Tax insight

Impact of House-passed H.R. 1 on Financial Services

Insight
10 minute read
May 29, 2025

What happened?

The House on May 22 voted to pass H.R. 1, the “One Big Beautiful Bill Act” (the Bill), which includes proposed tax law changes with an estimated net cost of $3.8 trillion over 10 years and also includes a provision to increase the federal statutory debt limit by $4 trillion.

The Senate is expected to begin action in June and consider revisions to the House-passed bill. Both the House and Senate would have to agree on a final identical version of H.R. 1 before the legislation can be sent to the White House for signing by President Trump. While Congressional Republican leaders hope to send a final bill to President Trump before Congress begins a July 4 recess, resolving differences between the House-passed bill and any changes approved by the Senate could extend work on the legislation until later in July.

Why is it relevant? 

The Bill includes several proposals that could significantly impact the financial services industry including the disallowance of state pass-through entity taxes at the partnership level, increasing the state and local tax cap for certain individuals, making permanent the excess loss limitations for noncorporate taxpayers, and increasing US tax for inbound investors resident in “foreign discriminatory” countries on certain of their US sourced income.

Notably, the House passed bill does not include proposals affecting carried interest, a new general limitation on deductions for state and local property taxes for businesses, credit unions’ tax-exempt status, the exclusion for gain related to qualified small business stock, crypto-related tax proposals, or rate increases on high income taxpayers.

Action to consider 

Business leaders and individuals should evaluate the potential effect of proposed tax law changes and consider any steps that might be taken before or after the legislation’s various proposed effective dates that could be beneficial. Assessing the potential effects of proposed tax law changes also will need to take into account any changes made by the Senate and in any final bill approved by both chambers.

For an in-depth look at all the key provisions in the Bill see our prior Insight – Overview of House-passed H.R. 1, the “One Big Beautiful Bill Act.”

Click on the video below for a playlist of sector-specific insights

To help you navigate the impact, our sector specialists in Asset and Wealth Management, Banking and Capital Markets, Global Structuring Financial Services, Real Estate and Insurance delve into the nuances of different proposals in the Bill, highlighting sector-specific challenges and opportunities.

Video 04/06/25

Impact on Asset and Wealth Management

Robert Roeder and Mindi Lowy break down the most impactful tax proposals in the House passed bill for stakeholders in asset and wealth management, including possible changes to the state tax deduction.