Big Tax Shifts Ahead: What’s in the “Big Beautiful Bill” for Families and Businesses

The tax landscape may soon shift again. The “One Big Beautiful Bill,” passed by the House in May, is now being debated in the Senate—and it’s packed with provisions that would impact individual taxpayers, families, and businesses for years to come.

At its core, the bill aims to lock in many of the 2017 Tax Cuts and Jobs Act (TCJA) provisions that are set to expire after 2025. The bill also introduces new deductions, repeals clean energy incentives, and alters how high earners and corporations can give, invest, and plan. The bill also includes several time-limited deductions and inflation adjustments designed to appeal across income brackets.

While the bill is still in flux, here’s a look at the most relevant tax provisions in the current draft and what they could mean for you.

How Will This Affect Regular People?

While much of the political debate focuses on business and budget impacts, this bill includes several changes that would directly affect everyday taxpayers, starting in 2025.

Here’s how:

• You may take home more money: Lower tax rates and wider income brackets from the TCJA would continue, helping most wage earners keep more of their paycheck.
  
• Bigger deductions for most filers: The standard deduction would stay elevated—and even increase temporarily—lowering taxable income for millions.
  
• Families get a boost: The child tax credit increases to $2,500 per child from 2025–2028, then adjusts with inflation going forward.
  
• New deductions for common expenses: Temporary write-offs include overtime pay, tip income, and even auto loan interest (for U.S.-assembled vehicles). Seniors would also get a $4,000 bonus deduction, even if they itemize.
  
• If you live in a high-tax state: You may benefit from a higher deduction limit for state and local taxes (SALT), depending on your income.
  
• No more personal exemption: This deduction for each person in your household won’t be returning—but the higher standard deduction and expanded credits aim to offset it.
  

Bottom line: Whether you’re working hourly shifts, raising kids, buying a car, or planning for retirement, parts of this bill may affect your finances and your tax filing in the next few years.

Now, here’s a deeper dive into the bill’s tax provisions and how they’re structured.

Individual Tax Changes

Many of the bill’s individual provisions aim to lock in lower rates and higher deductions introduced under the TCJA, while also introducing new temporary deductions aimed at working families and retirees.

• Tax Brackets Stay Lower: The reduced tax rates and wider income brackets from the TCJA would be made permanent, with ongoing inflation adjustments—except for the top 37% bracket, which remains fixed.
  
• Standard Deduction Gets a Boost: The higher standard deduction introduced in 2017 would become permanent. On top of that, a temporary increase would apply from 2025 through 2028: $2,000 for married filers, $1,500 for heads of household, and $1,000 for single filers.
  
• No Return of the Personal Exemption: Originally suspended under the TCJA, the personal exemption would now be repealed permanently. This change is largely offset by the higher standard deduction—also made permanent under the bill—and expanded credits like the child tax credit. Together, these provisions continue the shift away from personal exemptions toward a simpler, broader-based approach to tax relief.
  

Other individual provisions include:

• State and Local Tax (SALT) Deduction Cap Raised—But Not for Everyone: If you itemize your deductions, you can deduct what you pay in state and local taxes (like income or property tax)—but there’s a cap. Right now, it’s $10,000. The bill would raise that cap to $40,000, which could be a big help to people in high-tax states. This is still under debate in the Senate, so the amount may change.
  
• Child Tax Credit Made Permanent: The child tax credit becomes a permanent part of the tax code, with a temporary increase to $2,500 per child from 2025 through 2028. After that, it reverts to $2,000 and is adjusted for inflation. Likewise this is also under debate in the Senate, the amount may change.
  
• Alternative Minimum Tax (AMT) Relief: The bill makes permanent the higher AMT exemption and phaseout thresholds introduced by the TCJA.
  

New Temporary deductions (tax years 2025 – 2028)

• Deduction for Tip and Overtime Income: Workers would be able to deduct the premium portion of overtime pay and tip income, regardless of whether they itemize.
  
• Auto Loan Interest Deduction: Interest on loans for U.S.-assembled cars would become deductible—up to $10,000—phasing out for individuals earning more than $100,000 ($200,000 for joint filers).
  
• Senior Deduction Bonus: Seniors would receive a $4,000 boost to their standard deduction, which would also be available to itemizers. This bonus phases out above $75,000 for single filers and $150,000 for joint filers.
  

The bill also includes tighter eligibility rules for the premium tax credit (PTC), earned income tax credit (EITC), and child tax credit, along with the repeal of limitations on PTC clawbacks.

Estate Tax Changes

• Estate and Gift Tax Exemption Increase: Beginning in 2026, the estate and gift tax exemption would permanently rise to $15 million per person, indexed for inflation. This provision would allow families to transfer more wealth without triggering estate taxes.
  

Business Tax Provisions

The bill includes a mix of permanent and temporary tax breaks for businesses, with a strong focus on supporting small businesses, pass-through entities, and domestic investment. Some earlier provisions—like bonus depreciation and R&D expensing—would return for a limited time, while others—like the 199A deduction—would be expanded and made permanent. The bill also closes certain loopholes and adds new limits for corporations.

• Pass-Through Deduction Increased and Made Permanent: The 199A deduction for qualified business income would rise from 20% to 23% and be made permanent. It also modifies how limits apply to wages, capital investments, and specified service trades or businesses (SSTBs).
  
• Bonus Depreciation Restored: Businesses could again deduct 100% of qualifying asset purchases in the first year, for investments made from 2025 through 2029.
  
• Immediate R&D Expensing Reinstated: Domestic research and development expenses would again be fully deductible in the year incurred, also for tax years 2025 through 2029.
  
• Business Interest Deductions: The more generous EBITDA-based cap on interest deductions would temporarily return for 2025 through 2029.
  
• Charitable Contribution Limits for Corporations: C corporations would face a new 1% income floor before charitable donations become deductible.
  
• SALT Cap Workaround Closed: For pass-throughs treated as specified service trades or businesses (SSTBs), SALT deduction workarounds would be disallowed.
  
• Green Energy Rollbacks: Several tax credits created by the Inflation Reduction Act, such as the electric vehicle credit and residential energy efficiency incentives, would be repealed after 2025. Clean electricity tax credits would end sooner as well.
  

Final Thoughts

This bill has some provisions that are set to expire in just a few years, others represent lasting shifts in the tax code. From larger standard deductions to new incentives for domestic investment, the “Big Beautiful Bill” aims to lock in some of the TCJA’s most impactful changes while sunsetting or scaling back others. If passed, it could reshape tax planning through the rest of the decade, particularly for high earners, small business owners, and retirees.

With the Senate continuing to debate its contents, we’ll be watching closely. As always, your accountant can help you understand what these changes mean for your unique financial situation.