The Senate Finance Committee has released its draft of the One Big Beautiful Bill Act and it reshapes several construction-critical provisions that cleared the House on May 22. It is worth noting that these changes have just been released, and not yet voted on by the Senate.
For tax planning, the Senate version is permanently restoring 100 percent bonus depreciation for property placed in service after Jan. 19, 2025, instead of sun-setting the incentive after 2029. The draft also keeps the Sec. 179 expensing limit at $2.5 million with a $4 million phase-out for equipment and permanently allows immediate expensing of domestic R&D.
The Senate also proposes changes on the House’s headline SALT relief, leaving the $10,000 cap in place (said to still be under negotiation) and changing the draft language to affect a wider swath of businesses compared to the House. The Senate version also declines to boost the Sec. 199A Qualified Business Income deduction rate to 23 percent instead keeping it at the 20 percent deduction. Notably, the Senate retains the limits on contractors being able to claim excess business losses.
The Senate version also proposes changes to Inflation Reduction Act clean energy tax credits by including a longer phase out period for certain credits.
Senators are still revising sections (most notably the SALT cap and Medicaid offsets) so the draft is expected to change in the coming weeks. Once the Senate passes its version, the package will return to the House for consideration. AGC will monitor each adjustment and continue championing provisions that advance the interests of the construction industry.
For additional information, please contact Alex Etchen or Deniz Mustafa.