The House of Representatives has passed what’s being called the “One Big Beautiful Bill” — a sweeping package of tax reforms that could bring significant changes for individuals and business owners alike. While it still needs to pass through the Senate before becoming law, the current version includes several provisions that may impact how you earn, save, and plan.
Whether you're a business owner, high-income earner, or simply looking to stay ahead of potential tax law changes, here’s a breakdown of what’s in the House bill — and what it could mean for your financial future.
🔹 Small Business Owners: Expanded Deductions Ahead
Pass-Through Deduction Increased from 20% to 23%
Owners of pass-through entities (LLCs, S-corps, partnerships) could see tax savings with the increase of the Section 199A deduction. Updates to the income phase-out rules may also make more business owners eligible.
100% Bonus Depreciation Restored
The bill reinstates full expensing for equipment and property purchases, allowing businesses to deduct the entire cost in the year the investment is made — a major benefit for growth-focused companies.
Immediate Expensing for R&D Costs
Domestic research and development expenses can now be fully deducted right away, rather than amortized over time — encouraging innovation and reinvestment.
🔹 Individual Taxpayers: Clarity and Continuity
Permanent Individual Tax Rate Reductions
The bill locks in the lower personal income tax brackets from the 2017 Tax Cuts & Jobs Act, including the reduced top marginal rate — offering long-term certainty for tax planning.
Estate Tax Exemption Set at $15 Million
Starting in 2026, the federal estate tax exemption will be $15 million per person, indexed to inflation. This is important for those doing multi-generational or legacy planning.
SALT Deduction Cap Increased to $40,000
The state and local tax (SALT) deduction cap is raised significantly, but begins to phase out for those earning over $500,000 in modified adjusted gross income (MAGI).
Mortgage Interest Deduction Rules Made Permanent
The mortgage interest deduction is now permanently capped at interest paid on up to $750,000 in acquisition debt. Interest on home equity loans will remain non-deductible.
🔹 New Deductions and Credits to Watch
Car Loan Interest Deduction (Up to $10,000)
If you buy a car, motorcycle, ATV, RV, or camper for personal use — and it was assembled in the U.S. — you may qualify for a new deduction on your loan interest (subject to income limits).
“Trump Accounts” for Kids
Parents can contribute up to $5,000 annually to a new tax-advantaged account for children under 18. These accounts grow tax-free, and qualified withdrawals (for education, a first home, or small business expenses) are taxed as capital gains. Babies born between Dec. 31, 2024, and Jan. 1, 2029, may automatically receive a $1,000 deposit from the government.
New Scholarship Tax Credit
Starting in 2026, donors can receive a dollar-for-dollar tax credit for contributions to qualifying scholarship-granting nonprofits — up to $5,000 or 10% of their AGI.
Tip Income Deduction
Workers in tip-based jobs (excluding “professional” roles) will be able to deduct qualified tips from their taxable income between 2025 and 2028.
🔹 What’s Not Changing — But Worth Noting
No New Taxes on Life Insurance: The life insurance industry will not face the heavy tax burden it did in 2017 — good news, though not the centerpiece this time.
Carried Interest Loophole Remains Untouched: There are still no new taxes on carried interest, though deductions for compensation over $1 million are more limited.
New Excise Tax on College Endowments: Large endowments at private universities will be hit with a new tiered excise tax, ranging from 1.4% to 21%.
Clean Energy Credits Sunsetting by 2028: New clean energy projects will no longer be eligible for tax credits if they begin more than 60 days after the bill passes.
🔹 What It All Means for You
This new bill offers significant tax-saving opportunities for business owners, high-income individuals, and families — especially those who act early. With permanent rate cuts, enhanced deductions, and new tools like Trump Accounts, there’s a lot to consider as you plan for the years ahead.
Want to make sure you're positioned to take full advantage of these changes?
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Source: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://waysandmeans.house.gov/wp-content/uploads/2025/05/SMITMO_017_xml.pdf
Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only. Tax laws are always subject to change.