Republicans are advancing a sweeping tax and spending package called the One Big Beautiful Bill Act (OBBBA), aimed at extending key parts of the 2017 Tax Cuts and Jobs Act (TCJA) before they expire at the end of 2025. The bill proposes permanent lower tax rates for individuals and businesses, expanded standard deductions and child tax credits, a higher SALT deduction cap, and a new deduction for tip income. With year-end tax planning under way and the 2026 midterms approaching, Republicans are eager to notch a major legislative win.

While the specifics of proposed legislation continue to evolve daily, the following details outline the broad areas under consideration for tax law changes. The key emphasis is that a major tax bill is likely to be passed this year.

Key Provisions

The House version would raise the SALT cap to $40,000 and make the expanded standard deduction and child tax credit permanent, with a $2,500 supplement for 2025–2028. It also adds a new deduction for tips and overtime income. The Senate draft, released June 16, takes a more limited approach keeping the SALT cap at $10,000, capping the tip deduction at $25,000, and cutting Medicaid funding more deeply. Clean energy credits would phase out faster: solar and wind credits remain at full value for projects beginning construction in 2025, then drop to 60% in 2026, 20% in 2027, and disappear by 2028. Nuclear, geothermal, hydropower, and battery storage credits continue at full value through 2033, then phase down to zero by 2036. All versions include a “retaliation tax” targeting foreign entities seen as unfairly taxing U.S. firms.

Political Landscape

OBBBA passed the House on May 22 by a one-vote margin. Senate Majority Leader John Thune is targeting a vote by July 4. The Finance Committee version is the current draft, but changes, especially to SALT and energy, are expected. SALT remains the sharpest divide. House Republicans from high-tax states support the $40,000 cap, while Senate Republicans favor keeping it at $10,000. Medicaid and clean energy provisions are also dividing conservatives and moderates. No Democratic support is expected.

Economic and Public Reaction

The Congressional Budget Office estimates the primary deficit will rise by $2.4 trillion, and with interest, the total rises to about $3.0 trillion. The Senate version has similar fiscal effects. While some Republicans have floated restoring the 39.6 percent top rate to offset costs, no changes have advanced. Business groups back the long-term certainty of locked-in tax rates. Lawmakers from clean-energy states like North Carolina and Utah are pushing for amendments. Public opinion is mixed. While many support lower taxes, polling shows concern that the bill favors the wealthy.

What Comes Next

Major disagreements on SALT, clean energy, Medicaid, and tip deductions still need resolution. The Senate aims to vote in early July, followed by a conference committee to reconcile differences. That process could last through summer. OBBBA reflects the broader direction of Republican tax priorities lower rates, leaner benefits, and reduced support for clean energy all with an eye on the 2026 elections. As the bill evolves, we’ll continue tracking developments and recommend tax planning adjustments as needed. Stay in touch with your advisor as the landscape changes.