Key tax provisions in the House’s One Big Beautiful Bill Act
On May 22, 2025, the House of Representatives passed H.R. 1, One Big Beautiful Bill Act, a sweeping $3.8 trillion reconciliation package that includes a broad array of tax provisions affecting individuals, businesses, and international taxpayers.
While the bill is expected to undergo revisions in the Senate, we want to highlight the key provisions as currently drafted and offer preliminary insights into how they may affect your tax planning. Please contact us at your earliest convenience to discuss your situation so we can develop a customized plan. We continue to closely monitor any potential tax legislation and update you accordingly.
Individual income tax provisions
Permanent extension of lower tax rates and brackets:
The bill would make permanent the individual income tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA), including lower individual tax brackets and the increased standard deduction.
Standard deduction:
The nearly doubled standard deduction would be made permanent, with an additional inflation adjustment and a temporary increase for 2025–2028 ($1,000 for single filers, $2,000 for joint filers).
Child Tax Credit:
The credit would increase from $2,000 to $2,500 per child and include a temporary enhancement for 2025–2028.
Qualified business income deduction (Sec. 199A):
The 20% deduction for qualified business income from pass-through entities is made permanent and increased to 23% for tax years after 2025.
Estate and gift tax exemption:
The increased exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation.
SALT deduction cap:
The state and local tax (SALT) deduction cap is increased to $40,000 per household with a $500,000 income cap.
Charitable deduction for non-itemizers:
A temporary above-the-line deduction for charitable contributions is reinstated for 2025–2028 ($150 for single filers, $300 for joint filers).
No tax on tips and overtime:
For 2025–2028, above-the-line deductions are created for qualified tips (in certain occupations) and for overtime premium pay, subject to income and occupation limitations.
Enhanced deduction for seniors:
For 2025–2028, a $4,000 deduction is available for seniors (age 65+) with income below $75,000 ($150,000 for joint filers).
Car loan interest deduction:
For 2025–2028, up to $10,000 of interest on loans for U.S.-assembled passenger vehicles may be deducted, subject to income phaseouts.
Moving expense deduction:
The bill permanently terminates the deduction except for Armed Forces.
Other deductions and credits:
The bill makes permanent or enhances several other deductions and credits, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits.
Business tax provisions
Bonus depreciation:
100% expensing (bonus depreciation) for qualified property is restored for property placed in service from Jan. 19, 2025, through Dec. 31, 2029.
Sec. 179 expensing:
The maximum amount a business may expense is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.
Research and experimental expenditures:
Allows full expensing of domestic R&D from Jan 1, 2025 through 2029; amortization resumes in 2030.
Business interest deduction:
For 2025–2029, the limitation is calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), rather than EBIT.
Low-Income Housing Tax Credit:
The 9% credit allocation is increased for 2026–2029, the bond-financing threshold for the 4% credit is lowered, and Indian and rural areas are designated as “difficult development areas.”
Opportunity zones:
A new round of opportunity zones is created for 2027–2033, with revised eligibility and incentives, including special rules for rural areas.
Clean energy and IRS credits:
The bill would terminate or phase out several clean energy credits from the Inflation Reduction Act (IRA).
What’s next?
The bill now moves to the Senate, where significant revisions are expected. As noted by Senate Finance Committee members, the upper chamber will not rubber-stamp the House version. We will monitor developments closely and provide updates as the legislative process unfolds.
We recommend reviewing your current tax strategy in light of these proposed changes. Our team is available to discuss how these provisions may impact your personal or business tax situation and to help you plan accordingly.
Please don’t hesitate to contact us with any questions or to schedule a consultation.
Key Tax Provisions Compared — Current Law vs. One Big Beautiful Bill Act
Individual key provisions
Tax provision
Current law (2025)
Proposed change (2025)
Individual income tax rates
Tax Cuts and Jobs Act (TCJA) rates (lowered rates) expire after 2025; rates revert to pre-TCJA levels
Makes TCJA rates permanent; inflation adjustment continues
Standard deduction
Increased standard deduction (TCJA) expires after 2025; reverts to lower pre-TCJA levels
Makes increased standard deduction permanent; adds temporary enhancement ($1,500 for joint filers, $1,000 for others) for 2025–2028
Personal exemptions
Suspended for 2018–2025; allowed in 2026
Permanently terminates deduction for personal exemptions
Child Tax Credit
$2,000 per child (TCJA), reverts to $1,000 after 2025
$2,500 per child for 2025–2028, $2,000 thereafter; inflation adjustments
Qualified Business Income Deduction (Sec. 199A)
20% deduction for passthrough income, expires after 2025
Makes deduction permanent; increases deduction to 23%; modifies phase-in rules for specified service businesses
Estate and gift tax exemption
$13.61 million (2024, inflation-adjusted); reverts to ~$5 million (indexed) after 2025
Increases exemption to $15 million (indexed from 2026); makes higher exemption permanent
Alternative Minimum Tax (AMT) exemption
