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Senate Finance Unveils Tax Bill

Senate Finance Committee's tax bill backs TRALA priorities, including full expensing, EBITDA reporting, and the passthrough deduction.

Late yesterday, the Senate Finance Committee released the 549-page text and a section by section summary for its version of the tax title of the Republican budget reconciliation bill. Compared to the House Ways and Means reported bill, the Senate legislation prioritizes permanency for key tax provisions, including three TRALA priorities—full expensing (often referred to as bonus depreciation), a return to EBITDA for reporting earnings, and the passthrough deduction.

 

The Senate bill makes 100 percent bonus depreciation permanent. For net interest expensing, the Senate bill would return to the prior calculation for determining how much net interest can be deducted. EBITA, which stands for earnings before interest, taxes, depreciation, and amortization, measures a company's long-term financial health and profitability. As part of the 2017 Trump Tax Bill, EBITDA was made the standard but only for a specific number of years due to the fiscal score involved. In 2022, EBITDA was replaced with EBIT, which meant earnings before interest and taxes with no deprecation or amortization could be included. The proposed changes to the cap on the deductibility of business interest expense in the Senate's new proposal could have significant implications for TRALA. The expanded interest deductibility cap is poised to benefit capital-intensive sectors such as the truck renting and leasing industry.

 

In addition, while the House reconciliation bill makes the passthrough deduction permanent at 23 percent, the Senate version would make it permanent at a lower rate of 20 percent, helping all companies that are taxed at individual rates rather than the traditional C-corporation rates, which include the vast majority of TRALA members.

 

With negotiations between the White House, Senate and House Republicans ongoing, a few key issues that must be resolved between the House and Senate reconciliation package remains the state and local tax (SALT) cap as well as the package's impact on Medicaid restrictions. If these can be resolved, Senate Majority Leader Thune and House Speaker Johnson aim to pass the negotiated package back through the House to send the final “Big, Beautiful Bill” to President Trump's desk to be signed into law by July 4th. 

 

TRALA applauds both Chambers for the work they have put into the reconciliation framework. With that said, TRALA prefers the Senate version due to the permanency of key tax items that would give more future clarity for companies to plan and invest.

 

Next week, TRALA will be meeting with several congressional offices to make the case for keeping full expensing, EBITDA and individual rates permanent. If you have any questions about this process, please contact Jake Jacoby at jjacob@trala.org or Lori Prater at lprater@trala.org