of which consists of ethanol (E85) or
methanol (M85), natural gas, compressed natural
gas (CNG), liquefied natural gas, liquefied
petroleum gas, and hydrogen, or any mixture of
biodiesel and diesel fuel, determined without
regard to any use of kerosene and containing at
least 20% biodiesel. For the purposes of the
credit, electricity is also considered a clean fuel.
Costs for vehicle charging equipment—including
bidirectional charging equipment and charging
stations for electric motorcycles intended for use
on public roads—are eligible for the credit.
For businesses meeting the prevailing wage and
apprenticeship (PWA) requirements set forth in
the IRA, the credit is equal to 30% of the cost of
purchasing and installing qualified alternative fuel
vehicle refueling property at a taxpayer's
business, up to a limit of $100,000 per property
item. For businesses not meeting PWA
requirements, the AFVRPC is equal to 6% of
purchase and installation costs, also up to a limit
of $100,000 per property item.
For property installed on a personal residence,
the credit is equal to 30% of the purchase and
installation costs up to a maximum value
of $1,000.
Due to modifications enacted under the IRA,
since 2023, only qualifying property installed in a
nonurban or a low-income census tract has been
eligible for the credit. The IRA also modified the
AFVRPC in other ways and extended eligibility
for the credit through the end of 2032.
This provision would terminate the AFVRPC for
property placed in service after December 31,
2025, effectively repealing the credit starting in
calendar year 2026.
This provision would apply to property placed in
service after December 31, 2025.
CRS Report R47675, Federal
Policies to Expand Electric
Vehicle Charging Infrastructure,
by Melissa N. Diaz and Corrie
E. Clark.
CRS Report R46865, Energy
Tax Provisions: Overview and
Budgetary Cost, by Nicholas E.
Buffie and Donald J. Marples.
CRS Report R48351, EV
Charging Infrastructure:
Frequently Asked Questions, by
Melissa N. Diaz.
49
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Termination of Energy
Efficient Home
Improvement Credit
Section 112005 of the bill
Section 25C of the IRC
The energy efficient home improvement credit
(EEHIC) was first enacted by EPACT05 and was
most recently modified by the IRA.
Under current law, between tax years 2023 and
2032, taxpayers may receive an EEHIC for
making energy-efficiency upgrades to their
homes. Purchases of energy-efficient appliances
installed at homes that are rented, owned and
used as secondary residences, or owned and
used as principal residences are eligible for the
EEHIC. Upgrades to the insulation, exterior
doors, and exterior windows or skylights of
homes owned and used as principal residences
are also EEHIC-eligible. In addition, home energy
audits of taxpayers' principal residences (whether
owned or rented) are eligible for the credit.
The EEHIC is equal to 30% of the costs of
purchasing and installing eligible energy-efficiency
equipment. The credit is generally limited to
$1,200 per taxpayer and $600 per item, with
certain exceptions described in statute.
Taxpayers may claim an additional amount of up
to $2,000 for installations of electric or natural
gas heat pumps, electric or natural gas heat pump
water heaters, biomass stoves, and biomass
boilers. This $2,000 amount is in addition to the
normal $1,200 maximum, allowing taxpayers to
receive as much as $3,200 per year from the
EEHIC.
The EEHIC is nonrefundable, meaning that if the
value of the credit exceeds a taxpayer's income
tax liability, they may not receive a refund for the
difference. This limits the value of the EEHIC for
households with low tax liabilities, including most
low-income households. Preliminary data from
2023, the first full year with the IRA-modified tax
credit in place, indicate that taxpayers in the
bottom 27% of the income distribution received
0.8% of EEHIC benefits and that taxpayers in the
top 24% of the income distribution received 62%
of EEHIC benefits.
This provision would make property placed in
service after December 31, 2025, ineligible for
the credit, in effect repealing the EEHIC starting
in 2026.
This provision would apply to property placed in
service after December 31, 2025.
CRS Insight IN12422,
Preliminary Data on the IRA
Energy Efficient Home
Improvement Credit, by
Nicholas E. Buffie.
CRS Report R46865, Energy
Tax Provisions: Overview and
Budgetary Cost, by Nicholas E.
Buffie and Donald J. Marples.
CRS Insight IN12051,
Residential Energy Tax Credits:
Changes in 2023, by Brendan
McDermott.