Higher exemption and phase-out thresholds (TCJA) expire after 2025
Makes higher exemption and phase-out thresholds permanent
Mortgage interest deduction
$750,000 acquisition indebtedness limit (TCJA) expires after 2025
Makes $750,000 limit permanent
Casualty loss deduction
Limited to federally declared disasters (TCJA) through 2025
Makes limitation permanent
Miscellaneous itemized deductions
Suspended 2018–2025 (TCJA); returns in 2026
Permanently terminates deduction
Pease Limitation (itemized deductions phaseouts)
Reinstated after 2025
Replaces with new limitation: reduces itemized deductions by 2/37 of the lesser of itemized deductions or taxable income over the 37% bracket threshold
Moving expenses deduction
Suspended 2018–2025 (TCJA) (except for Armed Forces); returns in 2026
Permanently terminates deduction (except for Armed Forces)
Wagering losses
Limited to itemized deduction based on the amount of winnings through 2025
Makes limitation permanent
Charitable deduction for non-itemizers
Not available after 2021
Reinstates partial deduction: $150 ($300 joint) for 2025–2028
No tax on tips
Tips are taxable income
Allows deduction for qualified tips received in certain occupations (as defined by Treasury); deduction ends after 2028; SSN required
No tax on overtime
Overtime pay is taxable income
Allows deduction for qualified overtime compensation (excludes highly compensated employees and tips); deduction ends after 2028; SSN required
Enhanced deduction for seniors
Additional standard deduction for age 65+
Adds $4,000 bonus deduction for seniors (2025–2028), phased out at higher incomes
No tax on car loan interest
Personal interest on car loans not deductible
Allows deduction for up to $10,000 of interest on new car loans (2025–2028), must be US - assembled passenger vehicles
Adoption credit
Nonrefundable
Makes $5,000 of the credit refundable; inflation adjusted
529 plan qualified expenses
Limited to higher education and $10,000 K-12 tuition
Expands to include more K-12 and homeschool expenses, and postsecondary credentialing expenses
State and local tax (SALT) cap
$10,000 cap
$40,000 cap, with phaseout for income at $500,000
Excess business loss limitation
Expires after 2028
Made permanent; losses disallowed are carried forward as NOLs
Penalties for unauthorized disclosure
$5,000 fine, up to 5 years prison
Increases to $250,000 fine, up to 10 years prison
Direct File Program
IRS Direct File pilot in place
Terminates Direct File program; creates task force for public-private free file partnership
Energy credit key provisions
Tax provision
Current law (2025)
Proposed change (2025)
Sec. 25C, Energy Efficient Home Improvement Credit
30% of qualified costs, $1,200 annual limit, expires 2032
Terminates for property placed in service after Dec. 31, 2025
Sec. 25D, Residential Clean Energy Credit
30% of qualified costs, phases down after 2032, expires 2034
Terminates for property placed in service after Dec. 31, 2025
Sec. 25E, Previously-Owned Clean Vehicle Credit
Up to $4,000, expires 2032
Terminates for vehicles acquired after Dec. 31, 2025
Sec. 30C, Alternative Fuel Refueling Property Credit
30% of cost, up to $100,000, expires 2032
Terminates for property placed in service after Dec. 31, 2025
Sec. 30D, Clean Vehicle Credit
Up to $7,500 per new clean vehicle, expires 2032
Terminates for vehicles placed in service after Dec. 31, 2025; special rule for 2026 for manufacturers under 200,000 vehicles
Sec.45L, New Energy Efficient Home Credit
Up to $5,000 per home, expires 2032
Terminates for homes acquired after Dec. 31, 2025 (Dec. 31, 2026 if construction began before May 12, 2025)
Sec. 45W, Commercial Clean Vehicle Credit
Up to $40,000, expires 2032
Terminates for vehicles acquired after Dec. 31, 2025; exception for binding contracts before May 12, 2025
Sec. 45Y, Clean Electricity Production Credit
No expiration, based on beginning of construction
Phases out for facilities placed in service after 2028 (80% in 2029, 60% in 2030, 40% in 2031, 0% after 2031); transferability repealed for facilities beginning construction 2 years after enactment; new restrictions for foreign entities
Sec. 48E, Clean Electricity Investment Credit
No expiration, based on beginning of construction
Same phaseout as Sec. 45Y; transferability repealed; new foreign entity restrictions
Business key provisions
Tax provision
Current law (2025)
Proposed change (2025)
Employer-Provided Childcare Credit
25% of qualified expenses, up to $150,000
Increases to 40% (50% for small businesses); max credit $500,000 ($600,000 for small businesses); inflation adjusted
Paid Family and Medical Leave Credit
Temporary, expires after 2025
Extends and enhances credit; allows for insurance premiums; modifies aggregation and eligibility rules
Research and experimental (R&D) expensing
Amortization over 5 years for domestic R&D (TCJA change)
Allows full expensing of domestic R&D from January 1, 2025, through 2029; amortization resumes in 2030
Bonus depreciation
80% in 2023, phases down to 0% by 2027
Restores 100% bonus depreciation for property placed in service from January 19, 2025 through 2029
Business interest limitation (Sec. 163j)
Based on EBIT through 2021, then EBITDA
Returns to EBIT calculation for 2025–2029
FDII and GILTI deductions
37.5% (FDII) and 50% (GILTI) deductions
Reduces to 36.5% (FDII) and 49.2% (GILTI)
Charitable deduction for corporations
10% of taxable income
Adds 1% floor: only contributions above 1% of taxable income are deductible, up to 10% limit
Fringe benefits and unrelated business taxable income (UBTI) for not-for-profit entities
Certain fringe benefits not deductible
Increases unrelated business taxable income by amount of disallowed fringe benefits