Important Tax Legislation Updates and Key Provisions
On May 22, the House of Representatives passed President Trump’s “One Big Beautiful Bill Act,” a major fiscal and tax reform package with wide-ranging implications for taxpayers, businesses and investors. While the Senate has yet to review the legislation and the details are subject to change, the current bill contains several important provisions that could be of particular interest to our clients.
To help you prepare for these potential changes, we have outlined some of the bill’s key provisions as they stand today, followed by tips to help you monitor the bill’s progress and plan accordingly.
How the Bill Might Affect You
The ‘Big Beautiful Bill’ would preserve and expand on the changes passed during Trump’s first term with the 2017 Tax Cuts and Jobs Act (TCJA). Some of the most impactful provisions in the proposed legislation include:
Individual tax rates made permanent: The adjustments to income tax brackets and rates enacted with the TCJA would become permanent, with a top rate of 37%.
The table below shows the differences in tax rates between “Current Law” and if the Provisions remain permanent. Please keep in mind that these provisions may change.
- Standard deduction amounts made permanent and enhanced: The IRS’ standard deduction (the alternative to itemizing deductions), which was nearly doubled in 2017, would be made permanent AND receive a temporary inflation adjustment of $1,000 for individual filers ($2,000 for married filing jointly) through 2028. Additionally, seniors 65 and older receive a bonus of $4,000 to their standard deduction through 2028.
- Estate and gift tax exemptions raised: The higher lifetime estate and gift tax exclusions passed in 2017 would be made permanent and would increase to $15 million (from$13.99 million) for singles and to $30 million (from $27.98 million) for married filing jointly. Importantly, without congressional intervention, TJCA would sunset at the end of 2025 and the estate tax threshold and lifetime gift tax exemption would revert to less than $7 million for 2026.
- State and Local Tax (SALT) deduction increased: This deduction allows tax filers who itemize to deduct not only state and local income taxes, but also property taxes. The total deduction is currently capped at $10,000 per household, but the Big Beautiful Bill would raise the cap to $40,000 (phased out for those with income over $500,000).
- Other notable changes: The bill also contains a number of other adjustments that may pertain to you, such as:
- An increase to the Child Tax Credit from $2,000 to $2,500 through 2028
- No income tax on overtime hours or tips
- Deductible interest on auto loans to purchase American-made vehicles
- The creation of “Trump Accounts,” a new savings vehicle for parents that offers a$1,000 starter contribution plus later tax benefits
Note: some proposed enhancements may phase out based on income.
What You Can Do Now
While the Big Beautiful Bill has yet to be finalized, a Republican-led Senate implies that some version of the bill is likely to pass in the coming months. Here are some preliminary steps to help you stay on top of the situation.
- Stay Informed. Follow QuotientWealth.com/Insights to keep up with the latest updates on the bill’s tax and spending provisions as it moves through the legislative process.
- Review Your Current Tax Situation. Consult your CPA to understand how the proposed changes may affect your personal or business finances.
- Plan Ahead. Develop a strategy for both the current and upcoming tax years to take advantage of any new opportunities or mitigate potential impacts.
- Engage with Your Financial Advisor. Schedule a meeting to discuss how these changes could influence your financial goals and what adjustments may be necessary.
We’re here to help you navigate these developments and ensure you’re well-prepared for whatever changes may come.