Congressional Research Service
50
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Termination of Residential
Clean Energy Credit
Section 112006 of the bill
Section 25D of the IRC
The residential clean energy credit (RCEC) was
first enacted by the Energy Policy Act of 2005
(P.L. 109-58) and was most recently reinstated
and expanded by the IRA.
Under current law, the RCEC subsidizes taxpayer
purchases of renewable energy equipment used
at taxpayer residences. Between 2022 and 2032,
individuals and couples installing solar electric
panels, solar water heaters, small wind energy
property, geothermal heat pumps, and other
renewable energy equipment can receive an
RCEC equivalent to 30% of the costs
of purchasing, assembling, and installing such
equipment. The credit phases down to 26% for
equipment placed in service in 2033 and to 22%
for equipment placed in service in 2034 before
expiring for equipment placed in service after
2034.
Both renters and homeowners may claim the
credit for domestically located homes in which
they reside; landlords who rent property to
others are not eligible. The RCEC is
nonrefundable, meaning that if a taxpayer's RCEC
is greater than their income tax liability, the
taxpayer may not receive a refund for the
difference. However, unused credit amounts may
be carried forward to offset income
tax liabilities in future years. Preliminary data
from 2023, the first full year with the IRAmodified tax credit in place, indicate that
taxpayers in the bottom 27% of the income
distribution received 0.3% of RCEC benefits and
that taxpayers in the top 24% of the income
distribution received 67% of RCEC benefits.
This provision would make property placed in
service after December 31, 2025, ineligible for
the credit, in effect repealing the RCEC starting
in 2026.
This provision would apply to property placed in
service after December 31, 2025.
CRS Insight IN12423,
Preliminary Data on the IRA
Residential Clean Energy Credit,
by Nicholas E. Buffie.
CRS Report R46865, Energy
Tax Provisions: Overview and
Budgetary Cost, by Nicholas E.
Buffie and Donald J. Marples.
CRS Insight IN12051,
Residential Energy Tax Credits:
Changes in 2023, by Brendan
McDermott.
Termination of New Energy
Efficient Home Credit
Section 112007 of the bill
Section 45L of the IRC
The new energy efficient home tax credit
provides a tax credit to builders of ENERGY
STAR certified single-family homes, manufactured
homes, and multifamily homes and is scheduled
to expire after December 31, 2032.
The provision would have the tax credit expire
on December 31, 2025, while allowing homes
that began construction before May 12, 2025, to
claim the tax credit if the housing unit is
completed by December 31, 2026.
This provision would generally apply to any home
acquired after December 31, 2025, but will apply
after December 31, 2026, for homes that started
construction before May 12, 2025.
Congressional Research Service
51
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Restrictions on Clean
Electricity Production
Credit
Section 112008 of the bill
Sections 45Y of the IRC
Congressional Research Service
Qualifying facilities that produce zero-emissions
electricity and sell it to an unrelated person or
persons (e.g., other businesses) may receive the
clean electricity production tax credit (CEPTC)
during the first 10 years of the facility’s
operations. The CEPTC, as enacted under the
IRA, is equal to 2.5 cents in 2021 dollars per
kilowatt-hour of electricity production (with
lower amounts for facility owners not meeting
the IRA’s PWA requirements).
Credit amounts are reduced in proportion to the
share of capital financing coming from tax-exempt
bonds, up to a maximum reduction of 15%.
Taxpayers receiving the CEPTC are eligible for
a 10% bonus credit (2% for taxpayers not
meeting PWA requirements) if certain shares of
the iron, steel, and manufactured products used
to construct the facility were produced in the
United States. Taxpayers are eligible for a
separate 10% bonus credit (2% for taxpayers not
meeting PWA requirements) if the facility used to
claim the credit is located in an energy community.
Bonus credit amounts are calculated after
considering any reduction for financing from taxexempt bonds.
Under the IRA’s direct payments and
transferability mechanisms, certain tax-exempt
organizations may receive a cash payment of
equivalent value to the CEPTC, while taxpaying
businesses may sell their tax credits to other
taxpaying businesses for cash. Facilities beginning
construction in 2026 or later years are ineligible
for direct payments if they do not meet the
requirements of the domestic content bonus
credit. Facilities beginning construction in 2024
or 2025 receive reduced direct payment amounts
if they do not meet those domestic content
requirements.
