The impending expiration of key provisions from the 2017 TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.
Cuts and Jobs Act (TCJA) was a central reason Congress passed the One Big Beautiful Bill Act (OBBBA).
The OBBBA makes many expiring TCJA provisions permanent, creating stability for several major elements of individual and business tax policy. However, the original House version also introduced new temporary measures and phaseouts that would have required further legislative attention in just a few years. The final version addresses some of these by extending or making permanent several House proposals, but temporary policy remains a defining feature of both versions.
One of the principles of sound tax policy is stability. While temporary tax policy causes uncertainty, permanent policy provides taxpayers and businesses with the stability they need to make long-term decisions. If a provision improves the tax system, it should be made a lasting part of it—not left to expire arbitrarily.
The final law improved upon the version that passed the House, but it still includes enough temporary provisions to set up the need for another round of tax legislation in the near future. With that future in mind, it’s worth considering how policies changed throughout the process this time around.
Both Versions Make Core Individual Provisions Permanent
Both versions of the bill make key individual provisions permanent, including the TCJA individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S.
rates and brackets. If the TCJA expired at the end of the year, 62 percent of taxpayers would have seen a tax increase.
Both the final law and original House bill make the bulk of the TCJA structural reforms (a higher standard deductionThe standard deduction reduces a taxpayer’s taxable income by a set amount determined by the government. Taxpayers who take the standard deduction cannot also itemize their deductions; it serves as an alternative.
, eliminating the personal exemption, a higher exemption for the alternative minimum tax, limits to the mortgage interest deductionThe mortgage interest deduction is an itemized deduction for interest paid on home mortgages. It reduces households’ taxable incomes and, consequently, their total taxes paid. The Tax Cuts and Jobs Act (TCJA) reduced the amount of principal and limited the types of loans that qualify for the deduction.
, as well as miscellaneous itemized deductions) permanent. These structural reforms simplify tax filing. Both versions of the bill also make the TCJA’s expansion of the child tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income rather than the taxpayer’s tax bill directly.
(CTC) permanent, with the House version adding a temporary extra boost and the final version adding a smaller permanent boost to the maximum credit.
Not all the permanent changes to individual income taxes align with other principles of sound tax policy. Both versions raise the SALT cap to $40,000 and phase it down for taxpayers earning more than $500,000. The final version makes the increase temporary, reverting the SALT cap to $10,000 permanently after 2029. Both versions also make the pass-through businessA pass-through business is a sole proprietorship, partnership, or S corporation that is not subject to the corporate income tax; instead, this business reports its income on the individual income tax returns of the owners and is taxed at individual income tax rates.
deduction permanent, which provides a tax advantage to businesses taxed through the individual income tax. The House version would have raised the deduction to 23 percent, but the final version maintained it at a 20 percent deduction, both with some structural changes to avoid hikes in marginal tax rates.
Both House and Senate Made Key Individual Provisions Permanent
Source: Tax Foundation Analysis; One Big Beautiful Bill Act, Pub. L. 119-21 (2025),
Unlike the House Version, the Final Law Makes Key Business Provisions Permanent—With One Exception
Making the full expensingFull expensing allows businesses to immediately deduct the full cost of certain investments in new or improved technology, equipment, or buildings. It alleviates a bias in the tax code and incentivizes companies to invest more, which, in the long run, raises worker productivity, boosts wages, and creates more jobs.
provisions of the TCJA permanent is one of the best policies to encourage economic growth. Unlike the House version, which would have extended the expensing provisions temporarily, the final version of the bill makes expensing permanent for short-lived investments (100 percent bonus depreciationBonus depreciation allows firms to deduct a larger portion of certain “short-lived” investments in new or improved technology, equipment, or buildings in the first year. Allowing businesses to write off more investments partially alleviates a bias in the tax code and incentivizes companies to invest more, which, in the long run, raises worker productivity, boosts wages, and creates more jobs.
) and domestic research & development. Businesses make investment decisions over the long term, so permanent expensing is more effective for permanently boosting investment over the long run.
The final law also permanently changes the definition of “adjusted taxable incomeTaxable income is the amount of income subject to tax, after deductions and exemptions. Taxable income differs from—and is less than—gross income.
” for the business interest deduction limit from earnings before interest and taxes (EBIT) to earnings before interest, taxes, depreciationDepreciation is a measurement of the “useful life” of a business asset, such as machinery or a factory, to determine the multiyear period over which the cost of that asset can be deducted from taxable income. Instead of allowing businesses to deduct the cost of investments immediately (i.e., full expensing), depreciation requires deductions to be taken over time, reducing their value and discouraging investment.
, and amortization (EBITDA). This realigns the United States with the international community’s usage of EBITDA to define this base and lowers the cost of capital, particularly during this period of high interest rates.
Even though the final version makes research and development (R&D) expensing and bonus depreciation permanent, it keeps a new provision, expensing for long-lived assets involved in manufacturing and other production activity, temporary. Expensing for buildings and other long-lived assets is one of the most pro-growth policies available, and permanence for this provision would both provide businesses more certainty and substantially improve the bill’s pro-growth effects.
The OBBB Made Key Business Provisions Permanent – Except One
Source: Tax Foundation Analysis; One Big Beautiful Bill Act, Pub. L. 119-21 (2025),
Provisions That Shouldn’t Exist, Temporarily or Permanently
Both versions of the bill are riddled with political promises that have no place in the tax code. The most prominent of these are a tip income deduction, a deduction for the “half” portion of time-and-a-half overtime pay, a deduction for senior citizens, an auto loan interest deduction, an above-the-line charitable deduction, so-called “Trump Accounts,” and a tax credit for contributions to scholarship-granting organizations.
The new deductions make tax policy worse. They are targeted at narrow groups of taxpayers or types of economic activity and will place new administrative burdens on businesses and the Internal Revenue Service to determine rules, report required information, and enforce compliance. While temporary tax policy is usually ill-advised, if it means these provisions expire as scheduled and don’t receive a permanent place in the tax code, it would be for the better.
Many Temporary Narrow Tax Breaks in the House Version, the Senate Makes a Few Permanent
Source: Tax Foundation Analysis; One Big Beautiful Bill Act, Pub. L. 119-21 (2025),
Conclusion
Permanence for key provisions, like 100 percent bonus depreciation and R&D expensing, makes the final version of the bill more pro-growth. Tax Foundation modeling shows that the law will increase long-run GDP by 1.2 percent, as opposed to the House’s version, which would have only increased long-run GDP by 0.8 percent. However, even the final law includes plenty of temporary tax policy, some of which should be permanent and some of which should not be enacted at all.
These temporary tax provisions also mean the work of tax reform is not done. Several major new tax breaks are scheduled to expire at the end of 2028, setting the stage for another tax fight to either extend them or allow them to expire.
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