The House of Representatives Ways and Means Committee released their much-anticipated tax bill – “The One, Big, Beautiful Bill” – on May 12, 2025.
Many of the proposed changes appear aimed at middle-class and small business relief, while also offering expanded business deductions.
The bill could change substantially before it is signed into law. Stay tuned for updates as it advances through the Budget Committee, The House and Senate.
Some of the key tax proposals are highlighted below:
Individual provisions:
- Increase SALT deduction cap from $10,000 to $30,000 for MFJ and $15,000 for single filers. The increased deduction would start phasing out for households earning more than $400,000 ($200,000 for singles) until it reaches $10,000 for MFJ or $5,000 for single.
- Limit the use of passthrough entity taxes (PTET) to avoid the SALT cap.
- Temporarily raising the child tax credit from $2,000 to $2,500.
- Increase the estate tax exemption for 2026 to $15 million from $13.6 million
- No tax on tips and overtime, above the line deduction to be allowed.
- Car loan interest would now be deductible up to $10,000 subject to AGI and other limitations.
- Disallowed Excess Business Loss (EBLs) after 2024 will re-enter the Sec. 461(l) calculation annually and not be carried forward as NOLs.
- Repeal most of the energy credits from the Inflation Reduction Act.
Business provisions:
- Permanent increase to the Qualified Business Income Deduction (199A) from 20% to 23% for qualifying business income. Owners of specified service trade or business (SSTB) may benefit from an increased phase-out limitation.
- Suspend the requirement to capitalize and amortize domestic R & E expenditure ratably over a 5-year period for expenses paid or incurred in tax year beginning after December 31, 2024, and before January 1, 2030.
- Reinstate the EBITDA limitation under Sec. 163(j) for tax years beginning after December 31, 2024, and before January 1, 2030.
- 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025, and before January 1, 2030.
- 100% depreciation allowance on certain US facilities that produce tangible personal property subject to certain requirements.
- Increase section 179 deduction to $2,500,000 from $1,250,000 with increased the phaseout threshold amount to $4 million.
- Retroactively terminate the Employee Retention Tax Credit (ERC) for taxpayers who filed refund claims after January 31, 2024.
- Increase the small taxpayer gross receipts threshold for using the cash method of accounting and calculating the application of IRC163(j), IRC 263(A) from $31 million in 2025 to $80 million for tax years beginning after December 31, 2025, for manufacturing taxpayers.
- Authorize a new round of Opportunity Zone designations, starting on January 1, 2027, and ending on December 31, 2033
International provisions:
- 50% GILTI and 37.5% FDII deduction to be made permanent.
- 10% BEAT rate would be made permanent.
- Repeal of 20% FTC “haircut” for GILTI taxes. Currently only 80% of the foreign tax paid can be used as credit, the bill would change that to 100%.
As always, if you have any questions regarding the above update, please contact your SAX Advisor.