New Understanding "The Big Beautiful Bill": Key Tax Changes Every Taxpayer Should KnowPost

Understanding "The Big Beautiful Bill": Key Tax Changes Every Taxpayer Should Know

The U.S. House of Representatives made headlines in May 2025 when it narrowly passed what President Trump has dubbed "The Big Beautiful Bill" — officially known as the One Big Beautiful Bill Act (H.R. 1). This sweeping legislation passed by a razor-thin margin of 215-214 votes on May 22, 2025, and now heads to the Senate for consideration. As your trusted tax professional, I want to help you understand what this comprehensive bill could mean for your tax situation.

What is "The Big Beautiful Bill"?

The One Big Beautiful Bill represents President Trump's effort to make permanent the successful 2017 Trump tax cuts and includes critical pro-growth policies while addressing various aspects of fiscal policy, from tax relief to spending programs. The 1,100-page bill would extend corporate and individual tax cuts passed in 2017 during Trump's first term in office and fulfill several campaign promises made during the 2024 election.

Key Tax Provisions That Could Affect You

Individual Tax Relief
Permanent Extension of 2017 Tax Cuts: The bill makes the 2017 Trump tax cuts permanent, protecting the average taxpayer from a 22 percent tax hike and saving the average American family from a $1,700 tax hike.

Child Tax Credit Enhancement: There is a temporary $500 increase in the child tax credit, bringing it to $2,500 for 2025 through 2028, after which it returns to $2,000 and will increase to account for inflation.

Popular Campaign Promise Provisions (Temporary)
Several high-profile tax breaks promised during the campaign would be temporary:

No Tax on Tips: Tax relief for service industry workers on tips earned
No Tax on Overtime: No taxes on overtime earned between 2026 and 2028
Car Loan Interest Deduction: Americans could deduct interest on car loans — but only if the car is made in the U.S.
The no tax on tips and overtime provisions exclude "highly compensated employees" who fall above certain thresholds and were also recently revised to include gig economy workers.

Important Note: Many of these politically popular but costly provisions are set to expire in 2029.

Senior Tax Relief
To deliver on Trump's pledge not to tax Social Security benefits, the bill would allow for an extra $4,000 deduction for people over the age of 65, but it phases out for people at higher incomes.

State and Local Tax (SALT) Deduction Changes
One of the most contentious issues for taxpayers in high-tax states has been resolved: The bill increases the "SALT" cap to $40,000 for incomes up to $500,000, with the cap phasing downward for those with higher incomes. The cap and income threshold will increase 1% annually over 10 years.

Estate Tax Relief
The estate tax exemption rises to $15 million and is adjusted for inflation going forward, providing significant relief for families with substantial assets.

Business Tax Provisions
Small Business Benefits
The bill expands the 199A small business deduction to 23 percent and makes the deduction permanent. This is particularly significant for pass-through entities like S corporations and partnerships.

Equipment and Investment Incentives
The legislation renews 100 percent immediate expensing for equipment and machinery, 100 percent immediate expensing for research & development in the U.S., and supports the expansion of new production factories. The bill also has new provisions allowing a 100% expensing deduction for new factories and updates to existing factories.

What Happens Next?
The fate of legislation to enact President Trump's domestic policy agenda moves to the GOP-controlled Senate this week, where a handful of Republican spending hawks are criticizing the price tag. Several senators said they would seek substantial changes over what is likely to be weeks of debate.

The sweeping plan is moving through Congress under a budget process known as reconciliation, which allows Senate Republicans to pass legislation through the 100-member chamber with a simple majority.

Financial Impact Considerations
The package will add about $3.8 trillion to the federal government's $36.2 trillion in debt over the next decade, according to the nonpartisan Congressional Budget Office. This significant fiscal impact has led to some Republican senators expressing concerns about the bill's current form.

What This Means for Your Tax Planning
While the bill's final form remains uncertain as it moves through the Senate, taxpayers should be aware of several key considerations:

Timing Matters: Many provisions are temporary, requiring careful long-term tax planning
Income Thresholds: Several benefits phase out at higher income levels
Business Structure: The enhanced 199A deduction could influence business entity decisions
Estate Planning: Higher exemptions may affect estate planning strategies

Given the complexity and potential changes ahead, we strongly recommend consulting with qualified tax professionals to understand how these proposed changes might affect your specific situation. Tax law changes of this magnitude require careful analysis and strategic planning.

At Bloom Financial Group, we're closely monitoring developments with this legislation and will keep our clients informed as the Senate considers the bill. Our team is prepared to help you navigate any changes that become law and ensure you're positioned to take advantage of available tax benefits.

Contact Bloom Financial Group today to discuss how potential tax changes might affect you. Our experienced team of tax professionals is here to help you navigate the evolving tax landscape.