Did the Tax Bill Pass? H.R. 7024 Failed, OBBBA Became Law

Did the tax bill pass? The 2024 bill everyone was watching, H.R. 7024, the Tax Relief for American Families and Workers Act, did not become law. It cleared the House in January 2024, stalled in the Senate, and expired when the 118th Congress adjourned on January 3, 2025.¹ Most of its major provisions were later folded into a different law. The One Big Beautiful Bill Act, Public Law 119-21, was signed on July 4, 2025, and it carries the business tax breaks H.R. 7024 championed along with sweeping changes to the Child Tax Credit, individual rates, and more.²

Why H.R. 7024 Failed

The House passed the bill on a lopsided bipartisan vote on January 31, 2024. From there it went to the Senate Finance Committee and sat. Several senators objected to the expanded Child Tax Credit and to the cost of the retroactive business deductions, and leadership never brought it to a floor vote. When the 118th Congress ended, so did the bill.

The practical consequence: the retroactive Child Tax Credit changes that would have applied to 2023 returns never took effect. Anyone who filed 2023 taxes counting on that expansion did not get it.

What the One Big Beautiful Bill Act Does Instead

Rather than reviving H.R. 7024, Congress packaged several of its provisions into a larger reconciliation bill. Public Law 119-21 is far broader than H.R. 7024 was.³ It restores immediate deductions for research costs, equipment, and interest expenses; makes the 2017 individual tax rates permanent; raises the SALT deduction cap; increases the Child Tax Credit; and creates a new tax-advantaged savings account for children.

Businesses got most of what they wanted. Families got a smaller Child Tax Credit increase than H.R. 7024 proposed. The retroactive pieces that would have reached back into 2023 were dropped.

Child Tax Credit After the New Law

The One Big Beautiful Bill Act raised the maximum Child Tax Credit from $2,000 to $2,200 per qualifying child for the 2025 and 2026 tax years, with inflation adjustments after that. The refundable portion, which is what matters most to lower-income families who don’t owe enough tax to use the full credit, is capped at roughly $1,700 per child for 2026 after inflation adjustments. That refundable amount is calculated as 15 percent of earned income above $2,500.⁴

H.R. 7024 would have gone further. It proposed a refundable cap of $1,800 for 2023, $1,900 for 2024, and $2,000 for 2025, and it added a per-child multiplier that would have phased in the credit faster for larger families.⁵ It also would have let taxpayers use prior-year earned income if their current income dropped. None of those features made it into the final law.

The credit still begins to phase out at $200,000 in adjusted gross income for single filers and $400,000 for joint filers. Above those thresholds, the credit shrinks by $50 for every $1,000 of income over the limit.⁶

Business Provisions That Did Pass

Immediate R&D Expensing Restored

Under a 2017 change that took effect in 2022, companies had to spread domestic research costs over five years instead of deducting them right away. The new law reverses that rule for tax years beginning after December 31, 2024, restoring immediate expensing of domestic research and experimental costs.²

Companies that capitalized domestic research costs during 2022, 2023, and 2024 can elect to deduct the remaining unamortized balance either fully in 2025 or split equally between 2025 and 2026. That catch-up mechanism gives a significant cash flow boost to companies that spent heavily on R&D during those years.

100 Percent Bonus Depreciation Made Permanent

The 2017 Tax Cuts and Jobs Act let businesses deduct the full cost of qualifying equipment in the year it was placed in service. That benefit was scheduled to phase down by 20 points a year starting in 2023. The One Big Beautiful Bill Act eliminated the phase-down and made 100 percent bonus depreciation permanent for property acquired after January 19, 2025.⁷

H.R. 7024 had proposed a temporary extension. The enacted law removes the sunset entirely. Taxpayers who prefer to spread the deduction can elect a lower 40 percent rate for property placed in service during the first tax year ending after January 19, 2025.

Business Interest Deduction Loosened

The Section 163(j) limit on deducting business interest tightened in 2022 when the calculation switched from EBITDA (earnings before interest, taxes, depreciation, and amortization) to EBIT. EBIT is a smaller income figure, which meant a smaller allowable interest deduction. The new law permanently restored the EBITDA-based calculation for tax years beginning after December 31, 2024.⁸ Adding depreciation and amortization back in raises the income base, so more interest becomes deductible. Manufacturers, real estate developers, and any business carrying significant debt gain the most.

Other Changes Affecting Individuals

The lower income tax brackets from the 2017 Tax Cuts and Jobs Act, along with the higher standard deduction and the increased estate and gift tax exemption, are now permanent. They had been set to expire after 2025.
The cap on deducting state and local taxes rose from $10,000 to $40,000 for tax years 2025 through 2029. The higher cap phases down for households with income above $500,000 and reverts to $10,000 at income above $600,000.
Trump Accounts, a new tax-advantaged savings account for children, are coming. The federal government will contribute a one-time $1,000 deposit per eligible child, and individuals or employers can add up to $5,000 a year. Funds must be invested in index-tracking mutual funds or ETFs and generally cannot be withdrawn until the child turns 18. These accounts cannot be funded before July 4, 2026.²
Up to $5,000 of the adoption tax credit (adjusted for inflation) is refundable starting with tax years after December 31, 2024. Adoptive parents can receive that amount even if they owe no federal income tax.
The 1099-K reporting threshold stayed put at $20,000 and 200 transactions per calendar year, despite years of proposed changes.

What to Do for the 2026 Filing Season

If you were waiting on H.R. 7024, stop waiting. That bill is dead. If you run a business, the news is largely positive. Immediate R&D expensing, permanent 100 percent bonus depreciation, and the more generous interest deduction limit are already in effect. Calendar-year businesses could claim all three on their 2025 returns, and the rules carry into 2026.

For families, the Child Tax Credit at $2,200 per child is a modest bump. The refundable portion remains limited for lower-income households, and the per-child multiplier H.R. 7024 introduced to speed up the phase-in for larger families did not survive. If you have children and earn under $200,000, the credit is still worth claiming, but the refundable cap means families with very low earnings will see less than the headline number.⁴

The higher SALT cap matters most to homeowners in high-tax states who itemize. If you have been taking the standard deduction because the $10,000 cap made itemizing pointless, the math may now favor itemizing. Run the numbers, or ask a tax professional to check.

1
Congress.gov. H.R.7024 – Tax Relief for American Families and Workers Act of 2024
2
Internal Revenue Service. One, Big, Beautiful Bill Provisions
3
GovInfo. Public Law 119-21
4
Office of the Law Revision Counsel. 26 USC 24 – Child Tax Credit
5
Congress.gov. How Would the Child Credit Be Calculated for 2023 Under H.R. 7024
6
Internal Revenue Service. Child Tax Credit
7
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One Big Beautiful Bill
8
Internal Revenue Service. Questions and Answers About the Limitation on the Deduction for Business Interest Expense