The Expected Tax Implications of the “One Big Beautiful Bill”

On May 22, 2025, the U.S. House of Representatives passed H.R. 1, colloquially referred to as the “One Big Beautiful Bill Act.” The bill is over 150,000 words in length and will almost certainly undergo substantial changes before reaching the President’s desk, but its text provides us with valuable insight into Congress’s objectives regarding upcoming tax law changes.   

While the majority of the regulatory context pertains to the permanent ratification of changes made under the “Tax Cuts and Jobs Act,” there are also new provisions and tax implications that will have a substantial impact on many taxpayers.  

Permanent TCJA Ratifications  

The following TCJA provisions set to expire at the end of 2025 would be permanently ratified:  

• Reduced individual tax bracket rates (maximum 37% relative to previous 39.4%)  
• Elimination of personal exemptions & miscellaneous itemized deduction  
• Limitations on casualty losses and mortgage interest deduction  
• Increased standard deduction relative to pre-TCJA  
• State-and-local-tax deduction limitation (though the cap would be raised from $10,000 to 30,000)  
• Increased child tax credit (with additional language to increase this credit over future years)  
• Increased lifetime estate tax exclusion  
• Qualified business income deductions, but with a 3% allowance increase  

New Individual Tax Provisions  

In addition to the ratifications above, H.R. 1 also introduces the following new individual tax provisions:  

• A limited below-the-line deduction for tips with a maximum income threshold, set to expire after 2028  
• A limited deduction for overtime pay, set to expire after 2028  
• An allowable deduction for automobile loan interest, set to expire after 2028  
• Changes to tax-advantaged savings plans  
• A limited allowance for charitable contribution deductions, regardless of itemization  

Business and Energy Credit Changes  

Finally, speaking to businesses and energy credits, the bill proposes the following changes:  

• Reinstatement of 100% bonus depreciation through 2029  
• Reinstatement of R&D expensing for domestic costs through 2029  
• Increase to 179 deduction limitations after 2024   
• Termination of clean vehicle credits, alternative fuel credits, & energy efficient home credits  

Initial Takeaways and Tax Implications 

The overarching theme of the above changes is a continued shift away from direct income taxation in the federal government’s funding methods, as well as a renewed focus on immediate deductions and tax-advantaged opportunities.   

The Tax Foundation is an independent nonprofit organization that conducts economic research; it expects H.R. 1, as it currently exists, to reduce federal tax revenue by $3.2-$4.1 trillion over the next decade. The federal government is expected to generate revenue by cutting other programs in exchange for the tax provisions listed above, which are generally favorable to all individual and business tax filers.  

Work with Maner on a Tax Strategy for 2025 and Beyond  

As mentioned earlier, this is only a “first draft” of the bill, and there are likely to be many changes and edits made before anything is signed into law. However, we can begin to pull insights from the themes and overall direction of future tax legislation, allowing us to start thinking through tax strategies.  

If you have any questions about how to start preparing your business for next year’s filing season or want to discuss some of the provisions or tax implications introduced in the “One Big Beautiful Bill,” then reach out to Maner’s tax team by emailing us at maner@manercpa.com. We can help you understand what is being discussed and what steps you can take to prepare for the future. 

https://taxfoundation.org/research/all/federal/big-beautiful-bill-house-gop-tax-plan/