New eligibility for the full credit amount is
maintained through an "applicable year," which is
the later of either 2032 or the year in which
greenhouse gas emissions from the domestic
electricity sector are less than or equal to 25% of
the sector's emissions from 2022. Credit
eligibility is then subject to a phaseout. As part of
the phaseout, facilities that begin construction
during the calendar year after the applicable year
may receive 100% of the full credit amount;
facilities that begin construction two calendar
years later may receive 75% of the full amount;
and facilities that begin construction three
calendar years later may receive 50% of the full
amount. No taxpayers may become newly eligible
for the credits thereafter. However, because
credit eligibility is based on the year a facility
begins construction, whereas receipt of the
credits is based on when a facility is placed in
service, taxpayers may receive the credit after
the final year of new eligibility. For example, if the
CRS Report R46865, Energy
Tax Provisions: Overview and
Budgetary Cost, by Nicholas E.
Buffie and Donald J. Marples.
CRS Report R48428, Inflation
Reduction Act (IRA) Wage and
Apprenticeship Requirements:
Effect on Tax Credit Values, by
Nicholas E. Buffie.
CRS Report R48358,
Domestic Content Requirements
for Electricity Tax Credits in the
Inflation Reduction Act (IRA), by
Nicholas E. Buffie.
CRS Report R47831, Federal
Economic Assistance for Coal
Communities, by Julie M.
Lawhorn et al.
CRS Report RL31457, Private
Activity Bonds: An Introduction,
by Grant A. Driessen.
CRS In Focus IF12596, Tax
Credit Transfers and Direct
Payments in the Inflation
Reduction Act of 2022, by
Nicholas E. Buffie.
52
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
applicable year is 2037, a taxpayer begins
construction on a new facility in 2037 and begins
providing electricity to consumers in 2040, then
the taxpayer could receive the credit for 10 years
from 2040 to 2049.
This provision would eliminate the CEPTC for all
facilities which begin construction more than 60
days after enactment or which are placed in
service after December 31, 2028. Exceptions
exist for certain nuclear facilities. The credit
would continue to be allowed for advanced
nuclear facilities, as defined in IRC section
45J(d)(2)), that begin construction on or before
December 31, 2028, but not thereafter. Any
nuclear facility for which the reactor design is
approved by the Nuclear Regulatory Commission
would not be allowed a credit for any facility
expansions beginning after December 31, 2028.
In addition, this provision eliminates CEPTC
eligibility for the renting or leasing of solar water
heating property, solar electric property (i.e.,
solar panels), and small wind energy property to
homeowners and renters whose use of the
property would qualify for the residential clean
energy credit if the homeowner or renter owned
the given property. (Section 112006 of H.R. 1
repeals the residential clean energy credit. Under
current law, homeowners and renters only
receive the credit for property they own.)
The provision would also introduce various
restrictions to foreign involvement in qualifying
taxpayers’ supply chains. The provision would (1)
if the facility receives material assistance from a
prohibited foreign entity, disallow the tax credit for
facilities that start construction after December
31, 2025; (2) if the taxpayer is a specified foreign
entity, disallow the tax credit for tax years
beginning after the date of enactment; (3)
disallow the tax credit for tax years beginning
two years after the date of enactment if the
taxpayer is a foreign-influenced entity; (4) disallow
the tax credit for tax years beginning two years
after the date of enactment if the taxpayer pays
dividends, interest, compensation for services,
rentals or royalties, or guarantees, or otherwise
makes FDAP (fixed, determinable, annual, or
periodic) payments to a prohibited foreign entity,
or is produced subject to a licensing agreement
greater than threshold amounts.
This provision would have several effective dates.
Congressional Research Service
53
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Restrictions on Clean
Electricity Investment Credit
Section 112009 of the bill
Section 48E of the IRC
Congressional Research Service
The clean electricity investment tax credit
(CEITC), as enacted by the IRA, may be claimed
by facilities producing electricity from any zeroemissions energy source. For taxpayers
complying with the IRA’s PWA requirements, the
CEITC is equal to 30% of taxpayers' capital
investment costs (defined in statute as "basis"; 6%
for firms not meeting PWA requirements), and
qualifying facilities must be placed in service after
December 31, 2024. Energy storage technology is
also eligible for the credit.
Credit amounts are reduced in proportion to the
share of capital financing coming from tax-exempt
bonds, up to a maximum reduction of 15%.
