On May 22, the House Republicans passed the One Big Beautiful Bill Act (H.R. 1, also known as the \u201cBill\u201d). While the Senate committees give their input and changes, time allows us to analyze which expiring Tax Cuts and Jobs Act (TCJA) provisions are extended in the House\u2019s bill and which elements from President Trump\u2019s campaign platform are relevant. The bill impacts sixty-six changes to the current tax Code.<\/p>\n
Key Components of the Bill<\/h3>\n
Here\u2019s a breakdown of what\u2019s included and how it aligns with expectations:<\/p>\n
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TCJA Extension (As Expected)<\/strong>
The bill makes the individual tax rate cuts permanent, retains the increased standard deduction, maintains the repeal of personal exemptions, extends the Alternative Minimum Tax (AMT) exemption increase, and continues enhancements to the child tax credit. It also extends limits for mortgage interest deduction, casualty losses, and miscellaneous expenses.<\/p>\n<\/li>\n- \n
Corporate Tax Rate Unchanged<\/strong>
Despite prior campaign discussion of lowering the corporate tax rate to 15%, the bill does not propose a change from the current 21%.<\/p>\n<\/li>\n- \n
Pass-Through Deduction Increased<\/strong>
The bill includes the Section 199A Qualified Business Income (QBI) deduction, increasing permanently from 20% to 23%.<\/p>\n<\/li>\n- \n
SALT Deduction Modified as Expected<\/strong>
The bill raises the State and Local Tax (SALT) deduction cap as anticipated from $10,000 to $40,000, with a phaseout beginning at $500,000 of income. This proposal faces strong pushback from the GOP\u2019s SALT caucus, mainly representatives from high-tax states like New York. Notably, Alabama\u2019s Pass-Through Entity (PTE) tax election, which allows pass-through entities to bypass the SALT cap by paying state income tax at the entity level, remains unaffected by this change.<\/p>\n<\/li>\n- \n
Family & Education Tax Benefits (Extended with Tweaks)<\/strong><\/p>\n
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The enhanced child tax credit would be $2,500 from 2025\u20132028, then revert to $2,000. The bill includes a refundable portion and requires a Social Security number.<\/p>\n<\/li>\n
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The saver\u2019s credit and ABLE account contributions are expanded past the 2025 expiration date.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n
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Retirement Incentives (Partially Addressed)<\/strong>
No changes to IRA or 401(k) limits are proposed, but the bill introduces a $4,000 senior bonus deduction, phasing out above $75,000 in income before 2028. Broader retirement provisions may appear in future drafts.<\/p>\n<\/li>\n- \n
International Tax Modifications<\/strong>
Lowers the preferential rates on GILTI and FDII.<\/p>\n<\/li>\n- \n
R&D Expensing Reinstated<\/strong>
As anticipated, the bill restores full expensing of domestic research and development (R&D) costs through 2030.<\/p>\n<\/li>\n- \n
Estate and Gift Tax Exemption Increased<\/strong>
The exemption is raised to $15 million starting in 2026 (from $5 million, inflation-adjusted), aligning with prior expectations.<\/p>\n<\/li>\n<\/ol>\nAdditional Provisions from Trump\u2019s Campaign Included<\/h3>\n
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No tax on tips:<\/strong> A deduction for cash tips in traditionally tipped occupations (e.g., food service, salons) before 2028, with strict documentation requirements.<\/p>\n<\/li>\n
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Overtime deduction:<\/strong> Overtime pay becomes deductible, excluding high earners and owners before 2028.<\/p>\n<\/li>\n
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Senior tax relief:<\/strong> A $4,000 enhanced bonus deduction for seniors (as mentioned above), phasing out at $75,000 income.<\/p>\n<\/li>\n
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Auto loan interest deduction:<\/strong> Creates a deduction for interest paid on qualifying car loans on personal-use vehicles assembled in the U.S. before 2028.<\/p>\n<\/li>\n<\/ul>\n
Notable Policy Repeal<\/h3>\n
Several clean energy provisions from the Inflation Reduction Act (IRA) are repealed or phased out.<\/p>\n
Final Thoughts<\/h3>\n
The House bill checks off many expected items: TCJA extensions, expanded business incentives, and campaign-driven deductions aimed at middle-income voters.<\/p>\n<\/p><\/div>\n
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