On Monday, Republicans unveiled their much anticipated Tax Bill (the “Bill”). At 389 pages, the Bill contains a number of provisions. Some are simply extensions of previous provisions that were sunsetting at the end of 2025. Others are new sections or reversals of existing law. Key provisions or reversals include:

Increased SALT Cap. The 2017 Tax Cuts and Jobs Act (“TCJA”) limited SALT deductions to $10,000. This new Bill increases that limit to $15,000 for single filers and $30,000 for joint filers. However, the deduction is reduced for single filers earning over $200,000 and joint filers earning over $400,000, but not by more than $5,000 and $10,000, respectively.

No tax on tips or overtime pay. The Bill allows a deduction for tip income earned by employees in certain businesses where tips are “traditionally and customarily” paid. Similarly, employees can now receive a deduction for overtime compensation. This deduction is not limited to just tipped employees. However, for both the tip deduction and overtime pay deduction, the employee must include their social security number on their return.

Deduction for interest on auto loans. The Bill allows for a deduction on interest paid for personal car loans. The amount of the deduction is capped at $10,000.

Immediate deductibility of research expenses. The TCJA neutered Sections 174 and 41 by requiring research expenses to be amortized. The Bill reverses course and allows for immediate deductions for Section 174 expenses. This would breathe life back into the Section 41 credit.

Increased Estate and Gift Tax exemption. The Bill makes the estate and gift tax exemption permanent and increases the exemption to $15 million.

Increase QBI deduction to 23%. The Bill increases the QBI deduction from 20% to 23%. The deduction was set to expire at the end of the year. The new Bill not only extends and makes the deduction permanent, but increases the deduction.   

Elimination of various clean energy incentives. The Bill eliminates a number of clean energy incentives, including the Section 30D clean vehicle credit, Section 25C energy efficient home improvement credit, the Section 48A energy property credit, and the Section 48E clean electricity investment credit.

Allowance for contingency fee arrangements. The Bill prevents Treasury from restricting the use of contingency fees with regards to tax returns or claims for refund. This would end the long standing rule in Circular 230 that a return preparer should not charge a contingency fee for return preparation or claims for refund

The Bill contains additional provisions that impact the entire Code. However, the Bill is still in its infancy. It must pass both the House and Senate before it goes to the President. It is likely that certain provisions will change during that time. But with Republicans controlling Congress, it is a decent bet that some version of this bill will be enacted this year.