The One Big, Beautiful Bill- Chapter 6: Enhancing Deduction and Income Tax Credit Guardrails, and Other Reforms
On July 4th, 2025, The One Big Beautiful Bill (BBB) became law after passing the Senate, the House, and the President. This bill includes a section pertaining to finance and tax (Title VII-Finance).
Our team has reviewed the bill and have drafted these posts to provide you with relevant information and explanations about what this means for you. We will separate chapters from the bill into shorter blog posts for specificity and clarity. Please note that this is not a complete list of changes, just ones we have found to be relevant to our clients.
Chapter 6: Enhancing Deduction and Income Tax Credit Guardrails, and Other Reforms
A taxpayer’s SSN is required to claim the American Opportunity and Lifetime Learning Credits. If the credit is related to individuals other than the taxpayer or spouse, that individual's name and SSN are required. The institution's EIN is required to receive the American Opportunity Tax Credit. This applies to tax years beginning after Dec 31, 2025.
The Premium Tax Credit is changed in a number of ways:
The bill disallows individuals who are not “eligible aliens” even if they are lawfully present in the U.S. It also disallows them even if they are ineligible for Medicaid.
It establishes new pre-enrollment verification requirements. This will apply to tax years beginning after Dec 31, 2027.
It restricts the PTC for individuals who enroll in coverage through certain types of special enrollment periods. This is applicable to plan years starting after Dec 31, 2025.
It removes the statutory ceiling on the amount of advance PTC that an individual needs to repay when their credit is less than the advance payments they received. This applies to tax years beginning after Dec 31, 2025.
Safe Harbor for absence of deductible for telehealth service is extended and made permanent. This is related to telehealth service for High Deductible Health Plans.
Eligibility for HSAs are expanded to allow Bronze and Catastrophic health plans to be treated as High Deductible Health Plans.
There are a number of proposed changes that did not make it into the final bill that passed. These are proposals that you may have heard about in the news, as they were a part of previous drafts.
Treatment of State Passthrough Entity Tax (PTET) SALT Workarounds (relevant to businesses)
The version that was in the House prohibited owners of SSTBs from deducting PTET taxes from an SSTB from anything other than personal taxes. The Senate version limited entities when PTET taxes are passed to an individual exceeding $400,000. Neither of these versions were included in the final bill.
Expansion of Activities Facilitating Solicitation under PL86-272
There was a proposed amendment to the bill to broaden the scope of Public Law 86-272. This broadening would have nullified many state tax regulations. This proposal failed due to the Senate’s Byrd Rule.
Section 899 Revenge Tax
This was a provision that targeted foreign-owned companies and investors from countries the Administration deemed to have ‘unfair foreign taxes’. This was removed after making agreements with several foreign countries and at the Treasury Secretary's request.
Hybrid and Electric Vehicle annual fees
The version of the bill passed by the House included a measure that would create an annual fee of $100 for hybrid electric vehicles and $250 for electric vehicles. The measure was removed as it would most likely violate Byrd’s Rule.
The Bill’s Name
The Bill’s official name is not the “One Big Beautiful Bill” due to Byrd’s Rule again. Its official name is “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14”.
If you have any questions or would like a deeper explanation of any of the changes described above, please contact info@wbcpafirm.com to schedule an appointment with Cameron. For a complete breakdown of the BBB, see Congress’ official website.
Source Documents used:
HR1-119th Congress- Enrolled Bill
ISCPA’s “One Big Beautiful Bill Act- What is in the New Law?”