One, Big, Beautiful Bill Advances to the Next Stage

By: William L. Bricker, Linda Galler, Juliya L. Ismailov, and Matthew Crawford

President Trump’s much anticipated “One, Big, Beautiful Bill” is progressing through the early stages of the legislative process. The text of a bill was approved by the House Committee on Ways and Means early Wednesday morning. The bill now goes to the House Budget Committee, where it will be combined with provisions from other House committees.

The following is a summary of several material tax proposals extending or making permanent the provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”) enacted during President Trump’s first presidency.

The proposals are subject to change as the bill advances through the legislative process.

Effective as of January 1, 2026:

• Increase of Estate and Gift Tax (and GST Tax) Exemption: Permanent increase of the unified estate and gift tax exemption to $15 million in 2026, with inflation adjustments thereafter.

• Increase of QBI Deduction: Making permanent the deduction for qualified business income (income from certain partnerships and S corporations), increasing from 20% to 23% the deductible amount for each qualified trade or business, and eliminating the limitation for specified service trades or businesses (e.g. law, accounting, architecture, medicine, etc.).

• Extension of Income Tax Rates: Making permanent the current income tax rate structure for individuals, estates and trusts, and adding an additional year of inflation adjustment to all brackets except the top bracket (37%) resulting in larger tax brackets. 

• Increase of SALT Deduction: Increase to $30,000 (from $10,000) the maximum allowable deduction for state and local taxes, with phase outs for incomes over $400,000 ($200,000 for married taxpayers filing separately); phases out may not reduce deduction below $10,000 ($5,000 for married taxpayers filing separately).

• Limitation on Itemized Deductions: Permanent reduction of the tax benefit of itemized deductions (generally by 2/37 of otherwise deductible amounts).

• Personal Exemption: Permanent repeal of the deduction for personal exemptions.

• Miscellaneous Itemized Deductions: Permanent repeal of miscellaneous itemized deductions.

• Qualified Residence Interest Deduction: Making permanent the $750,000 limitation on the itemized deduction for interest on acquisition indebtedness and the $100,000 limitation on the itemized deduction for interest on home equity indebtedness.

Effective retroactively as of January 1, 2025:

• Increase of Standard Deduction: Permanent increase of the standard deduction, with inflation adjustments, and a temporary $1,000-$1,500 increase for tax years 2025-28.

• Child Tax Credit Increase: Temporary increase of child tax credit to $2,500 for 2025-2028.

In addition, the bill includes the following two items, which have been widely reported in the media:

• No Tax on Tips: A deduction equal to the amount of qualified tips received during the taxable year that are included in federal tax forms W-2, 1099, or 4317, for tax years 2025-2028.

• No Tax on Overtime: A deduction equal to the amount of qualified overtime compensation received during the taxable year, for tax years 2025-2028.