The 2025 reconciliation bills represent a significant shift in the US tax code. These bills will have a substantial impact on individuals, businesses, and the energy sector. This blog will walk you through the major changes in the tax system, compare the House and Senate bills, and explain how these shifts could affect taxpayers.
The Key Tax Provisions – Final Legislation with Comparison
Passed on July 01, 2025, the new reconciliation bills highlight several potential upgrades to the tax system, covering everything from individual income tax rates to business incentives and energy credits. To make things easier for you, we share the detailed analysis of the most critical provisions.
Individual Tax Provisions
Income Tax Rates
According to the new law, the Tax Cuts and Jobs Act (TCJA) is about to expire after 2025. This could result in higher pre-tax levels, a financial burden for many taxpayers.
However, both the House and the Senate propose to make TCJA rates permanent, maintaining a seven-bracket structure (10%, 12%, 22%, 24%, 32%, 35%, and 37%). Additionally, Senate bills offer an extra year of adjustment for the 10% and 12% brackets.
Standard Deduction
The previous bill had kept the TCJA’s standard deduction temporary. However, the new legislation makes it permanent. The House bill is about $16,000 for single/mfs, $24,000 for hoh, and $32,000 for mfj, which is slightly lower than the Senate bill.
Child Tax Credit (CTC)
The current House bill increased CTC to $2,500 per child. However, this increase is temporary and will be in effect from 2025 to 2028, after which it will revert to $2,000.
On the other side, the Senate bill makes the increase permanent to $2,200, with $1,700 of it refundable. Both House and Senate bills tighten the Social Security Number (SSN) requirement.
Estate and Gift Exemption
In 2024, the gift tax exemption was $13.61, but after 2025, it is expected to drop to $5 million. However, the new legislation could improve this number to $15 million (indexed) and make the higher limit permanent.
State and Local Tax (SALT) Deduction
The SALT cap was $10,000 before the new legislation. However, the state and local taxes were increased to $40,000 under the House and Senate bills, which was a perfect opportunity for high earners to phase out. Further, the Senate bill offers additional adjustments for inflation and excludes pass-through entities from the limitation.
Business Tax Provisions
Qualified Business Income Deduction
The qualified business income tax rate increases from 20% to 23% in the House bill. However, the Senate bill keeps it to 20%, but expands phaseout ranges.
Bonus Depreciation
Under the House bill, 100% bonus depreciation is reinstated for all qualified property placed in service between 2025 and 2029. In contrast, the Senate bill makes this provision permanent.
Research and Experimental Expenses
Under the House bill, domestic research and experimental costs can now be fully expensed from 2025 to 2029. In contrast, the Senate bill makes this R&E cost permanent.
Form 1099 Reporting Threshold
Under the current law, the Form 1099 threshold reporting increases from $600 to $2000, relieving the compliance burden for small businesses.
Energy Tax Provisions
Many energy credits, including those of energy-efficient homes and clean vehicles, are terminated or removed earlier than expected under this law. However, under the Senate bill, the new market tax credit is permanently extended.
How Eric M Hunt Can Help
Overcoming these changes can be complex. That’s why I am here to help you with all your legal troubles. Eric M Hunt is a trusted tax consultancy. I help individuals and businesses to optimize their tax strategies under new legislation. No matter whether looking for long-term planning or just about the form filing, we ensure your compliance with the new law.
Frequently Asked Questions
Will the Tax Cuts and Jobs Act tax rates expire in 2025?
No! It will not expire in 2025. However, the House and Senate bills propose to make it permanent.
What happens to the child tax credit after 2025?
Under the House bill, the child tax credit is temporarily increased to $2,500 per child for the years 2025-2029, after which it will return to $2,000. However, in contrast, the Senate bill makes the increase permanent to $2,200.
Is bonus depreciation coming back?
Under the House bill, 100% bonus depreciation is reinstated for all qualified property placed in service between 2025 and 2029, while it is permanent in the Senate bill.
How does the SALT cap change?
Under the House and Senate bills, the cap increases from $10,000 to $40,000, with phaseouts for high earners. The Senate bill offers additional adjustments for inflation and excludes pass-through entities.
Are energy tax credits being eliminated?
Under the new law, many energy credits, including clean vehicles and energy-efficient homes, are terminated or removed earlier than expected.
Conclusion
In conclusion, The Key Tax Provisions – Final Legislation with Comparison across 2025 reconciliation bills introduce transformative changes to the US tax system. Therefore, staying informed of the new legislation is essential for optimizing financial results.
For a personalized guide, consult experts like Eric M Hunt. He will help you navigate these complex changes with ease.
