The potential income tax changes of the One Big Beautiful Bill Act are a subject of curiosity for many Americans. Here are the points we believe will have the most impact.
Extension of TCJA 2017 tax rates
The Bill would make permanent the lower tax rates that were initially put into place by the Tax Cuts and Job Act of 2017. This is favorable for taxpayers, especially those in the highest tax bracket.
Increased standard deduction
The standard deduction is the amount by which your taxable income is reduced when you file your taxes. The standard deduction for 2025 is $6,500 for single people and $13,000 for households who claim Married Filing Jointly. Under this Bill, the standard deduction would increase to $12,000 and $24,000, respectively (Forbes, 2025).
SALT taxpayer relief
Under the Bill, Americans would be able to deduct up to $40,000 of their state and local tax payments. Currently, taxpayers are only able to deduct $10,000 of the state income, property, and sales taxes. This benefit phases out for households that earn more than $500,000.
$4,000 deduction for seniors 65 years or older
There is an additional $4,000 that will be added to the standard deduction for seniors over age 65. You must meet certain income limits in order to qualify for this additional deduction.
Increased QBI deduction
Another proposed change is for the deduction for Qualified Business Income (QBI) to be raised from 20% to 23% indefinitely. This means the self-employed and small business owners would be able to deduct more of their net income when they file their tax return. It also may have beneficial effects from receiving income from certain Real Estate Investment Trusts or Publicly Traded Partnerships.
Increased AMT exemption
The Alternative Minimum Tax, or AMT, was established decades ago to limit exemptions so that high income earners don’t receive preferable tax treatment. However, due to inflation’s effect over time, middle-income earners started being subject to this charge. The Bill would increase the exemption amount and reduce the number of taxpayers liable for AMT.
“Trump accounts”
Children born between 2025 and 2029 will receive a $1,000 credit to a Treasury-funded “Trump Account”, to be used for specific purposes such as starting a business or paying for college. These accounts received favorable tax treatment, with earnings growing on a tax-deferred basis, and withdrawals (after age 18) assessed at the long-term capital gains rate.
How it may impact you
While most of the proposed tax changes under the Big Beautiful Bill appear to work in the taxpayer’s favor, please note that these are proposed changes, not actual. The changes will not take effect until what has been proposed is put into code, and the date of confirmation is not specified. Nothing here may be interpreted as a statement of fact or a recommendation that applies to any one particular person or situation.
Regardless of what happens with the Big Beautiful Bill, tax planning is an important part of your financial life. Your investments, your family’s disposable income, and your business or job are impacted heavily by the decisions you make regarding your tax status. If you would like to review your personal situation with us, please send us a note.
-Judd
Sources
McGhee, Cindy, CPA. 31 March, 2025. Forbes. The Big Beautiful Bill Moves Forward: A First Look At 10 Key Tax Cuts.