As a second term unfolds for the Trump administration, many significant policy changes are already underway via the executive branch. While these changes are largely favorable for the Republican party, their slight majority in both the Senate and House of Representatives could prove problematic for enacting bills relating to tax reform. One tax bill that faces an uncertain future this year is the Tax Cuts and Jobs Act (TCJA).
While many aspects of the TCJA are expected to remain, there are several temporary items due to expire in 2025 which will either remove them entirely, like the Qualified Business Income Deduction, or reduce them significantly, like the Estate Tax Exemption.
These impending changes have spurred a push for an extenders bill, titled TCJA 2.0, that could be a catalyst for more tax reform. However, the bill requires compromise from both parties and despite the call for swift action, delays may be imminent.
Click here to jump to the July 1 and July 3, 2025, update.
How Will This Impact My Business?
The TCJA created many important tax cuts. Two of the most impactful to private lenders were (1) reducing the corporate tax rate, and (2) creating the Section 199A qualified business income deduction. These two cuts created increased incentives to invest in private lending, particularly in Mortgage REITs.
Further, the vast majority of private lending operating companies are structured as pass-through businesses, so the Section 199A deduction became much more impactful.
Navigating the Future of Tax Reform
The future of tax reform in 2025 relies heavily on the budget reconciliation process. This process allows for partisan tax legislation to pass with just 50 votes plus the Vice President in the Senate, bypassing the need for Democratic cooperation. Anticipating this, Republicans in Congress are preparing for swift action.
The proposed tax reconciliation bill advocates for several new measures in addition to extending the TCJA or making it permanent. This includes (1) no tax on tips; (2) no tax on overtime; (3) reducing the corporate tax rate for US-made products and services; (4) no tax on social security and (5) increasing the SALT deduction cap.
The reconciliation process will be key to passing tax legislation on a partisan basis. The biggest challenge will be determining whether to pursue a single, all-encompassing reconciliation bill or two smaller bills, addressing more complex tax provisions later.
The decision to use a single bill could help secure broader support, as it would allow Republicans to bundle tax reforms with other priorities like immigration/border security, an enhanced military budget, and energy policies. As of January 27, President Donald Trump has advocated for one bill, but additionally stated he would not rule out two.
The Prospects for TCJA 2.0
Although Congress and President Trump want immediate action on a tax bill, the intricate and complex list of inclusions may lead to significant delays. As of now, the government is only funded through March 14, and the debt ceiling suspension that expired on January 1 still needs to be addressed.
Despite these hurdles, TCJA 2.0 could be the vehicle for a major overhaul of the tax system. Included in the package are provisions to extend the current tax cuts, and address Trump’s campaign promises.
An important area that could be influenced by TCJA 2.0, is clean and renewable energy. The push for tax incentives aimed at supporting clean energy initiatives is expected to be a significant part of the upcoming legislative discussions.
The timeline for the reconciliation process is tight, with significant milestones looming. The first step will be the passage of a budget resolution by February’s end, which would set the stage for the budget reconciliation package. This will allow tax provisions to move forward to pass them by May 23, 2025.
Debates over using a “current law” or “current policy” baseline will shape the reconciliation process. A current policy baseline would extend the TCJA without additional cost projections, while a current law baseline could lead to significant tax policy changes, affecting everything from estate taxes to business deductions.
As of February, the House has submitted a budget resolution with various items and there is still consternation whether this will be a single “big beautiful bill” per President Trump or two separate bills.
Staying Informed and Prepared
As the legislative process unfolds, businesses need to stay informed and prepared for the potential impact of TCJA 2.0 and the broader tax reform efforts underway in 2025. The potential for changes in tax incentives—especially in areas like community development, affordable housing, historic preservation, and clean energy—requires vigilance and proactive planning.
Contact your Congressperson and Senator and express your support to extend the TCJA and the positive impact it has had on small businesses including yours.
By staying updated on the latest industry news and legislative developments, businesses can better navigate these changes and ensure they are in the best possible position to take advantage of tax reforms or mitigate the risks posed by potential policy shifts. Click here to subscribe to our newsletter today and stay informed.
Senate Approves “Big, Beautiful” Reconciliation Bill: July 1, 2025 Update
On July 1, 2025, the Senate approved the sweeping Republican-led “One Big Beautiful Bill Act” by a 51–50 vote, with Vice President J.D. Vance casting the deciding vote. Three GOP senators, Susan Collins, Thom Tillis, and Rand Paul, voted against the bill.
