Trump Signs Sweeping One, Big, Beautiful Bill Act Into Law

Key Changes Affecting Individuals

• Makes permanent the TCJA’s individual tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%

• Makes permanent the near doubling of the standard deduction. For 2025, the standard deduction increases to $15,750 for single filers, $23,625 for heads of households and $31,500 for joint filers, with annual inflation adjustments going forward

• Makes permanent the elimination of personal exemptions

• Permanently increases the child tax credit to $2,200, with annual inflation adjustments going forward

• Temporarily increases the limit on the deduction for state and local taxes (the SALT cap) to $40,000, with a 1% increase each year through 2029, after which the $10,000 limit will return

• Permanently reduces the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers) but includes mortgage insurance premiums as deductible interest

• Permanently eliminates the deduction for interest on home equity debt

• Permanently limits the personal casualty deduction for losses resulting from federally declared disasters and certain state declared disasters

• Permanently eliminates miscellaneous itemized deductions except for unreimbursed educator expenses

• Permanently eliminates the moving expense deduction (with an exception for members of the military and their families in certain circumstances)

• Expands the allowable expenses that can be paid with tax-free Section 529 plan distributions

• Makes permanent the TCJA’s increased individual alternative minimum tax (AMT) exemption amounts

• Permanently increases the federal gift and estate tax exemption amount to $15 million for individuals and $30 million for married couples beginning in 2026, with annual inflation adjustments going forward

• For 2025–2028, creates an above-the-line deduction (meaning it’s available regardless of whether a taxpayer itemizes deductions) of up to $25,000 for tip income in certain industries, with income-based phaseouts (payroll taxes still apply)

• For 2025–2028, creates an above-the-line deduction of up to $12,500 for single filers or $25,000 for joint filers for qualified overtime pay, with income-based phaseouts (payroll taxes still apply)

• For 2025–2028, creates an above-the-line deduction of up to $10,000 for qualified passenger vehicle loan interest on the purchase of certain American-made vehicles, with income-based phaseouts

• For 2025–2028, creates a bonus deduction of up to $6,000 for taxpayers age 65 or older, with income-based phaseouts

• Limits itemized deductions for taxpayers in the top 37% income bracket, beginning in 2026

• Establishes tax-favored “Trump Accounts,” which will provide eligible newborns with $1,000 in seed money, beginning in 2026

• Makes the adoption tax credit partially refundable up to $5,000, with annual inflation adjustments (no carryforwards allowed)

• Eliminates several clean energy tax credits, generally after 2025, including the clean vehicle, energy-efficient home improvement and residential clean energy credits

• Permanently eliminates the qualified bicycle commuting reimbursement exclusion

• Restricts eligibility for the Affordable Care Act’s premium tax credits

• Creates a permanent charitable contribution deduction for non-itemizers of up to $1,000 for single filers and $2,000 for joint filers, beginning in 2026

• Imposes a 0.5% floor on charitable contributions for itemizers, beginning in 2026

Key Changes Affecting Businesses

• Makes permanent and expands the 20% qualified business income (QBI) deduction for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships

• Makes permanent 100% bonus depreciation for the cost of qualified new and used assets, for property acquired after January 19, 2025

• Creates a 100% deduction for the cost of “qualified production property” for qualified property placed into service after July 4, 2025, and before 2031

• Increases the Sec. 179 expensing limit to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with annual inflation adjustments going forward

• Increases the cap on the business interest deduction by excluding depreciation, amortization and depletion from the calculation of “adjusted taxable income”

• Permanently allows the immediate deduction of domestic research and experimentation expenses (retroactive to 2022 for eligible small businesses)

• Makes permanent the excess business loss limit

• Prohibits the IRS from issuing refunds for certain Employee Retention Tax Credit claims that were filed after January 31, 2024

• Eliminates clean energy tax incentives, including the qualified commercial clean vehicle credit, the alternative fuel vehicle refueling property credit and the Sec. 179D deduction for energy-efficient commercial buildings

• Permanently renews and enhances the Qualified Opportunity Zone program

• Permanently extends the New Markets Tax Credit

• Permanently increases the maximum employer-provided child care credit to $500,000 ($600,000 for small businesses), with annual inflation adjustments

• Makes permanent and modifies the employer credit for paid family and medical leave

• Makes permanent the exclusion for employer payments of student loans, with annual inflation adjustments to the maximum exclusion beginning in 2027

• Makes permanent the foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) deductions and the minimum base erosion and anti-abuse tax (BEAT)

• Expands the qualified small business stock gain exclusion for stock issued after the date of enactment

CSH Insight: Navigating the One, Big, Beautiful Bill Act