Navigating Potential Tax Reform: What You Need to Know About the “One, Big, Beautiful Bill”

Posted

Updated on May 22, 2025

House Passes the “One, Big, Beautiful Bill”

The U.S. House of Representatives has officially passed President Trump’s much anticipated “One, Big, Beautiful Bill” in a 215-214 vote after weeks of intense negotiations. While this is a significant milestone, it’s important to remember that the bill’s future is far from certain. The Senate is expected to introduce substantial changes, and the final version could look quite different from what the House approved.

Key Highlights:

The bill would make the 2017 tax cuts permanent and aims to cut $1.5 trillion in federal spending, including changes to Medicaid and repealing certain tax credits from the Inflation Reduction Act.
The state and local tax (SALT) deduction cap for individuals and joint filers is increased to $40,000 and phases out for those making more than $500,000 per year. (This is a change from our original posting.)
The MAGA accounts are rebranded as Trump accounts.
The legislation now moves to the Senate, where further negotiation and modification are likely.

What’s Next:

Our team will be tracking Senate developments closely. As always, we’ll keep you informed about what these changes could mean for you and your business.

Originally Posted on May 15, 2025

On May 12, the U.S. House unveiled a sweeping 389-page tax reform draft known as the “One, Big, Beautiful Bill”. While this legislation is still in draft form, and will almost certainly evolve as negotiations continue, it’s already generating significant buzz. As your trusted advisors, we want to keep you informed about the changes most likely to impact you, your family, and your business.

Let’s break down some of the most notable provisions.

Individual & Family Tax Changes

Extensions and Modifications of Existing Rules:

Permanent Tax Cuts: The individual tax rates set by the 2017 Tax Cuts and Jobs Act (TCJA), including the 37% top bracket, would become permanent.

Standard Deduction: The higher standard deduction introduced by the TCJA would also be made permanent.

Child Tax Credit: Stays at $2,000 (indexed for inflation after 2026); temporarily increased to $2,500 per child for 2025-2028.

Qualified Business Income (QBI) Deduction: Made permanent and increased to 23%.

Alternative Minimum Tax (AMT): Higher exemption amounts and phaseouts are here to stay.

Mortgage Interest Deduction: Continues to apply to the first $750,000 of home acquisition debt.

SALT Deduction: The controversial state and local tax deduction cap is proposed to rise from $10,000 to $30,000, with a phaseout for higher earners, though this may change as negotiations continue.

529 Plans: Expanded for more educational expenses, including certain credentials and homeschooling.

Miscellaneous Itemized Deductions: Eliminated.

Adoption Credit: Enhanced.

New Individual Provisions

Enhanced Senior Deduction: Filers aged 65+ could claim an extra $4,000 deduction (phasing out at higher incomes from 2025-2028).

No Tax on Tips or Overtime: For 2025-2028, qualifying employees could deduct tips and overtime pay from taxable income, with some income limitations.

Car Loan Interest Deduction: Up to $10,000 of interest paid on U.S.-assembled cars may be deductible (subject to income phaseouts).

Charitable Contribution Incentives: Temporary above-the-line deductions and a new credit for donations supporting educational scholarships.

MAGA Accounts: A new savings vehicle for children, supporting education, entrepreneurship, and first-time home-buying, with government contributions for children born 2024-2028.

Estate & Gift Tax: The lifetime exemption jumps to $15 million ($30 million for couples), indexed for inflation.

Business Tax Provisions

Tip Tax Credit Expansion: Now includes beauty service establishments.

Child Care & Family Leave Credits: Expanded and enhanced for employers.

HSA Improvements: Working seniors on Medicare could contribute; fitness memberships may now be HSA-eligible.

Bonus Depreciation: 100% for property acquired from January 2025 through 2029, with a new definition for “qualified production property.”

Section 179 Expensing: Limit increases to $2.5 million (phaseout starts at $4 million).

R&D Expenses: Fully deductible through 2029.

Business Interest Limitation: Returns to an EBITDA-based definition for 2025-2029.

Opportunity Zones: A second round is introduced, with policy adjustments.

Manufacturer Thresholds: Smaller manufacturers can use simplified accounting methods; the cash receipts threshold rises to $80 million.

Employee Retention Credit: No new claims after January 31, 2024.

When Reporting, Nonprofits, & Other Notables

1099 Thresholds: Both 1099-K and 1099-NEC/MISC thresholds rise, reducing some compliance burdens for small payees.

Private Foundations: Higher excise taxes for those with $50M+ in assets.

Unrelated Business Income Tax (UBIT): Now applies to certain transportation and branding/licensing income.

What Should You Do Now?

While these changes are still in flux, they represent a significant shift in tax policy with wide-ranging implications for individuals, families, and businesses. Here’s how to stay prepared:

Stay Informed: We’ll update you as the legislation evolves.

Evaluate Strategies: Review your current tax and business structure; opportunities (and risks) may be on the horizon.

Ask Questions: Our team is here to interpret how these changes affect you and to help you act proactively.

Tax reform is always a time of both uncertainty and opportunity. While not all these provisions will become law in their current form, understanding the direction of reform helps you make better decisions today.

If you have questions or want to discuss planning strategies, please reach out to your Simon Lever advisor.

Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Always consult a qualified professional for guidance specific to your situation.