What the bill includes:
- Permanent extension of 2017 TCJA tax rates and brackets, preventing the scheduled “tax cliff” at year-end.
- New tax breaks: exempting tips, overtime pay, and lowering taxes on older Americans, plus an increased Child Tax Credit (up to $2,200).
- Offsets via spending cuts: Approximately $1.3–1.5 trillion in reductions to Medicaid, SNAP, and green-energy incentives.
Fiscal implications:
- Nonpartisan analysis (CBO, tax policy groups) estimates the bill yields a $3.7–$4.5 trillion tax cut over 10 years, with a net increase in the deficit of around $3.3 trillion.
- The Urban–Brookings Tax Policy Center notes that the majority of benefits flow to high earners.
Procedural hurdles and revisions:
- Key provisions (Medicaid provider tax overhaul, foreign-owner penalties, sanctuary-city cuts) were struck or pared back by the Senate parliamentarian for violating reconciliation rules, creating roughly a $600 billion “gap” to reconcile.
- Republicans are adjusting to meet both the necessary budget rules and a narrow 50‑vote threshold, facing opposition even within their ranks.
Next steps:
- The revised version will return to the House for final approval, likely before July 4, per President Trump’s public deadline.
- Following House passage, reconciliation efforts will pivot to the Senate–House conference and work toward enactment.
Bottom Line
The Senate’s July 1 passage marks a pivotal moment in preserving and expanding TCJA provisions, laying the groundwork for a once-in-a-generation tax overhaul. However, with a narrow vote, key procedural adjustments, and an upcoming House decision still ahead, the outcome remains uncertain. To understand how these developments could impact your fund structure, investment strategy, or corporate entity, contact the Corporate and Securities Team at Fortra Law for tailored guidance.
House Enacts Senate Version: July 3, 2025 Update
On July 3, 2025 the United States House of Representatives voted 218–214 in favor of the Senate-amended One Big Beautiful Bill Act (OBBBA), officially sending it to President Trump for signature.
What This Means for Lenders
Permanent Section 199A QBI Deduction
The bill makes the 20 percent qualified business income (QBI) deduction from the Tax Cuts and Jobs Act (TCJA) permanent. This is a major win for pass-through businesses, including the vast majority of private lending operating companies.
The most important aspect of this bill for private lenders is the permanence of the Section 199A deduction. This deduction created meaningful tax savings for Mortgage REITs and pass-through lending entities.
The bill also includes a provision that could increase the deduction from 20 percent to 23 percent, subject to final rule making and technical corrections.
Broader Tax and Economic Impacts
Revenue and Deficit Effects
According to nonpartisan estimates, the bill will reduce federal tax revenue by approximately $4 trillion over ten years and increase the federal deficit by about $3.3 to $4 trillion.
Distribution of Benefits
The Urban-Brookings Tax Policy Center reports that the majority of tax relief will benefit high-income households, with approximately 80 percent of the gains flowing to the top 1 percent of earners. Lower- and middle-income households will see more modest reductions.
Additional Features
- SALT deduction cap increased
- Tips and overtime income exempted from federal income tax
- Increased Child Tax Credit, now up to $2,200
- Cuts to Medicaid, SNAP, and clean-energy incentive programs to offset costs
What Happens Next
Presidential Signature
President Trump is expected to sign the bill into law within the coming days, as part of his stated July 4 deadline.
Implementation and Technical Corrections
Although the bill passed both chambers, implementation guidance and technical corrections are likely. One item to watch is whether the Section 199A deduction increase to 23 percent is retained or revised.
Action Items for Private Lenders
Private lenders should evaluate how the permanent 199A deduction will affect fund structures and taxable income. For lenders operating as LLCs, LPs, or S corps, the continuation and potential enhancement of this deduction can significantly improve after-tax returns.
The House’s approval of the One Big Beautiful Bill Act marks a key milestone in preserving and expanding TCJA-era tax cuts. With Section 199A now permanent and a possible increase to 23 percent, private lenders and other pass-through businesses are well-positioned to benefit.
To understand how these changes may affect your investment strategy, fund structure, or operating entity, contact the Corporate and Securities Team at Fortra Law.
