Senate Finance Committee Releases Draft Language — Here’s What’s Inside
Last night, the Senate Finance Committee finally released its long-anticipated draft language outlining proposed changes to the House’s version of the GOP’s “One Big Beautiful Bill.”
As expected, the new draft touches on several key areas of specialty tax. But a few provisions came as a surprise—some good, some not-so-good.
Here’s a breakdown of what we know so far:
Key Highlights for Specialty Tax
1. 179D Deduction Eliminated for New Construction
One of the biggest surprises is the proposed elimination of the Section 179D deduction for energy-efficient commercial buildings. If passed as written, properties constructed more than 12 months after the final bill is enacted would no longer be eligible.
This change could have major implications for developers, architects, and building owners focused on energy-efficient design.
2. Renewable Energy Credits Phase Out Starting in 2026
Under the Senate draft, wind and solar tax credits from the Inflation Reduction Act would begin phasing out soon:
- Projects starting in 2026 would receive only 60% of the current credit
- In 2027, the credit drops to 20%
- By 2028, the credit is gone entirely
While this version is a slight improvement over the House’s draft, it still falls short of the long-term incentives many in the industry were hoping for.
3. Bonus Depreciation Restored to 100% and Made Permanent
A major win for property owners and cost segregation professionals: bonus depreciation would be restored to 100% for qualifying property acquired and placed in service after January 19, 2025.
Even better—this version proposes making 100% bonus depreciation permanent.
4. R&D Expensing Permanence and Retroactivity
This section had perhaps the biggest and most surprising developments:
- The Senate version proposes making immediate expensing of domestic R&D costs permanent starting January 1, 2025
- Small businesses with average gross receipts under $31 million would be allowed to apply this change retroactively back to 2022
- Taxpayers who were required to amortize R&D expenses under Section 174 from 2022 to 2024 would be allowed to accelerate remaining deductions over one or two years
This could offer significant relief for startups manufacturers, engineering firms, and all the other companies that have been burdened by Section 174 amortization rules over the past few years.
What Happens Next?
There’s still a long way to go before any of this becomes law.
- The SALT deduction and other contentious issues are still being negotiated
- The bill must pass the Senate with at least 51 votes, which is far from guaranteed
- Internal divisions—between deficit hawks like Senator Ron Johnson and moderates like Senator Josh Hawley—add more uncertainty
- If the bill clears the Senate, it still needs to pass the House, where the GOP holds only a slim majority
Bottom Line
The release of the Senate draft brings more clarity, but we’re not at the finish line yet. There’s real momentum behind some highly favorable changes—especially for R&D and bonus depreciation—but the elimination of 179D and the renewable credit phase-outs are important caveats to watch.
We’ll keep monitoring developments closely and continue to break down how this could impact year-end planning and long-term tax strategy for your clients.
Have questions or want to start scenario planning? The Tri-Merit team is here to help.
