In a bold legislative move fulfilling one of his core campaign promises, President Trump has unveiled his ambitious “One Big Beautiful Bill” — a sweeping piece of legislation packed with tax cuts, credits, deduction adjustments, and policy extensions. Despite Republican leadership’s determined efforts to advance the bill through Congress, it is encountering substantial opposition from Democrats and even some resistance from within Republican conservative ranks. Nevertheless, we expect that a significant portion of the bill will ultimately become law and will have a substantial impact on our tax landscape.
The proposed legislation’s remarkably broad scope addresses an eclectic range of groups, including taxpayers, businesses, immigrants, seniors, students, and aliens in both rural and urban America. Its provisions touch on fuel and energy, schools and foundations, healthcare, childcare, Medicare, and Social Security. Additional areas covered include artificial intelligence, adoptees, tribal governments, and national security concerns.
We’ve reviewed the bill, and here are our highlights: the key points that matter most to us and our clients.
Make American Families and Workers Thrive Again
- The bill includes an increase to the Qualified Business Income (QBI) deduction from the current 20% to 23%. This change to the QBI deduction will be significant and will provide more favorable tax treatment for pass-through businesses.
- Itemized deductions for high-income taxpayers would be capped at a 35% marginal tax rate for taxpayers in the top income bracket.
Make America Win Again
- The new bill proposes a substantial increase to the estate and gift tax exemption to $15 million per individual, starting in 2026. The doubling of the exemption amount will significantly reduce the number of estates subject to federal estate taxes and will allow more wealth to be passed on to heirs without incurring steep tax liabilities.
Make Rural America and Main Street Grow Again
- The bill reinstates immediate expensing for domestic R&D costs (2024–2029), including software development. Foreign R&D costs require 15-year amortization. Companies can choose 60-month amortization, benefiting U.S. firms but impacting multinational strategies.
- The proposed tax bill extends 100% bonus depreciation for qualified property acquired after January 19, 2025, and placed in service before January 1, 2030. This will allow a full-cost deduction in the year of purchase.
Additional Tax Relief for American Families and Workers
- The bill introduces a tax credit capped at 10% of a taxpayer’s income for contributions to scholarship-granting organizations, effectively enabling taxpayers to allocate a portion of their Federal tax liability toward K-12 education costs, including private schools, religious institutions, homeschooling, and public school expenses.
- A proposed extension of Opportunity Zone (OZ) Provisions through 2033. The extension aims to reinstate step-up in basis benefits for long-term investments and implement stronger reporting requirements to enhance transparency.
Other notable provisions of the proposed bill include:
Tax Rates & Credits
- Reduced Tax Rates - Caps maximum at 37%.
- Alternative Minimum Tax (AMT) - Extends higher thresholds and exemptions permanently.
- Child Tax Credit - Increases to $2,500 per child from 2025 through 2028, then reverts to $2,000.
- Green Energy - changes and limitations to several green energy-related tax credits.
Deductions
- Standard Deduction - Permanently increases after 2025 personal exemptions repeal.
- Eliminated Deductions - Ends miscellaneous itemized deductions.
- Tip Income - Adds special deduction for tip earnings if the gross receipts from the business exceed the cost of goods sold and other deductible expenses.
- “Pease Limits” - Repeals these limits while capping itemized deductions at 35% for the highest bracket.
- SALT Deduction – Increases to $40,000 cap for individuals earning up to $500,000, with a phase-out for higher incomes.
Property & Interest
- Car Loan Interest - Creates above-line deduction (2025-2028) capped at $10,000 per taxable year.
- Mortgage Interest - Limits deduction to first $750,000 of acquisition debt.
- Casualty Losses - Restricts losses to federally declared disaster areas only.
Business & Reporting
- Bonus Depreciation - Raises thresholds to $2.5M/$4M in 2025 with inflation adjustments.
- 1099 Reporting - Raises minimum threshold to $2,000.
As the new legislation moves through Congress, individuals and businesses should consult with their financial advisors to assess how its potential changes may impact their specific circumstances. Although the bill includes many promising provisions, the timeline and details of their implementation remain uncertain. Maximizing the potential benefits of the bill while managing associated risks will require skill and adaptability, no matter if, when, and in what form the legislation ultimately passes.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