Taxpayers receiving the CEITC are eligible for
a 10 percentage-point bonus credit (2 percentage
points for taxpayers not meeting PWA
requirements) if certain shares of the iron, steel,
and manufactured products used to construct the
facility were produced in the United
States. Taxpayers are eligible for a
separate 10 percentage-point bonus credit (2
percentage points for taxpayers not meeting
PWA requirements) if the facility used to claim
the credit is located in an energy
community. Bonus credit amounts are calculated
without considering any reduction for financing
from tax-exempt bonds.
Solar and wind facilities (and energy storage
technology installed with such facilities) with a
maximum net output of less than 5 megawatts, as
measured in alternating current, may qualify for a
low-income communities bonus credit. The bonus
is 10 percentage points for facilities located in a
low-income community or on Indian land, and
is 20 percentage points for facilities that are part
of a qualified low-income residential building
project or a qualified low-income economic
benefit project. No more than 1.8 gigawatts of
electric capacity may be claimed under this bonus
credit program each year, though unused electric
capacity from one year may be carried over to
future years, including pre-2025 amounts carried
over from the Energy Investment Tax Credit in
Section 48 of the IRC. The low-income
communities bonus credit does not depend on
compliance with PWA requirements.
Under the IRA’s direct payments and transferability
mechanisms, certain tax-exempt organizations
may receive a cash payment of equivalent value
to the CEITC, while taxpaying businesses may sell
their tax credits to other taxpaying businesses for
cash. Facilities beginning construction in 2026 or
later years are ineligible for direct payments if
they do not meet the domestic content
requirements of the domestic content bonus
credit. Facilities beginning construction in 2024
or 2025 receive reduced credit amounts if they
CRS Report R46865, Energy
Tax Provisions: Overview and
Budgetary Cost, by Nicholas E.
Buffie and Donald J. Marples.
CRS Report R48428, Inflation
Reduction Act (IRA) Wage and
Apprenticeship Requirements:
Effect on Tax Credit Values, by
Nicholas E. Buffie.
CRS Report R48358,
Domestic Content Requirements
for Electricity Tax Credits in the
Inflation Reduction Act (IRA), by
Nicholas E. Buffie.
CRS Report R47831, Federal
Economic Assistance for Coal
Communities, by Julie M.
Lawhorn et al.
CRS Report RL31457, Private
Activity Bonds: An Introduction,
by Grant A. Driessen.
CRS In Focus IF12596, Tax
Credit Transfers and Direct
Payments in the Inflation
Reduction Act of 2022, by
Nicholas E. Buffie.
54
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
do not meet those domestic content
requirements.
Under current law, taxpayers are eligible for the
credit through an "applicable year," which is the
later of either 2032 or the year in which
greenhouse gas emissions from the domestic
electricity sector are less than or equal to 25% of
the sector's emissions from 2022. Credit
eligibility is then subject to a phaseout. As part of
the phaseout, facilities that begin construction
during the calendar year after the applicable year
may receive 100% of the full credit amount;
facilities that begin construction two calendar
years later may receive 75% of the full amount;
and facilities that begin construction three
calendar years later may receive 50% of the full
amount. No taxpayers may become newly eligible
for the credits thereafter. However, because
credit eligibility is based on the year a facility
begins construction, whereas receipt of the
credits is based on when a facility is placed in
service, taxpayers may receive the credit after
the final year of eligibility. For example, if the final
year of eligibility is 2037 and a facility begins
construction that year, and the facility is placed in
service in 2040, the facility owner will claim the
CEITC in 2040. In this example, facilities that
begin construction after 2037 would not be
eligible for the CEITC, regardless of when they
are placed in service.
This provision would make four amendments to
the CEITC. First, it would eliminate the CEITC
for all facilities which begin construction more
than 60 days after enactment or which are placed
in service after December 31, 2028. The credit
would only continue to be allowed for advanced
nuclear facilities, as defined in IRC section
45J(d)(2)), that begin construction on or before
December 31, 2028, but not thereafter.
Second, the provision would allow 1.8 gigawatts
of electric capacity to be claimed under the lowincome communities bonus credit each year
through CY2028, but not thereafter. In addition,
any unused electric capacity from previous years
that was still available as of December 31, 2028,
could not be rolled over to future years.
Third, this provision would eliminate CEITC
eligibility for the renting or leasing of solar water
heating property, solar electric property (i.e.,
solar panels), and small wind energy property to
homeowners and renters whose use of the
property would qualify for the residential clean
energy credit if the homeowner or renter owned
the given property. (Section 112006 of H.R. 1
repeals the residential clean energy credit. Under
current law, homeowners and renters only
receive the credit for property they own.)
