The Senate overnight released its substitute amendment to the House-passed One Big, Beautiful Bill Act (OBBBA, H.R. 1) that includes tax changes relative to the June 16 Senate Finance Committee package. Republican leaders still hope for the Senate to pass their version of the reconciliation bill this weekend and then for the House to vote again to approve the Senate version before the July 4 target enactment date. A Statement of Administration Policy confirmed President Trump’s support for the revised version of the bill. Below is a preliminary discussion of changes.

General tax provisions
 

• $40,000 state and local tax (SALT) deduction cap reverts to $10,000 after 2029 and language on passthrough entity tax (PTET) election omitted
• Provides that spaceports are treated like airports under exempt facility bond rules
• Addition of a permanent increase in limitation on cover over of tax on distilled spirits
• Exception to percentage of completion method of accounting for certain residential construction contracts
• Remittance tax reduced to 1% 
• Provision on treatment of capital gains from the sale of certain farmland property
• Inclusion of health savings account (HSA) provisions
• Section 48D advanced manufacturing investment credit increased to 35% instead of 30%
• Capitalized interest is subject to 163(j) and subpart F, GILTI income, and Section 78 are excluded from ATI – the substitute adds clarification that section 245A deduction allowed by reason of Section 964(e)(4) or 250(a)(1)(B) is also excluded from ATI
• Expands the 21% excise tax on employee compensation over $1 million of a nonprofit to include all employees and former employees retroactively to 2017
• Increases the amount of expenses of an Alaska whaling captain treated as a tax-deductible charitable contribution from $10,000 to $50,000
• Modifies the university endowment tax to only apply to schools with more than 3,000 tuition paying students

International
 

• Omission of Section 899 retaliatory tax provision 
• Base erosion and anti-abuse tax (BEAT) would be increased to 10.5% as of January 1, 2026
• Other BEAT changes (high tax exception, inclusion of capitalized interest, change to base erosion threshold) not included
• Expense allocation rule revised to say that there is no interest or R&E allocated to GILTI basket, and that other expenses (other than SALT and 250 deduction) are allocated to GILTI only if “directly allocable” (which is not defined)
• Applies (new) 10% FTC haircut to section PTEP related taxes (including section 960(b) taxes), with an immediate effective date of June 28, 2025
• Fixes FTC glitch allocating base differences to branch basket instead of general basket
• Modifies the exclusion of certain income from foreign-derived intangible income (FDII): excludes income from the sale or disposition of (1) section 367(d) intangibles; and (2) property of a type that is subject to depreciation, amortization, or depletion; like the initial text, it would not exclude royalties; the substitute text would not exclude passive income

Energy
 

• Electric vehicle credits terminated for vehicles acquired after September 30, 2025, rather than certain periods after date of enactment (DOE)
• Section 45Y and 48E for wind and solar changed to placed-in-service by December 31, 2027, instead of begins construction
• Changes effective date of material assistance restrictions to June 16, 2025 instead of December 31, 2025. New direction to Treasury to establish anti-circumvention rules to avoid effective dates by preventing stockpiling. 
• Adds new excise tax penalty to solar and wind facilities that fail the material assistance cost ratio test for facilities that begin construction after DOE
• Termination of the credit for production of clean hydrogen (45V) on January 1, 2028, rather than January 1, 2026 
• The advanced manufacturing production credit (45X) restores “stackability” for integrated components but with a requirement that the secondary component be at least 65% US produced. Adds metallurgical coal to the list of qualifying minerals and allows the Treasury Department to increase the material assistance threshold for critical minerals 
• Clean Fuel Production Credit (45Z) extended through December 31, 2029 rather than December 31, 2031, small agribiodiesel credit (40A) added with a new 20 cent per gallon value through December 31,  2026, and various other modifications including prohibition on foreign feedstocks (other than from Mexico and Canada)
• Carbon oxide sequestration credit (45Q) parity for end-use changed from facilities placed-in-service after 2022 to placed-in-service after the date of enactment
• Termination of alternative fuel vehicle refueling property credit after June 30, 2026, rather than 12 months after DOE
• Termination of energy efficient home improvement credit for property placed in service after December 31, 2025, rather than 180 days after DOE
• Termination of residential clean energy credit after December 31, 2025, rather than 180 days after DOE
• Termination of energy efficient commercial buildings deduction for property the construction of which begins after June 30, 2026, rather than 12 months after DOE
• Termination of energy efficient commercial buildings deduction after June 30, 2026, rather than 12 months after DOE
• Termination of new energy efficient home credit after June 30, 2026, rather than 12 months after DOE
• Termination of 5-year cost recovery for wind and solar energy property the construction of which begins after December 31, 2024, rather than after DOE