The House has just narrowly passed the Senate’s version of the Big Beautiful Bill, with a 218-214 vote. The bill is now on its way to the President, who says he plans to sign it by July 4th. Here’s what in the legislation:
Key Provisions for Individuals and Businesses:
• Individual Tax Brackets & Rates:
Makes permanent the modified federal income tax brackets and lower tax rates established by the TCJA. An additional year of inflation adjustment for determining the dollar amounts at which any rate bracket higher than 12% ends and at which any rate bracket higher than 22% begins.
• Standard Deduction:
Permanently retains the nearly doubled standard deduction created by the TCJA. Beginning in the tax year 2025, the standard deduction increases to $15,750 for single filers, $23,825 for head of households and $31,500 for married couples filing jointly and is indexed to inflation in the following years.
• Child Tax Credit:
The Senate makes permanent a $2,200 per-child tax credit beginning in 2025 and indexes the credit amount for inflation annually. It would in addition make permanent the increased income phaseout threshold amounts of $200,000 ($400,000 in the case of a joint return).
• Child and Dependent Care Credit:
The Senate’s newly passed tax bill would permanently raise the child and dependent care tax credit from 35% to 50% of eligible expenses. The enhanced credit phases down for higher-income earners.
• Qualified Business Income Deduction (Section 199A):
Keeps the current 20% and would be made permanent. It also expands the phase in range for deduction limits.
• Estate and Gift Tax Exemption:
Permanently extends and increases the estate and lifetime gift tax exemption to $15 million/$30 million (single/joint) in 2026. There will be future indexing for inflation.
• Miscellaneous Itemized Deductions:
Permanently eliminates miscellaneous itemized deductions.
• Alternative Minimum Tax (AMT):
Makes permanent the increased AMT exemption and phase-out thresholds.
• SALT Deduction:
The SALT deduction increases the individual limit from $10,000 to $40,000 for 2025 and $40,400 for 2026, followed by 1% increases for 2027, 2028, and 2029 and reverts back to $10,000 in 2030. However, the increased deduction begins to phase out for households with modified AGI over $500,000 but never dropping below $10,000.
• SALT Deduction Workarounds for PTET:
Removes the House proposals, which addressed limitations on individual deductions and explicitly referenced SALT workarounds like pass-through entity tax (PTET). The current law remains instead.
• Qualified Small Business Stock (QSBS) rules under IRC § 1202:
Significant enhancements to Qualified Small Business Stock (QSBS) rules, including a new tiered capital gains exclusion (50% after 3 years, 75% after 4 years, and 100% after 5 years), a higher per-issuer gain cap ($15M, indexed for inflation), and an increased gross asset threshold ($75M). These changes would apply only to QSBS acquired after enactment.
• Tips Deduction:
Deduction capped at $25,000 and phases out when the adjusted gross income (AGI) exceeds $150,000/$300,000 (single/joint) for tax years 2025 through 2028.
• Overtime Deduction:
Deduction capped at $12,500/$25,000 (single/joint). It phases out when AGI exceeds $150,000/$300,000 (single/joint) for tax years 2025 through 2028.
• Senior Deduction:
$6,000 per filer that’s 65 or older and phases out when AGI is above $75,000/$150,000 (single/joint) for tax years 2025 through 2028.
• Car Loan Interest Deduction:
An above-the-line deduction of up to $10,000 for qualified passenger vehicle loan interest. The deduction begins to phase out at $100,000/$200,000 (single/joint). The vehicle must be assembled in the U.S., and the deduction applies from 2025 through 2028.
• Limitation on Tax Benefit of Itemized Deductions:
Permanently repeals the Pease limitation and replaces it with a new overall limitation on itemized deductions. The amount of itemized deductions otherwise allowed would be reduced by 2/37 of the lesser of (1) the amount of the itemized deduction or (2) the amount of the taxpayer’s taxable income that exceeds the start of the 37% tax rate bracket.
• Above-the-Line Charitable Deduction:
Non-itemizing taxpayers would be allowed to deduct up to $1,000/$2,000 (single/joint) in charitable cash contributions. This would be made permanent.
• Itemized Charitable Deduction Limitation:
Itemizers now only get to deduct the portion of charitable giving that exceeds 0.5% of AGI.
• Tax Favored Account for Children:
Designed to benefit children under age 8. Eligible new-born children would be given a one-time $1,000 deposit from the US Treasury to help fund the account. Contribution limits into the account would be $5,000.
• Business Loss Carryforwards:
The new tax bill makes permanent the limitation on excess business losses for noncorporate taxpayers under Section 461(l), which was previously set to expire after 2028. Earlier proposals would have tightened the rules by treating carried-over losses as subject to this limitation, rather than allowing them to be treated as net operating losses (which are more favorable). That provision did not make it into the final version—meaning carried-over losses will continue to be treated as NOLs and not subject to the excess loss cap.
• Bonus Depreciation:
Permanently restores 100% bonus depreciation (full expensing) for qualified property placed in service on or after January 19, 2025.
• Sec. 179 expensing:
Increases the maximum amount a taxpayer may expense under Sec. 179 to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million.
• Business Tax Breaks (R&D, Interest, Equipment):
Permanent extensions for R&D Deduction, Interest Deductibility (EBITDA), and Full Expensing for Equipment.
• 1099 Reporting Thresholds:
Increases reporting thresholds from $600 to $2,000 for payments made during 2025.
• Termination of Clean Energy Tax Credits:
Phases out or eliminates current clean energy tax credits.
• Excise Tax on Private Foundations:
Maintains the existing flat rate. Private foundations would continue to pay the current 1.39% excise tax on net investment income. The House bill created a tiered excise tax on private foundations’ net investment income from 1.39% to 10%.
Please note: The Rubin Report and DDK News will continue to monitor it’s implementation and keep you informed on any related developments and specific topics for tax planning purposes.
We can help
If you have any questions or concerns about how this proposed tax bill could impact you or your business, please contact your DDK partner.
