On May 22, 2025, the U.S. House of Representatives narrowly passed a nearly $4 trillion tax bill known as the “One Big Beautiful Bill” by a 215-214 vote. The legislation includes the most significant tax changes proposed since 2017, including permanent extensions of key provisions from the Tax Cuts and Jobs Act (TCJA), new deductions, and revised rules for both individuals and businesses.
While this is a major step, it is not yet law. The bill now heads to the Senate, where changes are likely. The administration has signaled an interest in seeing legislation finalized by July 4, though many expect the timeline may extend into August or beyond, depending on the pace of negotiations.
Here’s what you need to know — and what we’re doing to help you prepare.
Key Highlights from the House Bill
For Individuals:
- Permanent extension of TCJA provisions, including lower individual tax rates, an expanded standard deduction, and repeal of personal exemptions.
- Increased child tax credit to $2,500 per child for tax years 2025 through 2028.
- Higher SALT deduction cap, raising the limit from $10,000 to $40,000 for households earning under $500,000, with the cap and income threshold indexed by 1% annually through 2033.
- New above-the-line deductions for seniors ($4,000), tip income, overtime pay, and up to $10,000 in U.S. auto loan interest—each subject to income limits.
Estate Planning Updates:
- Increased lifetime exemption for estate, gift, and generation-skipping transfer taxes to $15 million starting in 2026, indexed for inflation. This builds on the existing TCJA levels, which reach nearly $14 million in 2025.
For Business Owners:
- Bonus depreciation restored at 100% for qualifying assets placed in service between 2025 and 2029.
- Section 179 expensing limits increased to $2.5 million, with a $4 million phaseout threshold.
- Domestic R&D expensing reinstated for 2025 through 2029 under a new Section 174A structure.
- Section 199A (Qualified Business Income Deduction):
- Deduction rate increased from 20% to 23% starting in 2026.
- Phaseout reform: For service businesses, it expands eligibility and the deduction phases out gradually—reducing by 75 cents for each dollar of income over the threshold—making planning more predictable and makes the deduction permanent. (I removed the comma in this sentence.)
- Expanded eligibility: Certain dividends from Business Development Companies now qualify for the deduction.
- Permanence: The deduction is made permanent, ending its previous 2025 sunset.
Other Notables:
- Energy credit repeals and phaseouts: The legislation rolls back tax credits from the Inflation Reduction Act, affecting wind, solar, and battery storage projects, and potentially increasing household energy costs.
- Opportunity Zone extension through 2028, with new incentives for rural investment.
- International and reciprocal taxes, including changes to GILTI, FDII, BEAT, and new retaliatory taxes for countries imposing “unfair” taxes on U.S. firms.
- Medicaid & SNAP Changes: The bill imposes stricter work requirements for Medicaid and the Supplemental Nutrition Assistance Program (SNAP), potentially affecting millions of low-income Americans.
- Introduction of “Trump Savings Accounts”: The bill creates $1,000 “Trump savings accounts” for children born after 2024, offering tax-deferred savings with capital gains tax rates on withdrawals.
- Student Loan Forgiveness Repeal: The legislation repeals student loan forgiveness options under President Biden’s SAVE plan and introduces new repayment plans.
- Defense & Border Security Funding: The bill allocates $150 billion to defense spending and $70 billion to border security, including funding for mass deportations and border infrastructure.
What Happens Next?
The Senate is expected to take up the bill in June, possibly bypassing committee review in favor of direct negotiations. Any significant changes made by the Senate would require another vote in the House before the bill can be enacted. While many core elements of the bill enjoy broad Republican support, there are competing priorities among Senate members — particularly around energy credits, international taxation, and the scope of permanent provisions.
How Gatewood Is Preparing Our Clients
With major tax changes on the horizon and year-end planning season approaching, timing and strategy will be critical. At Gatewood Wealth Solutions, we’re preparing our clients for all possible outcomes — and we’re starting now.
Here’s how we’re helping:
- Running personalized tax scenarios under both current law and the proposed changes, so you can make informed decisions now — not after the fact.
- Identifying strategic opportunities to leverage new deductions, avoid phaseouts, and optimize entity structures and income timing.
- Reviewing estate and business plans to take advantage of proposed changes, including the increased estate exemption and favorable treatment of business investments and income.
You don’t need to wait for the final vote to start planning. Strategic action today can create lasting benefits regardless of how the final bill takes shape.
If you’re ready to review your plan or want to understand how this legislation could impact your financial goals, let’s talk. We’re here to guide you through it — with clarity, strategy, and purpose.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.
