Highlights of the One Big, Beautiful Bill Act

The House of Representatives Passes Sweeping Legislation Which Includes Numerous Tax Proposals

Early in the morning on May 21, 2025, the U.S. House of Representatives passed, by a margin of one vote, the One Big, Beautiful Bill Act (H.R. 1 – 119th Congress (2025-2026) (“The Act”). The House of Representatives version of this Act incorporates many of the items that President Trump touted during his 2024 campaign for re-election and extended provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”), in some cases, making them permanent (they were originally set to expire as of January 1, 2026). The Act now advances to the U.S. Senate where it is widely anticipated that numerous changes will be proposed.

Many of the provisions of the Act, if passed in its current form, will have a pervasive impact on individuals and businesses.

Individual Provisions of Note

1. Tax rates and brackets established under the TCJA would be made permanent with annual inflation adjustments to all but the highest bracket (37%).
2. Standard deduction increases will be made permanent. For tax years 2025 to 2028, there will be increases to the standard deductions as follows:
   1. For single filers: $1,000
   2. For heads of household: $1,500
   3. For married couples filing joint returns: $2,000
3. The $2,000 child tax credit will be made permanent but for tax years 2025 to 2028, the credit will be increased to $2,500.00. Effective for tax years beginning after 2028, the credit amount will be indexed for inflation.
4. The Section 199A deduction for qualified business income (“QBI”) for sole proprietors, partners in partnerships and shareholders of S Corporations will also be made permanent. The deduction will increase from the current 20% amount to 23% for tax years beginning after December 31, 2025. To determine the QBI deduction, the wage and investment income limitation and the specified trade or business (“SSTB”) limitations would now phase in at a fixed rate as opposes to being phased in over a fixed range of taxable income.
5. The Alternative Minimum Tax (“AMT”) exemption as well as the related phase-out caps are made permanent.
6. The acquisition debt limitation of $750,000 used to compute the limitation on the deductibility of home mortgage interest is made permanent.
7. The elimination of miscellaneous itemized deductions enacted by TCJA is made permanent.
8. Workers who earn overtime and those who earn qualified tips will be entitled to an above-the-line deduction if their earned income is under $80,000 for the tax years 2025 to 2028.
9. Interest on loans to purchase a vehicle will be another above-the-line deduction, limited to $10,000 for taxpayers reporting income under $200,000 if they file a joint return or $100,000 for those who are single or married filing separately for tax years 2025 through 2028.
10. The state and local income tax deduction (“SALT”) will be increased to $40,000 from the current level of $10,000. There will be a graduated phase-out for taxpayers if their income exceeds $500,000. However, the Act also imposes the $40,000 limit on state and local taxes paid by a pass-through entity: these would be considered to be separately stated amounts which would be subject to the SALT cap.
11. An additional phase-out of itemized deductions will be imposed on those taxpayers in the highest individual tax bracket (37%) after 2025: the goal of this provision is to limit the benefit of itemized deductions to a tax benefit of 35%.
12. Excess business loss limitations will be made permanent.
13. The lifetime exemption under the estate and gift tax provisions of the IRS Code are made permanent. For 2026, the exemption amount per individual will be increased to $15 million (as opposed to the current exemption of $13.99 million) and will be indexed for inflation thereafter.

Business Tax Provisions

1. Bonus depreciation will be allowed for 100% of qualified property acquired after January 19, 2025, and before January 1, 2030: the current percentage amounts were 40% in 2025 and 20% in 2026.
2. Qualified research and development expenses would be eligible for immediate expensing for tax years beginning after December 31, 2024, and prior to January 1, 2030.
3. The deduction for business interest for tax years beginning after January 1, 2024, and before January 1, 2030, would be increased. The deduction is now calculated using the so-called Adjusted Taxable Income” (“ATI”) computation: ATI will now be determined using an earnings before interest, taxes, depreciation and amortization (“EBITDA”) concept as opposed to the earnings before interest and taxes (“EBIT”) concept.
4. Immediate expensing of the entire cost of “qualified production property” (“QPP”). QPP includes new factories, certain improvements to existing factories and certain other structures utilized in qualified production activities. Manufacturing, producing or the refining of tangible personal property are considered to be qualified productionactivities. For this purpose, “production” is limited to agricultural and chemical production.
5. Tax benefits introduced by the TCJA for investments in Opportunity Zones will be extended: adjustments and improvements to the current policy will be implemented.
6. The Section 179 allowance for the immediate expensing of qualifying property, as opposed to depreciation over the required period of time established for various categories of property, would be increased to $2.5 million but would also be reduced by which the cost of the qualifying property exceeds $4 million. The $2.5 million and $4 million amounts would be adjusted for inflation for tax years beginning after 2025.
7. Charitable contributions made by corporations will be limited to 1% of taxable income: this is a decrease from the current allowance of 10% of taxable income.

Please note that the above represents highlights of the House version of the One Big, Beautiful Bill Act. None of the above are enacted into law without first clearing the Senate and being signed by the President.