In May 2025, the House of Representatives narrowly passed the “One Big Beautiful Bill” — a sweeping tax and budget package building on the 2017 Tax Cuts and Jobs Act (TCJA). The bill extends expiring provisions, cuts taxes for families and businesses, and rolls back several clean energy credits and pandemic-era programs. It now heads to the Senate, where changes are possible.
If you’re a high-net-worth individual, retiree, or business owner, here’s what you need to know — and the moves to consider.
Key Provisions That May Affect You
āļø Permanent Lower Tax Rates
The bill extends the lower TCJA individual income tax brackets — keeping the top rate at 37% (instead of rising to 39.6% in 2026), with all rates indexed for inflation.
š Action Item: Run multi-year income projections and consider Roth conversions or income acceleration under lower rates.
āļø Increased Standard Deduction
The higher TCJA standard deduction ($27,700 for 2023 joint filers, indexed) is made permanent. The House version keeps it in place for 2026 and beyond, though the dollar amount is adjusted for inflation.
š Action Item: Itemizers should consider bunching deductions in 2025 or using donor-advised funds while the higher threshold lasts.
āļø Enhanced Child Tax Credit
The Child Tax Credit remains at $2,000, but with an increase to $2,500 per child through 2028 (not permanent). Social Security number requirements for parents continue, and the higher phase-out thresholds stay in place.
š Action Item: Confirm eligibility if you have minor dependents — especially for business owners with fluctuating income.
āļø Qualified Business Income (QBI) Deduction Made Permanent
The popular 20% deduction for pass-through business income (S corps, partnerships, some LLCs) is permanently extended. However, the rate is not increased to 23% in the House-passed version — it stays at 20%.
š Action Item: Review your business structure to ensure you maximize the deduction under current rules.
āļø Estate Tax Exemption Doubled and Indexed
The estate, gift, and GST tax exemption is permanently set at roughly double pre-TCJA levels (projected at $13.61M per individual for 2026, indexed), with no “clawback.” The House bill does NOT raise it to $15M/$30Mbut locks in current law.
š Action Item: Revisit gifting and trust strategies. If you expected the exemption to drop in 2026, you may have more planning flexibility.
āļø No Federal Tax on Tips and Overtime (with Caps)
Tips and qualified overtime wages (within limits) are made non-taxable for federal income tax purposes, starting in 2026. Annual caps apply and IRS reporting rules will be clarified.
š Action Item: Service businesses and families with teens or wage earners should review withholding and payroll compliance.
āļø $4,000 Senior Deduction (Temporary)
Taxpayers age 65+ with AGI under $75,000 ($150,000 joint) can claim a $4,000 additional deduction above the standard deduction for 2025–2028.
š Action Item: Model your retirement income, especially if you have IRA withdrawals or Social Security.
āļø Restoration of Bonus Depreciation to 100%
Businesses can fully expense (100%) qualifying equipment and property through 2029. After that, the bonus depreciation phases out.
š Action Item: Consider accelerating large business purchases in 2025–2029 to maximize deductions.
āļø Opportunity Zones Rebooted (“OZ 2.0”)
The bill authorizes a new wave of Opportunity Zones starting in 2027, with improved incentives for investments in rural and distressed communities, including a basis step-up for rural OZs.
š Action Item: If facing major capital gains, review updated OZ maps and consult on fund options.
āļø MAGA Accounts for Children (Pilot Program)
The bill introduces “MAGA accounts” for children under 8 — tax-advantaged savings vehicles with $5,000/year contribution limits and a federal matching pilot for newborns, subject to income caps.
š Action Item: Grandparents and parents with young kids should explore these accounts as long-term savings or gifting tools.
Other Key Elements
āļø Repeal of “Green” Credits:Multiple clean energy credits, including the EV credit and some home energy incentives, are eliminated or phased out.
āļø No Tax on Car Loan Interest:Up to $5,000/year in car loan interest becomes deductible for middle-income taxpayers.
āļø Stricter Limits on SALT Deductions:State and local tax (SALT) deduction limitations are extended.
āļø Expanded 529 Account Use:Additional K-12 and workforce training expenses are now 529-eligible.
Need Help Adjusting Your Strategy?
At Beacon Private Wealth, we’re helping clients navigate what’s proposed — and what’s likely. If your financial plan assumes a major tax increase in 2026, you may have more time than you thought — or not.
š Schedule a strategy call todayto walk through your situation.