“One Big Beautiful Bill” – Town Hall Summary (7.14.25)

Overview

The One Big Beautiful Bill Act is a comprehensive piece of legislation, over 930 pages long, signed into law by President Trump.

• Roughly one-third of the bill addresses tax policy.
• The remainder covers defense spending, infrastructure, Medicare, and Medicaid.

IRS Implementation & Regulation Process

• The IRS is tasked with interpreting the tax-related sections and converting them into code.
• These interpretations first take effect as temporary regulations, which can remain temporary indefinitely and are subject to revision.
• Until finalized, taxpayers may need to preserve the ability to amend returns by annually filing an extension form.

Key Tax Provisions Effective 2025

Individual Tax Changes

1. Standard Deduction Increases
• Married Filing Jointly: $31,500
• Single: $15,750
• Head of Household: $23,625
• Most taxpayers will continue to take the standard deduction due to high thresholds.
2. SALT Deduction Limit Raised
• From $10,000 to $40,000 for MFJ ($20,000 if MFS).
• Indexed to inflation beginning in 2026.
• Deduction phases out starting at:
• $500,000 taxable income
• $250,000 (MFS)
3. Vehicle Interest Deduction Reinstated
• Up to $10,000 deductible car loan interest on first lien debt incurred after 12/31/2024.
• Applies to personal vehicles only; excludes fleets and commercial vehicles.
• Income phaseouts begin at:
• $100,000 single / $200,000 joint
• Applies only to new vehicles or refinance of an existing car that was purchased new
• Vehicle must have:
• Gross vehicle weight rating under 14,000 lbs
• Final assembly in the U.S.

4. Overtime & Tip Income Exclusion
• Up to $12,500 ($25,000 MFJ) of overtime and $25,000 qualified tip income can be excluded from taxation.
• Phases out starting at:
• $150,000 single / $300,000 joint
• Not available for MFS.
• Applies only in specified tip-based industries.
• The IRS must publish a qualifying occupations list by October 2, 2025.
5. Child-Related Credits
• Child Tax Credit: Increased to $2,200 (with $1,400 refundable).
• Adoption Credit: Now partially refundable up to $5,000 if it exceeds tax liability.
6. Expanded Use of 529 Plans
• Now covers certification and exam prep (e.g., CPA exam), career credential programs, and continuing education.
7. Increased Deduction for Seniors
• Individuals 65 and older may qualify for an additional deduction:
• Up to $6,000 (or $12,000 MFJ if both are 65+).

Business Tax Changes

1. 100% Bonus Depreciation Restored
• Immediate expensing of qualifying assets with useful lives of 20 years or less.
2. Expanded Interest Expense Deductions
• Loosens prior restrictions to encourage investment and borrowing.
3. Qualified Business Income (QBI) Deduction
• The 20% QBI deduction is made permanent.
4. Research & Experimental (R&E) Expenses
• Amortization requirements rolled back.
• Businesses may deduct unamortized balances starting in 2025 over one or two years.
5. 1202 Stock Returns
• Favorable capital gains exclusions reinstated for C-corporations:
• 50% exclusion after 3 years
• 75% after 4 years
• 100% after 5 years (up to $75M gain)

Investments & Credits

1. Opportunity Zone Enhancements
• Deferred gains with potential full exclusion after 10 years.
• 10% basis bump per year, up to 5 years.
2. Ending of Certain Green Incentives
• EV tax credits and energy-efficiency residential credits phased out by late 2025 or mid-2026.

2026 & Estate Planning Updates

1. Estate & Gift Tax Exemption
• Increased to $15M per individual ($30M per married couple with portability).
• No portability for non-U.S. citizen spouses.
2. Mortgage Insurance Deduction
• Reinstated; now deducted as mortgage interest.
3. Elimination of Miscellaneous Itemized Deductions
• Tax prep, investment fees, job search costs, etc., are now permanently nondeductible.
4. Charitable Contribution Floors Introduced
• Minimum thresholds to deduct charitable contributions:
• Individuals: 0.5% of income
• Corporations: 1% (10% cap retained)
• Cash contributions up to $1,000 ($2,000 MFJ) deductible on personal return without itemizing.

Education & Family Benefits

1. Childcare FSA (DCAP) Limit Increased
• Payroll deduction up to $7,500 ($3,750 MFS)
• Childcare credit increased to 50%, phases out at $150,000 joint
2. Student Loan Assistance
• Employer-paid loans up to $5,250 are not taxable to the employee.
3. 529 Enhancements
• Up to $20,000 can be used for pre-college education, including religious schools.

New Provisions: The “Trump Account”

A new tax-deferred investment account for children under 18, with strict rules:

• $5,000 annual contribution limit
• No deductions; taxable on withdrawal above basis
• $1,000 government contribution for babies born 2025–2028
• Employer contributions allowed (up to $2,500, part of $5,000 limit)