Senate Finance Releases Tax Portion of Senate Reconciliation Bill

The Senate Finance Committee has released the bill text for the tax portion of the Senate’s reconciliation bill. Like the House version, it is notable for what it does not include: changes to 1031 exchanges, taxes on unrealized gains, and modifications to carried interest provisions. Below are some key provisions of interest:

SALT – There is no imposition of corporate SALT limitations, including no restrictions on the deductibility of property taxes paid by rental property owners. The SALT cap for personal taxes remains at $10,000, consistent with current law. In contrast, the House proposal raises the cap to $40,000. The Senate has described its proposal as a “placeholder,” anticipating further negotiations on this issue.

QBI Deductions – The Senate plan makes permanent the 20% deduction for Qualified Business Income (QBI). It also introduces a minimum deduction of $400 for taxpayers with at least $1,000 of QBI from one or more active trades or businesses in which the taxpayer materially participates. This minimum would be adjusted for inflation. The House proposal increases the deduction to 23% but does not include a minimum deduction.

Senate Finance Tax Reform Landing Page (links to the bill and summaries)