What’s Different in the Senate’s Version of the One Big Beautiful Bill?

The One Big Beautiful Bill is moving through the Senate after it was passed by the House last month. Below, our team has assembled summaries of some of the key differences to know in the Senate Finance Committee’s version of the bill compared to the version that was passed by the House.

Qualified Business Income (QBI) Deduction

Summary by Stephen Hill

The House bill proposed to raise the QBI deduction percentage to 23%. The Senate Finance Committee’s response is to keep the current rate of 20% but change the phase-in amounts and limitations to include higher income earners.

The Senate also made two new additions to the bill:

• A minimum deduction of $400 for taxpayers with at least $1,000 of qualified business income
• An inflation adjustment for the QBI thresholds starting in 2026

Provisions Pertaining to Nonprofits

Summary by Megan Randolph

The Senate eliminated several provisions that were in the House’s version of the bill, including:

• The proposal for a tiered tax rate structure based on a foundation’s assets;
• The proposal to increase unrelated business taxable income by certain fringe benefits (including parking); and
• The proposal to include certain purchases of employee-owned stock for purposes of the foundation tax on excess business holdings.

Provisions Pertaining to Individuals

Summary by Cory Stanaland

The Senate made several small modifications to several provisions related to individual taxation. The most noticeable difference relates to the Child Tax Credit. The House version sets the child tax credit at $2,500 per eligible child. The Senate version sets the credit at $2,200 per eligible child.

State and Local Tax (SALT) Cap

Summary by David LeGrand

The House version of the bill increased the cap on state and local income tax (SALT) deductions to $40,000 with a phasedown to $10,000 and  reduced the deduction benefit for higher income taxpayers. The Senate bill has a $10,000 cap on SALT deductions at the individual level.

Pass-Through Entity Election Limitation for Specified Service Trades or Businesses

Summary by David LeGrand

The Senate bill restores this tax benefit to all pass-through entities but places limits on the deductions.

Specifically, the bill limits the entity level deduction to:

• Any portion of the individual level unused $10,000 cap, and
• The greater of $40,000 or 50% of the PTET paid by the entity.

This can be contrasted with the House bill that disallowed the PTET benefit for specified service trade or businesses (SSTBs) which offer services and other related businesses.

Provisions Related to Disaster Relief

Summary by Mindy Rankin

The Senate version of the bill adds language to include “a State declared disaster.” This language will expand the number of taxpayers that would be allowed to take a casualty loss. A casualty loss would be allowed for both a presidentially declared disaster and a state declared disaster. The Senate version also makes this code section permanent, with no expiration date.

International Tax Provisions

Summary by Daniel Reyer

The House versions of the bill proposed several significant changes to U.S. international tax rules, particularly affecting GILTI, FDII and BEAT. The Senate’s adjustments include:

• Base Erosion and Anti-Abuse Tax (BEAT) – The Senate’s version adjusts the tax rate to 14%, compared to 10.1% standard rate in the House bill. (The bill still contains Super BEAT and potential higher rates related to unfair foreign taxes). The good news is payments subject to a “high tax” rate (over 18.9%) are exempt from treatment as base erosion payments, but it also reduces the base erosion percentage from 3% to 2% for taxpayers.
• Foreign-Derived Intangible Income (FDII) – The Senate bill reduces Sec. 250 deduction to 33.34%, resulting in 14% effective rate, compared to 13.3% in the House version of the bill. The Senate bill also revamps the FDII calculation and Sec. 250 deduction terminology that applies to both FDII and GILTI, including renaming FDII to Foreign-Derived Deduction Eligible Income (FDDEI).
• Global Intangible Low-Taxed Income (GILTI) – The Senate bill reduces Sec. 250 deduction to 40%, resulting in a 12.6% effective rate, compared to the 10.7% rate in the House bill. GILTI would be renamed to Net CFC Tested Income (NCTI).

Changes to Low Income Housing Program

Summary by Cristy Andrews

The Senate bill modifies the low-income housing tax credit program through the following permanent revisions:

• Increased the state allocation ceiling to 12%
• Lowered the bond-financing threshold to 25% for projects starting after 12/31/25, with no rural boost

Connect with an Advisor

Our team will continue to monitor changes to the bill. If you would like more information about these proposed changes, please contact your Warren Averett advisor directly.