Tax insight

Overview of House-passed H.R. 1, the “One Big Beautiful Bill Act”

Insight
11 minute read
May 23, 2025

What happened?

The House on May 22 voted 215 to 214 to pass H.R. 1, the “One Big Beautiful Bill Act” including proposed tax law changes, increased funding for border security and national defense, and spending reductions affecting a large number of federal programs. The bill also includes a provision to increase the federal statutory debt limit by $4 trillion.

Below is an overview of the House-passed version of H.R. 1, which includes some changes to the tax provisions originally reported on May 14 by the Ways and Means Committee.

The tax provisions of H.R. 1 (the Bill) would extend permanently, with some modifications, certain individual, pass-through business, and international tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act (TCJA) that currently are set to change at the end of this year. H.R. 1 features several new business and individual tax proposals, including a new “bonus” depreciation provision for qualified production property and other business investment incentives; “no tax on tips” and certain other tax proposals offered by President Donald J. Trump; a new retaliatory measure to address “unfair foreign taxes;” and various revenue-raising measures.

H.R. 1 as passed by the House reflects a “manager’s amendment” adopted by the House Rules Committee that modified a number of provisions that had been reported by the Ways and Means Committee and other House committees. Key tax provisions modified by this amendment include changes to certain international business tax rates, expanding from $30,000 to $40,000 a proposed increase in the current $10,000 cap for individual itemized deductions for state and local taxes (SALT), and accelerating the phase-out date of certain Inflation Reduction Act (IRA) clean energy tax credits. In addition, the House included proposed changes to federal law (P.L. 86-272) concerning state jurisdiction to impose net income taxes that had previously been approved by the House Judiciary Committee. See PwC’s Insight here for details on this proposal.

Why is it relevant?

The House action clears the way for the Senate action on the legislation to begin in June, after Congress returns from a Memorial Day recess. H.R. 1 is being considered under reconciliation instructions provided in the fiscal year (FY) 2025 budget resolution approved in April by Congress that will allow the legislation to be approved by Republicans in the Senate with a simple-majority vote, instead of the 60-vote majority usually required.

Congressional leaders have set a goal of sending a final bill to be signed by President Trump before Congress begins a July 4 recess, but the House and Senate will have to agree on a final identical version of H.R. 1 that can be approved by both chambers.

Observation: Republican Senators are expected to propose changes to the House-passed bill but House Speaker Mike Johnson (R-LA) and Ways and Means Committee Chairman Jason Smith (R-MO) have, not unexpectedly, cautioned that the Senate will need to take into consideration the need to reach an agreement with House Republicans on a final bill that can clear Congress.

Action to consider 

Business leaders and individuals quickly will need to evaluate the potential effect of proposed tax law changes in H.R. 1 as passed by the House on the US economy, business, and individuals, and consider whether to pursue opportunities to modify the legislation as it advances in the Senate.