By Jon Taets, Director, Government Relations

The Senate Finance Committee released their version of the tax portion of the “One Big Beautiful Bill” on Monday evening. Senators are seeking to make significant changes to the version passed by the House.

For the convenience industry, some of the most important tax policies in the bill include the qualified business income deduction for pass-through entities, known as 199A, bonus depreciation and the fix for calculating adjusted taxable income for business interest deductions under section 163(j).

The 199A provision isn’t as generous in the draft Senate bill as it was in the one passed by the House. While both make the provision, which is scheduled to expire at the end of this year, permanent, the Senate bill simply extends it at the current 20% deduction from qualified business income, whereas the House version bumped the deduction up to 23%. Regardless, making that deduction permanent at 20% was the top priority for the industry, and NACS, going into the consideration of the bill and would be a major win.

Regarding two of NACS’ other priorities, the Senate language improves on the language from the House. NACS strongly advocated for permanency for 100% bonus depreciation and that is part of the language of the Senate draft bill. The bonus depreciation provision only applies to qualified expenditures made after January 19, 2025. The Senate language also fixes a problem with the calculation to deduct business interest by returning to the recognition of depreciation and amortization in that process.

Both chambers’ versions make permanent changes to expensing of certain real property under section 179 of the tax code. This provision allows businesses to fully expense some purchases that may not be eligible for bonus depreciation. The maximum amount per purchase available under this section was increased to $2.5 million from roughly $1.25 million with the phase out amount rising from $2 million to $4 million in total purchases.

Similarly, both versions of the tax bill increase and make permanent the threshold for the Estate Tax, an important provision for many family businesses. Currently set at just under $14 million, both bills raise the threshold to $15 million. Estates valued under the threshold are exempt from the Estate Tax provision. In addition, both the threshold amounts under Section 179 and the Estate Tax are indexed for inflation in both bills.

The Senate also made a significant change to the renewable fuel tax credit in section 45Z of the Internal Revenue Code. The Senate bill keeps the same phase-out timeline as the House legislation—the end of 2031—but the Senate language eliminates the imbalance between how the credit treats sustainable aviation fuel versus biodiesel fuel. With the Senate language, both fuels would receive the same credit starting at the end of 2025. Leveling that difference is important to many NACS members who buy and sell diesel fuel because it will keep the tax code from artificially pulling the feedstock from biodiesel into the process for making aviation fuel—and reducing the supply of biodiesel.

Unfortunately, two other requests NACS had made for the legislation failed to be included in the Senate bill: A temporary return of the 40A biodiesel blenders tax credit and an extension of the Work Opportunity Tax Credit (WOTC). NACS will continue to advocate for the inclusion of those credits in the tax package.

This package is not the final say for the One Big Beautiful Bill. There will continue to be negotiations on key provisions in the coming days. One of the most significant decisions impacting the ability of Congress to pass the overall package is the State and Local Tax (SALT) Deduction language. While the House had language allowing individuals to deduct up to $40,000 of state and local tax payments from their federal taxes, the Senate language keeps the cap at $10,000. That is among the bigger pieces that will cause concern with the House Republican majority who will need to pass the entire bill again with whatever changes the Senate ultimately makes. The President remains focused on having the Senate pass its version of the bill by July 4.

This bill may also not be the final tax policy change made by Congress this year. Talk has been increasing on Capitol Hill about a possible second tax bill to include provisions that have bipartisan support. If it develops, that bill would come about near the end of the year. Should such an effort materialize, it would provide another opportunity for things like the 40A tax credit and an extension of WOTC.