Congressional Research Service
55
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Fourth, the provision would place four
restrictions on interactions with foreign entities.
The provision would (1) disallow the tax credit
for tax years beginning after the date of
enactment if the taxpayer is a specified foreign
entity as defined in IRC Section 7701(a)(51)(B),
(2) disallow the tax credit for facilities that start
construction after December 31, 2025, if the
facility receives material assistance from a
prohibited foreign entity as defined in IRC Section
7701(a)(52), (3) disallow the tax credit for tax
years beginning two years after the date of
enactment if the taxpayer is a foreign-influenced
entity as defined in IRC Section 7701(a)(51)(D)),
and (4) disallow the tax credit for tax years
beginning two years after the date of enactment if
the taxpayer pays dividends, interest,
compensation for services, rentals or royalties,
or guarantees, or otherwise makes FDAP
payments to a prohibited foreign entity, or is
produced subject to a licensing agreement
greater than threshold amounts.
This provision would have several effective dates.
Congressional Research Service
56
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Repeal of Transferability of
Clean Fuel Production
Credit
Section 112010 of the bill
Section 45Z and 6418 of the
IRC
Section 45Z of the IRC provides a tax credit for
the production of clean fuels. Under current law,
the tax credit applies to fuel sold on or before
December 31, 2027. Section 111112 of this bill
would modify the credit in various ways and
extend it to fuel sold on or before December 31,
2031. See the entry “Extension and Modification
of Clean Fuel Production Credit” for more
information on both the tax credit as it exists
under current law and the tax credit as modified
under this bill.
As part of a tax mechanism known as
transferability that was enacted under the IRA, a
taxpaying business may sell its clean energy tax
credits to another taxpaying business at an
agreed-upon price in exchange for cash. This
mechanism can help firms with tax credits in
excess of their tax liabilities. Prior to the
enactment of the IRA, firms receiving clean
energy tax credits generally entered into tax
equity partnerships with larger businesses
(generally banks or other financial institutions)
and offered those businesses a share of the tax
credit in exchange for upfront financing of the
clean energy project. Research indicated that on
average, clean energy producers lost roughly 15%
of the tax credit’s value in such partnership
arrangements. Since the creation of the
transferability mechanism, new research has
found that transferred tax credits generally sold
at 89 to 95 cents on the dollar in 2023 and
at slightly higher values in early 2024, indicating
that clean energy producers are foregoing fewer
tax benefits due to the monetization of their tax
credits.
This provision would repeal transferability of the
clean fuel production credit for fuel produced
after December 31, 2027.
This provision would apply to fuel produced after
December 31, 2027.
CRS In Focus IF12596, Tax
Credit Transfers and Direct
Payments in the Inflation
Reduction Act of 2022, by
Nicholas E. Buffie.
CRS In Focus IF12502, The
Section 45Z Clean Fuel
Production Credit, by Nicholas
E. Buffie.
CRS Report R45693, Tax
Equity Financing: An
Introduction and Policy
Considerations, by Mark P.
Keightley, Donald J. Marples,
and Molly F. Sherlock.
Congressional Research Service
57
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Restrictions on Carbon
Oxide Sequestration Credit
Section 112011 of the bill
Sections 45Q and 6418 of the
IRC
Taxpayers may claim the carbon oxide
sequestration credit per metric ton of qualified
carbon oxide captured and disposed of or used
by a taxpayer. For taxpayers complying with the
IRA’s PWA requirements, the credit amounts
are $85 per metric ton of carbon oxide that is
captured and geologically sequestered, $60 per
metric ton that is reused, $180 per metric ton
that is captured using direct air capture (DAC)
technologies and then geologically sequestered,
and $130 per metric ton for carbon oxide
captured using DAC that is utilized in a qualified
manner. These amounts are scheduled to remain
in place through the end of 2026 and will be
adjusted annually for inflation starting in 2027.
Taxpayers not meeting the PWA requirements
receive tax credits that are only one-fifth as large,
and credit amounts are reduced in proportion to
the share of capital financing coming from taxexempt bonds, up to a maximum reduction
of 15%.
Under the IRA’s direct payments and transferability
mechanisms, certain tax-exempt organizations
may receive a cash payment of equivalent value
to the credit, while taxpaying businesses may sell
their tax credits to other taxpaying businesses for
cash.
