Top Ten Things You Should Know About The Big, Beautiful Bill

Tax implications for you and your business

A few weeks ago, the US House of Representatives passed The One, Big, Beautiful Bill. The 2025 Reconciliation Package is in the Senate, where it’s getting pushback from Democrats and Republicans. The White House has given Congress a tight deadline of July 4th to get the Bill passed. With Senate objections and anticipated changes, including Medicaid cuts and renewable energy incentives, it’s unlikely we will have a signed bill by Independence Day.

Why the sense of urgency? Current tax cuts enacted by the 2017 Tax Cuts and Jobs Act are set to expire at the end of this year, which would cause the average taxpayer to see a 27% tax hike. According to the US House Committee on Ways & Means, a family of four making a median income of $66,712 could see a $1,278 tax increase if the tax cuts expire.

Living up to its name, The Big, Beautiful Bill is one of the largest tax packages we’ve seen in a decade. It includes a plethora of tax cuts for households and businesses. While individual provisions in the Bill are still being debated in Congress, here are the top ten tax proposals that are sure to have an impact on your family and business.

1. Permanently lowers personal income tax rates and increases the inflation adjustment across all income brackets except for the 37% tax threshold. This gives most taxpayers more overall take-home pay.
2. Makes the standard deduction levels, which were doubled in 2017, permanent. The Bill boosts the standard deduction by $2,000 for joint filers, $1,500 for head of household filers, and $1,000 for all other filers through the end of 2028. What this means for taxpayers is that the new standard deduction would increase to $16,300 for an individual filer, $24,500 for a head of household, and $32,600 for married couples.
3. Expands the child tax credit to $2,000 per child with an additional four-year boost of $500. Families will get $2,500 per child, until 2029, and afterwards it would stay at $2,000 and increase with inflation.
4. Makes other changes and limits to tax deductions and exemptions, including permanently lowering the deduction for qualified residence interest to the first $750,000 in home mortgage acquisition debt. It makes the state and local tax (SALT) deduction cap permanent at a higher threshold of $30,000, phasing down to $10,000 at a rate of 20% beginning at modified adjusted gross income of $200,000 for single filers and $400,000 for joint filers. Also, it makes changes to itemized deductions permanent, including: the limitation on personal casualty losses and wagering losses and termination of miscellaneous itemized deductions, Pease limitation on itemized deductions, and certain moving expenses.
5. Increases the estate and gift tax exemption to an inflation-adjusted $15 million beginning in tax year 2026. The generation skipping transfer tax exemption is also permanently increased to $15 million and adjusted to inflation.
6. No tax on tips. The deduction is allowed for both W-2 employees and 1099-k independent contractors, 1099-NEC, or reported by the taxpayer on Form 4317. This provision excludes highly compensated employees (making $160,000 or above). This deduction is allowed through 2028.
7. No tax on overtime pay. Like the no tax on tips, this allows for an income deduction for overtime pay during the taxable year, until 2028. This includes both taxpayers who itemize and those who are non-itemizers. Tipped income is excluded from the overtime deduction and for highly compensated employees.
8. Increases the standard deduction for seniors, age 65 and older, by $4,000 per eligible filer with a modified gross income that does not exceed $75,000 for single filers and $150,000 for married filing jointly. Again, this dedication is available to both itemizers and non-itemizers. This deduction will be allowed until 2028.
9. No tax on car loan interest. Taxpayers can deduct up to $10,000 for qualified passenger vehicle loan interest during the year. The deduction begins to phase out once the taxpayers modified adjusted gross income exceeds $100,000 or $200,000 in a joint return. To take this deduction, final assembly of the vehicle must be in the United States. This includes all-terrain vehicles and recreational vehicles. The dedication lasts until 2028.
10. Small Business Tax Cuts. The deduction for qualified business income for small businesses, including partnerships, S-corps, sole proprietorships, etc., would be increased from 20% to 23% and made permanent. There’s additional tax relief by loosening the phase-in of limitations and adjusting the threshold amounts for inflation. Additionally, the Bill closes SALT cap workarounds for pass-through businesses that do not make their income from 199a-eligible sectors.

Contact Johnson Legal today to schedule your consultation. Let us help you create an estate plan that works and explore ways you can minimize your tax liability through your Trust. Johnson Legal is not a tax law firm. Please consult your tax advisor for more information on how these provisions could affect your tax situation.