On July 4, President Trump signed into law H.R. 1, the "One Big Beautiful Bill Act," a comprehensive reconciliation package that advances a significant portion of the administration's tax, energy, and domestic policy priorities. The nearly 1,000-page bill passed the House by a narrow 218-214 vote and the Senate 51-50, with Vice President J.D. Vance casting the tie-breaking vote.

Key Provisions:

• In a boost for small businesses, the bill permanently extends the Section 199A pass-through deduction at the 20% rate, restores 100% bonus depreciation, increases the Section 179 deduction to $2.5 million with phase-out beginning at $4 million, and reinstates the EBITDA-based limitation on business interest deductibility.

• The State and Local Tax (SALT) deduction cap is raised to $40,000 for five years for households earning up to $500,000. The bill preserves full deductibility of state and local taxes paid through state-enacted pass-through entity taxes (PTETs), providing pass-through businesses important relief from the federal SALT limit.

• Provides much-needed certainty to the biofuels market by reforming the Section 45Z Clean Fuel Production Credit and extending it through 2029. Of note, the bill restores tax parity by eliminating the higher rate for Sustainable Aviation Fuel.

• To support small biofuel producers harmed by the expiration of the biodiesel blenders' tax credit, the bill offers $0.20 per gallon on top of the 45Z credit for fuel sold or used from July 1, 2025, through December 31, 2026, up to 15 million gallons.

• Terminates the Inflation Reduction Act's tax incentives for home efficiency improvements (Section 25C) and residential solar (Section 25D) after December 31, 2025. As a result, these credits – including the 30% (up to $600) federal tax credit for qualified furnaces and boilers – will only be available through the end of this year.

• Significantly expands oil and gas production by requiring minimum lease sales on public lands and offshore waters, reducing royalty rates from 16.67% to 12.5%, and mandating specific drilling opportunities in Alaska and the Gulf of America.

• Rolls back federal support for renewable power generation by terminating Section 45Y and 48E clean electricity credits for wind and solar facilities placed in service after December 31, 2027, and rescinds billions in related unobligated IRA funding.

NOTE: This is not a comprehensive summary. NEFI will provide a more thorough analysis for its dues-paying members in the coming days detailing the bill's full implications for the heating fuels and home comfort industries. We also strongly advise you to consult qualified tax and legal professionals before making business decisions based on this new law.

The Congressional Budget Office projects that the bill will add around $3.4 trillion to the national debt over ten years. This figure is disputed by senior Republicans and the White House, which argue the CBO's analysis excludes key economic growth projections and revenue from new tariffs and regulatory reforms. GOP leaders have promised additional legislation aimed at reducing the annual budget deficit and national debt, possibly as part of additional reconciliation legislation and other must-pass measures later this Congress.

What’s next?

Now that the One Big Beautiful Bill is law, the Trump Administration and Republican Congress are expected to pivot to other energy policy reforms that could not be included in the reconciliation package. This includes energy permitting reform and an overhaul of the Energy Policy and Conservation Act (EPCA), the law that enables federal agencies to regulate appliance efficiency standards. NEFI is examining these legislative initiatives for opportunities to advance key priorities, including renewable fuels and energy choice.

NEFI is also advocating for full LIHEAP funding as Congress begins work on fiscal year 2026 appropriations, which must be resolved by September 30, 2025. Additionally, NEFI is advocating for federal cost-sharing grants for downstream biofuel infrastructure investments and closely monitoring implementation of the One Big Beautiful Bill, especially renewable fuel incentives. We will continue to keep members updated.