10 Things to Know About the House’s ‘One Big Beautiful Bill’

Jun 2, 2025 / By Debra Taylor, CPA/PFS, JD, CDFA
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The U.S. House has taken one step toward passing a massive tax and spending-cut bill that would still add to ongoing deficits. Action now moves to the Senate. Here are 10 things to know about the legislation that could affect your clients.

The U.S. House of Representatives narrowly passed President Trump’s comprehensive domestic policy package on May 22 by a razor-thin margin of 215-214. This sweeping legislation combines tax cuts, spending reductions, and policy changes that will reshape federal priorities for the foreseeable future.

Here are 10 key provisions individual taxpayers and families need to understand.

1. TCJA extensions made permanent—but with key limitations

The bill’s centerpiece makes “permanent” the individual tax cuts from Trump’s 2017 Tax Cuts and Jobs Act, which were scheduled to expire in December 2025. This affects all income tax brackets, with the current lower rates, expanded standard deduction, and various provisions continuing indefinitely. However, several temporary provisions expire in 2028–2029, creating potential “tax cliffs” that future Congresses will need to address.

2. SALT deduction dramatically expanded to $40,000

One of the most contentious changes quadruples the state and local tax (SALT) deduction cap from $10,000 to $40,000 annually for taxpayers earning less than $500,000. This provision phases out for higher incomes and was crucial to securing votes from Republicans representing high-tax states like New York, California, and New Jersey. The change overwhelmingly benefits higher-income households in these states.

3. Estate tax exemption increases to $15 million per person

The federal estate tax exemption increases to $15 million per individual (adjusted for inflation going forward). This change would continue to shield more estates from federal taxation, particularly benefiting wealthy families and potentially affecting estate planning strategies for high-net-worth individuals. Per Statista, the revenue from estate and gift tax amounted to $34 billion U.S. dollars in 2023. And per the Tax Policy Center, only about 0.14% of estates pay any estate tax (as of January 2024).

4. Child tax credit increases to $2,500 (with restrictions) & newborn ‘MAGA’ Accounts to receive $1,000 in federal deposits

The child tax credit increases to $2,500 through 2028 (from $2,000) but only for children with Social Security numbers, excluding mixed-status immigrant families. It returns to $2,000 after 2028, adjusting for inflation.

In addition, babies born January 1, 2025–January 1, 2029, receive $1,000 federal deposits into new Money Accounts for Growth and Advancement “MAGA” accounts. Parents can contribute up to $5,000 annually with after-tax dollars. Funds can be used for education, job training, or first home purchases once the child turns 18 (and can be used for any purpose after age 30). While income on the accounts can grow on a tax-deferred basis, distributions for qualified expenses, like those mentioned above, would be taxed at a long-term capital gains rate.

5. Standard deduction increases with additional senior relief & permanent AMT exemptions

For tax year 2025, the standard deduction would increase from $30,000 to $32,000 for married filing joint filers and from $15,000 to $16,000 for Single filers. Individuals over 65 earning less than $75,000 (single filer) and $150,000 (joint filer) annually would receive an additional $4,000 per filer (the deduction phases out once above the $75,000/$150,000 income limits).

This creates significant tax savings for lower- and middle-income seniors and may impact retirement planning. The bill also makes permanent the TCJA’s increased alternative minimum tax (AMT) exemptions.

6. Tax breaks on tips and overtime is temporary (only 2026–2028)

The bill eliminates taxes on tips for service workers and overtime wages, but only temporarily from 2026 to 2028. It also allows Americans to deduct interest on car loans—but only if the vehicle is American-made.

These provisions fulfill key Trump campaign promises but their temporary nature raises questions about long-term tax planning.

7. Business tax benefits include enhanced QBI deduction from 20% to 23%

Small businesses, farms and pass-through entities see their Qualified Business Income (QBI) deduction increase from 20% to 23%. The bill also restores 100% bonus depreciation and temporarily allows full expensing for domestic research and development costs.

These provisions are designed to stimulate business investment, though some are temporary and require future congressional action to extend.

8. Medicaid cuts total $880 billion over the decade and other entitlement program changes

The legislation implements significant reductions to Medicaid, accelerating work requirements from early 2029 to the end of 2026—a change expected to remove several million people from the program. David Sacks, Trump’s AI and crypto czar, confirmed that “this bill cuts $880 billion from Medicaid over a decade.”

The bill also narrows work requirement exemptions for SNAP recipients and targets Medicare eligibility for some legal immigrants who have worked and paid taxes for decades.

9. Massive fiscal impact raises debt ceiling by $4 trillion

The Congressional Budget Office projects the bill will add approximately $2.3 trillion to federal debt over the next decade, with $3.8 trillion added to federal deficits when including all provisions.

The legislation also raises the debt ceiling by $4 trillion following Treasury Secretary Scott Bessent’s warning that the nation’s borrowing capacity could be exhausted by August. The national debt already stands at $36.2 trillion, raising significant concerns about long-term fiscal sustainability. Per Census and Economic Information Center (CEIC) Data, the debt-to-GDP ratio as of December 2024 was about 124%.

10. Senate changes expected before final passage

According to The Economist, Senate Republicans are preparing significant modifications that will dramatically reshape the House bill.

The Senate is expected to scale back or eliminate the SALT deduction increase to $40,000, as there is minimal support for this costly policy among Senate Republicans.

Trump’s campaign promised tax breaks on tips, overtime, and car loans are expected to be included, but in a reduced form costing about half the House version’s $500 billion.

Most significantly, while the House bill contains $1.5 trillion in spending cuts, the Senate aims for approximately $2 trillion in cuts to improve the deficit outlook. The most challenging negotiations will involve cuts to clean-energy tax credits, food assistance, and Medicaid—proposed cuts that are unpopular with moderate senators facing competitive re-elections. These differences set up what The Economist calls “a bicameral brawl” that could take months to resolve.

What’s next?

Republican leaders want the legislation signed by July 4, but the Senate’s stated intention to make “considerable changes” means the House will need to vote again on a modified version. The Senate needs only a simple majority to pass their version.

Trump has endorsed the Senate’s ability to make changes, saying “I want the Senate and the senators to make the changes they want. It will go back to the House and we’ll see if we can get them. In some cases, those changes may be something I’d agree with, to be honest.”

The coming weeks will test Republican unity as senators balance competing priorities while facing pressure from Trump to deliver quickly on his domestic agenda.

Sources:

Debra Taylor, CPA/PFS, JD, CDFA, an industry leader and sought-after speaker with 30 years of experience, is Horsesmouth’s Director of Practice Management. She is Chief Tax Strategist and Managing Partner with Carson Wealth Management. She was the principal and founder of Taylor Financial Group, LLC, a wealth management firm in Franklin Lakes, NJ. Debra has won many industry honors and is the author of My Journey to $1 Million: The Systems and Processes to Get You There, a book about industry best practices. Debbie is also a co-creator of the Savvy Tax Planning program and leader of the Savvy Tax Planning School for Advisors. Several times a year she delivers her Build a Better Business Workshop for advisors.

Comments

I love your insights Deb. i do wish you had included this provision hidden in the bill. More people need to know about this effort to make the courts ineffective "No court of the United States may use appropriated funds to enforce a contempt citation for failure to comply with an injunction or temporary restraining order if no security was given when the injunction or order was issued,"

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