New Tax Bill Watch: What’s in ‘The One, Big, Beautiful Bill’

📜 Quick Context

This sweeping tax proposal aims to extend and enhance key provisions from the 2017 Tax Cuts and Jobs Act (TCJA), add new deductions for tips and overtime, expand benefits for seniors and families, and lock in higher exemption thresholds for estate and gift taxes.

‍

🏛️ Official name: “The One, Big, Beautiful Bill” aka “BBB”

‍

📅 Introduced: May 2025 (not yet passed or signed)

‍

🔴 Status: Still in the proposal stage. Expect changes, debates, and possibly compromises before anything becomes law

‍

🔍 Why it matters: If passed, it would affect individuals and business owners starting in 2026, with some provisions beginning in 2025.

‍

‍

Key Provisions Affecting High-Income Individuals

✅ Permanent Extension of TCJA Individual Rates

• Keeps lower individual income tax brackets in place beyond 2025.
• Avoids automatic “sunset” that would have increased top rates to pre-2018 levels.

‍

💡 Planning Note: If enacted, this removes the urgency to accelerate income into 2025.

‍

📉 Increased Standard Deduction (with Temporary Boost)

• Makes the TCJA’s higher standard deduction permanent.
• Adds a temporary boost (2025–2028):
  +$1,500 for single filers
  +$1,000 for married filing jointly

‍

👶 Expanded Child Tax Credit

• Boosts credit to $2,500 per child (2025–2028), then back to $2,000 in 2029+
• Indexes for inflation going forward
• Maintains refundability with a $1,400 limit (also inflation-adjusted)

‍

🧾 Enhanced QBI Deduction (199A)

• Raises the deduction from 20% → 23% of qualified business income.
• Makes this deduction permanent.
• Applies more broadly to certain income streams and eases phaseout rules.

‍

💡 Big win for pass-through business owners (especially those currently subject to phaseouts).

‍

🪦Estate & Gift Tax Lifetime Exemption Doubles

• Current exemption ($12.92M) was set to drop by half in 2026.
• New proposal raises it to $15M per person, permanently.

‍

📆 Planning Tip: Removes pressure to use full exemption before 2025 sunsets, but it’s still wise to review wealth transfer plans if any new tax bills become law

‍

‍

Notable Deductions and Credits

🚙 Car Loan Interest Deduction (2025–2028)

• New above-the-line deduction for up to $10K in interest on passenger vehicle loans.
• Phases out for incomes > $100K (single) / $200K (joint).
• Must be first-lien purchase loans. Leases and refinanced loans wouldn’t qualify.

‍

🧒 Child Care Credit Expansion

• Increases business credit for employer-sponsored care from 25% to 40–50%.
• Raises cap from $150K to $500K–$600K.
• Applies to companies that build on-site facilities or subsidize care.

‍

👶 Adoption Credit Enhancement

• Makes $5,000 of the credit refundable
• Adds inflation adjustments to thresholds and benefits

‍

🏫 Education Credit & 529 Plan Expansion

• Allows more K–12 expenses (think tutoring, online tools, standardized test fees) to qualify under 529 Plans
• New education donation credits up to $5,000 per taxpayer for donations to scholarship orgs

‍

💰 Tip Income Exemption (2025–2028)

• New deduction: Qualified cash tips would be fully deductible from income.
• Applies to certain service industries (hospitality, beauty, spas).
• Income and occupation caps apply to prevent abuse.

‍

💡 If you own a service-based businesses or hire hourly, entry level employees, you may want to highlight this benefit as a hiring tool.

‍

🕒 Overtime Pay Exemption (2025–2028)

• Deduction for qualified overtime wages, excluding high earners.
• Employer reporting obligations will increase, especially for payroll providers.

‍

‍

‍

⚠️ Risks, Limitations & What’s Not Included

• No SALT cap repeal: workaround strategies like PTE tax elections would still be vital.
• Many provisions expire in 2028, especially new deductions.
• Uncertain legislative path: This is a proposal that has not yet been enacted into law. Political negotiation may affect the final outcome and passage of these proposals

‍

‍

‍

🧭 What You Should Do Now

This is a watch-and-wait moment, but there are a few smart, low-risk action steps you may want to consider regardless of the outcome.

‍

Actions and Why It Matters

1. Track charitable giving. If scholarship donation credits pass, early tracking could help you qualify.
2. Document family caregiving. May support future employer-related credits.
3. ‍Reevaluate 529 plan usage. New K–12 expenses might become eligible — planning now could boost tax efficiency.
4. ‍Review estate plan timing. If you were planning large gifts before 2026, this may buy time - or not. Prepare for both outcomes.

‍

Whats Next? We’ll continue monitoring updates closely, and will be there to help you plan when it’s go-time.

‍

‍

This information is for educational purposes only and does not constitute legal or investment advice. Consult a qualified professional before making any investment decisions.

‍

References

‍

The One Big Beautiful Bill