‘The One, Big, Beautiful Bill’: Breaking Down Trump’s New Tax Agenda

Recently, the House Ways & Means Committee released the details of ‘The One, Big, Beautiful Bill’, a piece of proposed legislation that President Trump has boasted to contain the largest tax cuts in American history. Estimated to increase the fiscal deficit by $3.7 trillion over the next 10 years, the new legislation aims to permanently enshrine many of the provisions of the Tax Cuts and Jobs Act (TCJA) passed during Trump’s first term in 2017 that were set to expire this year, while also introducing further reforms. This article outlines the changes proposed in ‘The One, Big, Beautiful Bill’ that will impact individuals, businesses, and estate planning.

Tax changes for individuals

While it was the Tax Cuts and Jobs Act that first introduced the following points in 2017, meaning that there will be no noticeable difference on the tax return, the ‘One, Big, Beautiful Bill’ prevents the following provisions from expiring in 2025, with a few additional tweaks:

• Lower personal tax rates – The TCJA lowered personal tax rates temporarily and this new bill ensures these lower rates are now permanent. This is an effective tax cut for all taxpayers outside of the top bracket of 37%, after accounting for inflation.
• Increases to the standard deduction – The TCJA also increased the standard deduction, while the new bill plans for a further increase by $1,500 through to 2028.
  • New proposals also include an increase in the additional standard deduction by $4,000 for seniors over the age of 65 until 2028
• No personal exemption, less itemized deductions – Smaller deductions have effectively been rolled into the standard deduction since the TCJA was passed.
• Increased child tax credit – The new bill expands on previous increases to the child tax credit, with the credit being further enhanced to $2,500 per child until 2028.
• Reduced impact of the Alternative Minimum Tax (AMT) – The increased exemption amount and higher income thresholds for the exemption’s phasing out will be made permanent, preventing many middle, and upper-middle income households from being caught by AMT.
• Increased State & Local Taxes (SALT) cap – The TCJA introduced a $10,000 cap on the amount of state and local taxes that could be deducted from your federal tax bill – known as the SALT cap. The new bill proposes to increase this cap to $30,000, with this being whittled down to $10,000 at a rate of 20% for household earning over $400,000, or single filers earning over $200,000.
  • This is thought to be the most contentious issue in the bill, with House Republicans from high tax states like New York, New Jersey and California pushing for the SALT cap to be raised even higher.
• Pass-Through Entity Tax (PTET) elections – Owners of Partnerships & S-Corps can no longer use state-level PTET elections to work around the SALT cap.

There are also some initiatives separate to those from TCJA outlined in the bill that impact individual taxpayers:

• Tips and overtime pay – An income tax deduction to be introduced to offset tip and overtime compensation received for lower earners until 2028.
• MAGA Accounts – Money Accounts for Growth & Advancement (MAGA) accounts offer tax incentives for spending on education for children under 8 years old, small business investments and purchases of a first home. The treasury has also promised a one-time $1,000 deposit into these accounts for children born between December 31st 2024 and January 1st
• Deductible car loan interest – Taxpayers will be able to deduct interest on loans to buy vehicles that have been assembled in the U.S. This will be phased out for households earning over $200,000, or single filers earning over $100,000.
• Removal of green tax subsidies – The Inflation Reduction Act penned by President Biden in 2022 introduced credits for electric vehicles and other clean energy forms, which are due to be repealed by the new bill.

The bill also mentions the US will address certain unfair taxes that foreign governments assess on certain US persons or foreign entities owned by US persons without providing any further details. Crucially there has been no mention regarding a shift towards a resident-based tax system as opposed to the citizen-based approach currently used.

Tax changes for businesses

Just as ‘The One, Big, Beautiful Bill’ makes many of the TCJA’s changes permanent for individuals, it also solidifies several of the TCJA’s provisions for businesses.

• Bonus Depreciation – The TCJA allowed businesses to deduct 100% of the cost of qualifying assets from their tax bill until 2022, before a gradual yearly phase out. The new bill proposes to reinstate the 100% deduction until 2029.
• Business Interest – The TCJA changed business interest expense calculations, allowing deductions based on a formula similar to EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization). However, this expired in 2022 and since a stricter, EBIT-style calculation has been used, restricting the deductions available for business interest. The new legislation advocates for a return to the more favourable EBITDA-type calculation.
• Domestic Research & Development (R&D) credits – The proposed bill looks to reinstate immediate expensing on R&D spending until 2029.
• Qualified Business Income (QBI) deduction – The TCJA introduced a 20% QBI deduction, which this bill looks to increase to 23%.

The TCJA also introduced three U.S. international tax rates for businesses that the new bill promises to make permanent:

1. Global Intangible Low-taxed Income (GILTI) – A tax on certain foreign earnings of U.S. companies, designed to prevent them from shifting profits to low-tax jurisdictions.
2. Foreign Derived Intangible Income (FDII) – A tax incentive encouraging U.S. companies to keep intellectual property and profits in the U.S.
3. Base Erosion & Anti-abuse Tax (BEAT) – A minimum tax targeting large U.S. corporations making deductible payments to foreign affiliates, aiming to prevent profit shifting out of the U.S.

Separately to the TCJA, and similarly to the individual provisions, ‘The One, Big, Beautiful Bill’ also begins to phase out many of the clean energy incentives introduced by the Biden administration.

Tax changes for estates

The TCJA significantly increased the lifetime gift and estate tax exemption from $5.49 million in 2017 to $11.18 million in 2018. Following yearly inflation adjustments, this amount reached $13.61 million in 2024, but was due to expire in 2025, returning to pre-TCJA levels.

‘The One, Big, Beautiful Bill’ ensures that the increase in gift and estate tax exemption is permanent, with the amount due to rise to $15 million in 2026 after accounting for inflation.

The Path to Passing the Bill

Having progressed through the Ways and Means Committee, the bill now heads to the House Budget Committee to check the budget implications, before the House Rules Committee decides on the parameters of the debate.

The bill will then be debated on the floor of the house, as Representatives will discuss potential alterations, including a possible further increase to the SALT cap. House Republicans will then hope to use their slim majority to vote in favour of the bill, passing it onto the Senate to debate and vote on. In these stages, there can still be significant changes to the bill.

Once approved by the House and the Senate, the bill is sent to President Trump for his signature. The GOP are aiming for a July 4th deadline to pass the bill into law – a fitting tribute to the Founding Fathers who turned a tax dispute into a new nation all those years ago.