Summarizing the One Big Beautiful Bill Act

On May 22, 2025, the House of Representatives passed the “One Big Beautiful Bill Act.” While this tax bill will be modified as it goes through the approval process in the Senate, below is a summary of the key provisions as they stand today.

As we gain more clarity on how the bill evolves and when (or if) it will be passed, we’ll provide updates. It’s important to note the bill still has significant hurdles to overcome and may need to start over completely if either (a) the Senate parliamentarian rules against the scoring methodology, or (b) the Senate makes significant changes to the bill or splits it into two (which has already been suggested).

Main points of the current bill for individuals

Income tax brackets

• Permanently extends the current lower tax brackets of the Tax Cut and Jobs Act (TCJA), which was originally set to expire at year-end

Estate Taxes

• Estate tax exclusion is permanently increased to $15M per person starting in 2026 and is inflation adjusted going forward

Standard deduction (from 2025 to 2028; phased out in 2029)

• Increased to $32,000 for married filing jointly (MFJ) and $16,000 for single filers (currently $30,000 and $15,000, respectively)
• If over the age of 65, there will be an additional standard deduction of $4,000 per person
  • Additional standard deduction for seniors phases out $75,000 to $175,000 for single filers, and $150,000 to $250,000 for joint filers
  • The additional 65+ standard deduction is available, whether they take the standard deduction or itemize

Itemized deductions

• Overall itemized deductions phase out for those in the 37% tax bracket. With the phase out, those in the 37% bracket will receive a lower (roughly 35%) effective tax deduction
• State and local tax deduction (SALT) – Increase the cap to $40,000 for MFJ – married filing jointly ($20,000 for MFS – married filing separately). Inflates at 1% per year from 2026 through 2033
  • Increase phases out for modified adjusted gross income (MAGI) in excess of $500,000 for MFJ ($250,000 for MFS)
  • The cap would phase down 30% of the excess until it reaches $10,000 for MFJ ($5,000 for MFS)
• Pass-through entity tax (PTET)
  • Disallow the ability of partnerships and S corporations not qualifying for the qualified business income (QBI) deduction to treat state PTET elections as deductions of the entity, beginning in tax year 2026

Qualified business income (QBI)

• QBI made permanent, with deduction increasing from 20% to 23%
• Eases the rules that limit the deduction for high-income taxpayers
• Top effective rate on qualifying income reduced from 29.6% to 28.5%

Child tax credit

• Makes permanent the $2,000 Child Tax Credit currently in place
• Temporarily increases the credit by $500 to $2,500 per child (phases out in 2029)

529 plans

• Expanded to include elementary, secondary, and home-schooling expenses such as expenses for curriculum materials, textbooks, instructional materials, online education materials, and standardized testing fees
• New expenses above, plus tuition, are still limited to $10,000 annually.
• Importantly the ability to use 529s for elementary, secondary, and home-schooling expenses varies by state

Charitable contributions

• Adds a tax credit of up to $5,000 for contributions to a charitable organization that provides K–12 scholarships. The organization must grant scholarships to elementary or secondary students making less than 300% of the area’s median gross income. This is only from 2026 to 2029.
• Adds a deduction for charitable contributions from 2025 through 2028 for those who do not itemize deductions, equal to $150 for single taxpayers and $300 for married couples

“Trump accounts”

• Creates a new tax-advantaged savings account available only for children under 8.
• Contribution limits are $5,000 per year, adjusted for inflation
• Amounts from “Trump accounts” may not be distributed to beneficiaries before they reach age 18. Amounts used for higher education, post-secondary career or apprenticeship credentialing, starting a small business, or the purchase of a principal residence are subject to capital gains tax rates that are generally lower than individual income tax rates
• A pilot program provides a $1,000 credit to Trump accounts for U.S. citizens born from 2025 through 2028

Miscellaneous

• Automobile loan interest – deduction for up to $10,000 of interest paid for car purchases starting 1/1/2025. Phases out in 2029 and only applies to autos assembled in the U.S. The deduction would phase out by $200 for every $1,000 of MAGI over the thresholds of $100,000 for single filers and $200,000 for joint filers. Completely phased out for single filers with over $149,000 of MAGI and joint filers with over $249,000 of MAGI.
• Phase out of individual “green” residential and vehicle incentives (e.g., clean energy tax credits) at the end of 2025
• No taxes on tips – captured as a deduction for income received as tips. Do not need to itemize to claim. Phases out in 2029
• No tax on overtime – captured as a deduction for income received as overtime. Do not need to itemize to claim. Phases out in 2029

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