The provision would (1) if the taxpayer is a
specified foreign entity under IRC Section
7701(a)(51)(B), disallow the tax credit for tax
years beginning after the date of enactment; (2) if
the taxpayer is a foreign-influenced entity under
IRC Section 7701(a)(51)(D), disallow the tax
credit for tax years beginning more than two
years after the date of the bill’s enactment; and
(3) repeal transferability for equipment beginning
construction more than two years after the date
of the bill’s enactment.
This provision would have several effective dates.
CRS In Focus IF11455, The
Section 45Q Tax Credit for
Carbon Sequestration, by
Angela C. Jones and Donald J.
Marples.
CRS Report R44902, Carbon
Capture and Sequestration
(CCS) in the United States, by
Angela C. Jones and Ashley J.
Lawson.
CRS Report R46865, Energy
Tax Provisions: Overview and
Budgetary Cost, by Nicholas E.
Buffie and Donald J. Marples.
CRS In Focus IF12596, Tax
Credit Transfers and Direct
Payments in the Inflation
Reduction Act of 2022, by
Nicholas E. Buffie.
Congressional Research Service
58
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Restrictions on ZeroEmission Nuclear Power
Production Credit
Section 112012 of the bill
Sections 45U of the IRC
The zero-emission nuclear power production
credit is available for the production of electricity
from nuclear facilities placed in service before
August 16, 2022, that did not previously receive a
Section 45J tax credit. Depending on the price of
electricity, in addition to other factors, the tax
credit may reach a value of up to 1.5 cents (in
2024 dollars) per kilowatt-hour of electricity
produced and sold after December 31, 2023. The
credit is fully phased out when gross receipts are
at or above 4.375 cents per kilowatt-hour in
2024 dollars.
The value of the tax credit is partially contingent
on the IRA’s prevailing wage requirements,
though the credit is exempt from the
apprenticeship requirements.
Under the IRA’s direct payments and transferability
mechanisms, certain tax-exempt organizations
may receive a cash payment of equivalent value
to the credit, while taxpaying businesses may sell
their tax credits to other taxpaying businesses for
cash.
Under current law, the credit does not apply to
taxable years beginning after December 31, 2032.
The provision would (1) if the taxpayer is a
specified foreign entity under IRC Section
7701(a)(51)(B), disallow the tax credit for tax
years beginning after the date of enactment; (2) if
the taxpayer is a foreign-influenced entity under
IRC Section 7701(a)(51)(D), disallow the tax
credit for tax years beginning more than two
years after the date of the bill’s enactment; and
(3) move the credit’s expiration date forward
one year (from December 31, 2032 to December
31, 2031).
This provision would have several effective dates.
CRS Report R46865, Energy
Tax Provisions: Overview and
Budgetary Cost, by Nicholas E.
Buffie and Donald J. Marples.
CRS Report R48428, Inflation
Reduction Act (IRA) Wage and
Apprenticeship Requirements:
Effect on Tax Credit Values, by
Nicholas E. Buffie.
CRS In Focus IF12596, Tax
Credit Transfers and Direct
Payments in the Inflation
Reduction Act of 2022, by
Nicholas E. Buffie.
Congressional Research Service
59
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
Termination of Clean
Hydrogen Production
Credit
Section 112013 of the bill
Sections 45V and 48 of the
IRC
The clean hydrogen production credit (CHPC),
as enacted under the IRA, is available for the first
10 years that a facility produces clean hydrogen.
Taxpayers producing clean hydrogen at qualifying
facilities may receive the CHPC based on the
amount of hydrogen produced, the lifecycle
CO2e emissions rate of the hydrogen through
the point of production, and the taxpayer's
compliance with PWA requirements. Qualified
facilities must be owned by the taxpayer and have
begun construction prior to 2033, with some
exceptions for facilities modified to produce
clean hydrogen.
For taxpayers meeting PWA requirements,
the maximum credit in 2024 was $3.11 per
kilogram of qualified clean hydrogen with zero
CO2e emissions. Tax credit amounts phase down
in a nonlinear, stepwise fashion for higher CO2e
emissions rates.
Tax-exempt entities including nonprofits, local
governments, and rural electric cooperatives may
receive direct cash payments in place of
traditional income tax credits. Taxable entities
may also elect to receive direct cash payments
for five years, starting with the year a qualified
facility is placed in service. Taxable entities
cannot make this election after 2032. The CHPC
is also transferable, meaning that credits may be
sold from one taxpaying business to another for
cash.
