After overcoming significant opposition and obstacles within the Republican caucus, the House of Representatives passed the GOP’s $3.4 trillion tax-and-spending package, known as the “One Big Beautiful Bill Act (OBBBA)” on July 3. The House stayed in session overnight as House Speaker Mike Johnson (R-LA) and President Trump cajoled and wore down opposition from roughly two dozen Republican lawmakers with various concerns and reservations about the legislation after changes made in the Senate. In the end, the bill passed 218-214, with Congressman Thomas Massie (R-KY) and Congressman Brian Fitzpatrick (R-PA) being the only House Republicans to vote against the bill. Before final passage, Minority Leader Hakeem Jeffries (D-NY) spoke out about the harms of the bill for a record-breaking 8+ hours, using his “magic minute” floor speech to delay a final vote on the legislation. Earlier in the week, the Senate GOP overcame similar obstacles, with Senators passing the bill on July 1 after the Senate pulled its own all-night voting session. Ultimately, the Senate passed the bill in a 51-50 vote, with Vice President JD Vance breaking the tie. Senator Lisa Murkowski’s (R-AK) support, which came after hours of negotiation with Majority Leader John Thune (R-SD), was also critical to its passage. Three Republican lawmakers, Senators Rand Paul (R-KY), Thom Tillis (R-NC) and Susan Collins (R-ME), voted against the bill with every Senate Democrat.

The nearly 900-page reconciliation bill has vast impacts across policy areas and industries, including taxes, healthcare, education, defense, energy, and the debt ceiling. President Trump signed the legislation at a ceremony at the White House on Friday, July 4. While the legislation has been signed into law, the Treasury Department will issue guidance and rulemaking on many specific tax provisions over the coming months.

Some of the key provisions of importance to CDA members include:

• Estate and Gift Tax: CDA distributor members asked Members of Congress to provide more certainty in estate planning by repealing the death tax during their annual Day on the Hill. OBBBA provides a win for CDA members with an exemption for the estate and gift tax that is permanently extended and increased to $15 million for individual filers, and $30 million for married couples filing jointly, starting in tax year 2026. The exemption amount is indexed to inflation after 2026.
• No Taxes on Overtime Pay: The legislation establishes a deduction for overtime compensation for taxable years 2025 through 2028. The deduction is capped at $12,500 for individuals and $25,000 for joint filers and phases out for income that exceeds $150,000 for individuals and $300,000 for joint filers. While the deduction is effective on January 1, 2025, it provides transition relief for the first year allowing employers to approximate a separate accounting of amounts designated as qualified overtime compensation by any reasonable method.
• Paid Leave: The 2017 Tax Cuts and Jobs Act's (TCJA) paid family and medical leave tax credit for employers is made permanent under the legislation. The credit allows employers to claim non-refundable credits ranging from 12.5% to 25% of the wages paid to workers on paid leave.
• Pass-Through Business Income: The bill keeps the 199A business deduction for pass-through companies at its current level of 20%. It also increases the phase-in range making the deduction more generous for those phasing out of the credit. In addition, the legislation creates a new minimum deduction of $400 for eligible taxpayers with at least $1,000 of pass-through income beginning in 2026.
• Corporate Charitable Donations: The legislation puts new limits on corporate charitable deductions, allowing corporate taxpayers to deduct charitable contributions between 1% to 10% of taxable income. The measure allows contributions beyond the cap to be carried forward for as long as five tax years.
• Employee Retention Tax Credit (ERTC): OBBBA includes provisions on the ERTC, including heightened due diligence requirements on promoters with respect to a taxpayer’s eligibility for an ERTC. It also prevents the IRS from paying out ERTC claims filed after January 31, 2024, for the third and fourth quarters of 2021. The provision is a pared-back version of the ERTC repeal initially proposed in the House, which sought to retroactively block all claims filed after January 31, 2024, including those filed for 2020 and the first two quarters of 2021. Due to the Byrd Rule, that language was changed and limited to the third and fourth quarters of 2021.
• Depreciation Deductions: The bill permanently restores the 100% bonus depreciation rate for certain property if it was placed in service on or after Jan. 19, 2025. The legislation also allows taxpayers to immediately deduct 100% of the cost of qualified production property that is put in service before 2031. It increases the maximum amount that could be deducted for certain depreciable business assets to $2.5 million. It phases out for costs of qualifying property that exceeds $4 million.

Read more about the legislation here.