By Jon Taets, director of Government Relations at NACS
On Tuesday, the U.S. Senate passed their version of the “One Big Beautiful Bill” by a vote of 51 to 50, with Vice President J.D. Vance breaking the tie, sending it back to the House for final passage before becoming law. The vote was the culmination of an—at times—tumultuous week for Senate GOP leaders who had to keep a procedural vote on the legislation open for three hours on Saturday night to secure the votes necessary to move forward.
The Senate’s version made several changes to the House bill passed on May 22. Most of the changes came after the Senate Parliamentarian ruled some provisions of the bill were in violation of the so-called “Byrd Rule” in the Senate. That rule requires any legislation considered under the reconciliation procedures to be primarily budgetary and not just a policy change that doesn’t impact the budget or only impacts it secondarily. This required changes to, or jettisoning entirely, quite a few of the House’s spending cut provisions.
While the Senate did make some changes to the House-passed tax title, NACS’ main priorities remained in the bill. The Senate did eliminate the House-passed increase in the 199(A) deduction for pass-through entities, but it preserved NACS’ top priority of making the existing deduction permanent.
The Senate bill also maintained the House language making increases in the Estate Tax and Section 179 expensing thresholds permanent. It also improves the House bill by not only extending 100% Bonus Depreciation and the return to EBITDA for calculating income for the purposes of the business interest deductions, but making those changes permanent as well.
Below is a list of tax features the Senate Reconciliation Bill has updated:
- Federal Corporate Tax Rate (C-corps): Remains flat 21%, no rate cut in Senate text
- Graduated Rates: The flat rate stays at 21%
- Corporate Alternative Minimum Tax: Eliminated under TCJA, no new CAMT included in bill
- Pass-Through Income (QBI, sec 199A): Makes permanent at 20% (20% deduction legacy was previously set to expire in 2025)
- Bonus Depreciation: Permanently extended, was previously 100% through 2025 under TCJA
- R&D Expensing (Sec 174): Permanent suspension of capitalization, retroactive
- Interest Limitation: Switches to EBITDA cap permanently
- Section 179 Expensing: Expanded to $2.5M/$4M limit, was previously $1.16M limit
- Estate Tax: Permanently sets exemption at $15M per person, indexed annually
One of the most contentious negotiations among GOP Senators was the same as on the House side—how to deal with the State and Local Tax (SALT) Deduction. Notable for many convenience retailers, the Senate’s compromise eliminates the House language that invalidated SALT deduction work arounds for businesses that many states had passed since 2018.
On the energy side, the Senate bill also levels the playing field between sustainable aviation fuel and other biofuels. This provision will help level the playing field for biofuel production instead of arbitrarily creating winners and losers among the trucking, railway and aviation industries.
Noting the above benefits to our industry, NACS sent a letter to Senate Majority Leader John Thune (R-SD) expressing our industry’s support and urging Senators to support final passage of the Reconciliation package.
Due to the changes the Senate made, the bill must now be passed again in the House of Representatives before it can be sent to President Donald Trump. It remains to be seen if the changes made will be acceptable to the House GOP, particularly to budget hard liners in the caucus. If the House makes any further changes, it will have to be sent back to the Senate for another round of voting. Should that occur, the overall viability of the legislation would be in even greater jeopardy. The goal of republican leadership remains to have this package on the President’s desk by July 4, meaning the House will have to be called back from their district work period this week to take the needed votes.