The Senate has released a revised version of H.R. 1 that significantly reshapes several provisions practitioners have been tracking. While the bill is shorter overall, it now contains more sections due to new community development provisions, particularly targeting Alaska-specific tax issues.
Energy Credits Face Accelerated Timeline
The energy section underwent substantial revision, expanding from 44 to 56 pages with a new "termination and restrictions" title replacing the previous "phaseout and restrictions" framework. Commercial clean vehicle credits will terminate at the end of September rather than 180 days post-enactment, with all previously included exceptions eliminated. Wind and solar projects must now be placed in service by 2028 to qualify for the section 45Y clean energy production credit, tightening the timeline from the previous requirement of merely beginning construction by that date.
However, clean hydrogen production credits received a reprieve, extending through 2027 with an additional two years. The section 48D advanced manufacturing credit for semiconductors and renewable energy increased to 35 percent from the earlier 30 percent rate.
Individual Provisions Trimmed
Standard deduction expansion was scaled back to $15,750 for single filers, down $250 from the original Senate proposal. The SALT deduction changes remain substantial, retroactively increasing the limitation to $40,000 for 2025 and $40,400 for 2026, with one percent annual increases through 2029 before reverting to $10,000 in 2030. The phaseout for high earners above $500,000 remains, but workaround limitations were dropped. If passed, this will be a big win for this provision, which has been highly sought after by the Trump administration and highly criticized by those saying it favors higher-income earners.
International Tax Changes Abandoned
Treasury Secretary Bessent's intervention led to dropping the section 899 retaliatory tax following a tentative G7 agreement. This eliminates what would have been significant rate increases up to 15 percentage points for foreign individuals and entities, along with the "super BEAT" expansion that would have broadened affected entities and the tax base.
Notable Deletions and Additions
Several provisions disappeared entirely, including the earned income tax credit pre-certification requirement, enhanced penalties for unauthorized taxpayer information disclosure, and National Firearms Act device tax elimination. The firearms excise tax structure was modified instead, maintaining $200 for machineguns and destructive devices while eliminating taxes on other firearms.
New additions include spaceport treatment under exempt facility bond rules and Alaska-focused provisions covering Bering Sea fisheries reporting and increasing the Native Alaskan subsistence whaling charitable deduction from $10,000 to $50,000. A residential construction accounting exception was also added to the community development section.
Next Steps
The House must vote again to approve Senate changes, with potential conflicts over energy credits, SALT provisions, and business tax permanency. Republican leadership aims for presidential signature by July Fourth, making the coming week critical for final resolution.
Practitioners should prepare clients for accelerated energy credit terminations while monitoring House acceptance of the Senate's more moderate approach to SALT and international provisions.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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