The Senate Finance Committee dropped its highly anticipated version of the "One Big Beautiful Bill" this week, setting up what promises to be intense negotiations between the House and Senate versions. While both chambers share the same broad goals—making the 2017 Trump tax cuts permanent and rolling back Biden-era policies—the differences between their approaches could make a real difference for your family's finances.
Major Differences Between House and Senate Versions
When we analyzed the House version last week, we noted uncertainty around several key provisions. Now with the Senate version on the table, some of our guidance has evolved:
Estate Tax Certainty Remains: The good news we shared last week holds—both versions agree on the permanent $15 million exemption, so high-net-worth families can plan with confidence.
SALT Relief May Be Less Generous: Last week, we highlighted the House's increase to a $40,000 SALT cap for couples earning under $500,000. The Senate version completely ignores this change, reverting to the current $10,000 cap. While senators are calling this a "placeholder," the political reality suggests the final number may land somewhere between these positions—if anywhere at all.
Tips and Overtime Benefits: The Senate took a different approach to Trump's "no tax on tips" and overtime promises. While the House version allowed unlimited deductions (effectively eliminating taxes on tips and overtime for earners under $160,000), the Senate caps these benefits:
Tips: Up to $25,000 deduction (phases out for incomes over $150,000 individual/$300,000 married)
Overtime: Up to $12,500 deduction for individuals ($25,000 married), same phase-out thresholds
Both provisions run only through 2028.
Senior Deduction: Senate More Generous: The Senate increased the new deduction for seniors 65 and older to $6,000 (versus the House's $4,000), though it phases out at the same income levels ($75,000 for singles, $150,000 for couples). This makes the Senate version more attractive for our older clients.
Child Tax Credit: Modest Reduction: The Senate settled on $2,200 per child versus the House's $2,500. While both represent increases from current law, families with multiple children will notice the $300 per child difference.
Additional Changes for Families with Children: Beyond the child tax credit changes, families should note:
Enhanced child and dependent care credit (50% of qualifying expenses vs. current 35%)
Expanded 529 plan uses for K-12 and credentialing expenses
New Trump savings accounts for children born 2025-2028 with $1,000 government contribution
Climate Change: The Senate takes a more measured approach to rolling back green energy credits, giving projects more time to qualify and providing more flexibility for geothermal, nuclear, and hydropower. However, it maintains restrictions on foreign entity involvement and remains a step back from Biden-era climate initiatives.
The Road Ahead: Narrow Majorities, Tight Timeline
With Republicans holding slim majorities in both chambers and a self-imposed July 4th deadline, the path forward is anything but certain. Senate Majority Leader John Thune can only lose three GOP senators, while House Speaker Mike Johnson must navigate competing regional interests.
The updated Congressional Budget Office score showing the House bill would add $2.8 trillion to the deficit over a decade adds another wrinkle. Some fiscal hawks are already expressing concerns, and the Senate's additional provisions will likely increase that price tag.
Key Pressure Points
SALT Caucus: House Republicans from high-tax states remain adamant about the $40,000 cap
Deficit Hawks: Senators like Rand Paul have already opposed the increased debt limit provisions
Rural Interests: Changes to Medicaid provider taxes are drawing opposition from senators concerned about rural hospitals
Bottom Line
While key provisions of this bill remain in flux, the core fundamentals of good estate planning haven't changed—and won't change regardless of what Congress ultimately decides. Whether the SALT cap ends up at $10,000, $40,000, or somewhere in between, you still need updated wills, properly structured trusts, and beneficiaries that reflect your current wishes.
At Bequest, our planning approach remains consistent because we focus on strategies that work across different tax environments. The estate tax certainty is welcome news, but even without it, the families we serve need protection from probate, incapacity, and family disputes—issues that no tax bill can solve.