This provision would terminate the CHPC and
the ability to claim the Energy Investment Tax
Credit for hydrogen facilities that begin
construction after December 31, 2025.
CRS Report R48196,
Hydrogen Production: Overview
and Issues for Congress, by
Lexie Ryan.
CRS In Focus IF12602, The
Clean Hydrogen Production
Credit: How the Incentives are
Structured, by Nicholas E.
Buffie and Martin C. Offutt.
CRS In Focus IF12596, Tax
Credit Transfers and Direct
Payments in the Inflation
Reduction Act of 2022, by
Nicholas E. Buffie.
Congressional Research Service
60
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Phaseout and Restrictions
on Advanced Manufacturing
Production Credit
Section 112014 of the bill
Sections 45X and 6418 of the
IRC
Congressional Research Service
The advanced manufacturing production credit,
as enacted by the IRA, subsidizes the domestic
production of certain inverters, solar energy
components, wind energy components, battery
components, and critical minerals. Credit
amounts differ according to the type of good
being produced.
Annual tax credits are calculated based on the
year a product is sold, which may differ from the
year it is produced. Businesses may receive full
credits for goods sold from 2023 through 2029,
then may receive 75% of normal credit amounts
for goods sold in 2030, 50% for goods sold in
2031, and 25% for goods sold in 2032. The credit
expires for most credit-eligible products in 2033.
Neither the phaseout nor the expiration apply to
credits for critical minerals.
Goods qualifying for the credit must be produced
in the United States. However, there are no
prohibitions on foreign ownership of the
organizations receiving the credits.
Tax-exempt entities including nonprofits, local
governments, and rural electric cooperatives may
receive direct cash payments in place of
traditional income tax credits. Taxable entities
may also elect to receive direct cash payments
for five years, starting with the year a qualified
facility is placed in service. Taxable entities
cannot make this election after 2032. The
advanced manufacturing production credit is also
transferable, meaning that credits may be sold
from one taxpaying business to another for cash.
The provision would impose various restrictions
on the tax credit. Certain subprovisions
restricting interactions with foreign entities
would (1) disallow the tax credit if the taxpayer
received material assistance from a prohibited
foreign entity for components manufactured in tax
years beginning at least two years after the date
of the bill’s enactment; (2) if the taxpayer is a
specified foreign entity, disallow the tax credit for
all tax years beginning after the date of
enactment; (3) disallow the tax credit for tax
years beginning two years after the date of
enactment if the taxpayer is a foreign-influenced
entity; and (4) disallow the tax credit for tax years
beginning two years after the date of enactment if
the taxpayer pays dividends, interest,
compensation for services, rentals or royalties,
or guarantees, or otherwise makes FDAP
payments in excess of certain thresholds to one
or more prohibited foreign entity or entities, or
is produced subject to a licensing agreement of
more than $1 million with a prohibited foreign
entity.
The provision phases out the advanced
manufacturing production credit between 2028
and 2032. Credits for components or goods sold
in 2028 or later years would not be eligible for
CRS In Focus IF12809, The
Section 45X Advanced
Manufacturing Production
Credit, by Nicholas E. Buffie.
CRS In Focus IF12596, Tax
Credit Transfers and Direct
Payments in the Inflation
Reduction Act of 2022, by
Nicholas E. Buffie.
61
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Section Title
Description
CRS Resources
transferability. Wind components sold in 2028 or
later years would not be eligible for the credit.
Lastly, all other components or goods—including
critical minerals—sold in 2032 or later years
would not be eligible for the credit.
This provision would have several effective dates.
Congressional Research Service
62
Tax Provisions in H.R. 1, the One Big Beautiful Bill Act: House-Passed Version
Phaseout of Credit for
Certain Energy Property
Section 112015 of the bill
Sections 48 and 6418 of the
IRC
Congressional Research Service
This provision would amend certain parts of the
energy investment tax credit, which is
alternatively known as the energy credit,
investment tax credit, or simply the ITC.
The ITC provides a tax credit for investments in
electricity facilities powered by renewable energy
in addition to various energy storage
technologies. The ITC subsidizes different energy
sources and technologies at different rates. In
general, the credit is equal to 30% of investment
costs for taxpayers complying with PWA
requirements, with additional bonus credits
“topping up” the baseline credit. For most
technologies and energy sources,
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