One Big Beautiful Bill
News outlets are currently buzzing over the “One Big Beautiful Bill Act,” the first piece of legislation introduced in the House of Representatives on May 20th as part of the 119th Congress, which began earlier this year. The bill passed in the House by a vote of 215-214 (House Vote, 2025), and now the bill is under consideration in the Senate, where revisions are expected to be made before the bill is finalized. It’s important to note that this bill is considered a $3.8 trillion reconciliation package (CBO, 2025), which means it includes tax cuts and spending changes that are expected to cost the federal government $3.8 trillion over the next decade. Since it’s a reconciliation bill—a special kind of budget legislation—it is able to pass the Senate with just 51 votes instead of the usual 60. This procedural advantage is notable given the Senate's current partisan divide, as it creates a pathway for the bill to pass without bipartisan support—if the Republican senators are unified in the coming weeks.
Overview of the Bill
With the bill spanning over 1,000 pages, this comprehensive legislation can be overwhelming and difficult to understand. A clear grasp of the bill’s primary goals is key to understanding its impact. The bill centers on a two-part objective: offering tax relief and business incentives, and restructuring federal spending. The bill emphasizes tax relief for middle-class families, working individuals, and small business owners. On the spending side, it redirects funding from environmental and social programs to initiatives aimed at strengthening the U.S. economy and national defense.
Key Provisions within the Bill
Family Provisions
Child Tax Credit: The child tax credit would increase from $2,000 to $2,500 per child for 2025 – 2028, and then it reverts to $2,000 after that. In other words, parents would get a larger tax break for each child that they have.
"Trump Accounts": This bill would create a new type of tax-exempt individual savings account that would be available for anyone. The bill also provides for a program that pays a $1,000 credit specifically to the Trump accounts of children born after 2024 and before 2029.
Education Provisions
Broadened use of 529 Education Accounts: The bill allows for the 529 plan to cover more K-12 tuition and homeschool expenses, plus job credentialing costs such as CPA exam fees.
Student Loan Forgiveness (Death/Disability) Excluded from Tax: This bill permanently removes forgiven student loan debt from taxation after a death or disability in order to prevent student loans from creating a surprise tax bill for their family after a difficult life situation occurs.
Individual Taxpayer Provisions
Permanent Trump Tax Cuts: The Tax Cuts and Jobs Act (TCJA) of 2017, commonly known as the “Trump Tax Cuts,” was signed into law by President Trump and introduced lower individual tax brackets along with a double standard deduction in 2017. The Big Beautiful Bill seeks to make these provisions permanent, as they are currently set to expire in 2026. This bill also permanently extends the current seven bracket structure: 10%, 12%, 22%, 24%, 32%, 35% and 37% for tax years after 2025. Lastly, the bracket thresholds continue to be adjusted for inflation, with a change to the inflation adjustment for the 35% and 37% brackets only after 2025.
Standard Deduction: from 2025 to 2028, the bill includes an inflation adjustment and a temporary increase in the standard deduction as follows: $2,000 for joint filers, $1,500 for heads of household, and $1,000 for all others.
SALT Cap Increase: The State and Local Tax (SALT) deduction cap would raise to $40,000 per household with a phase-out starting at $500,000 MAGI. This would be beneficial for families in high-tax states like California or New York.
Charitable Deduction for Standard Filers: For 2025-2028, an above-the-line deduction would be reinstated for charitable contributions ($150 for individuals, $300 for joint filers). Typically, taxpayers do not receive a tax break for charitable donations unless they itemize deductions, but this provision would allow a deduction even when claiming the standard deduction.
Senior Deduction: For 2025-2028, individuals who are 65 and older and who make less than $75k (and less than $150k joint) would get an additional $4,000 deduction. This is meant to help seniors who have modest incomes to pay less in taxes.
Moving Expense Deduction Removed: The moving expense deduction would be eliminated for all taxpayers except active-duty military personnel.
Personal Exemptions Removed: This bill permanently terminates personal exemptions, which are currently set to return in 2026. This exemption allowed taxpayers to deduct a set amount from their taxable income for themselves and dependents. This permanent removal of personal exemptions would cause some households to report higher taxable income.
5% Excise tax on Foreign Remittances: for money sent abroad, a new 5% federal excise tax would be imposed. This would be collected by money transfer services and includes exemptions for U.S. citizens and credits for certain situations.
IRS Direct File Program Removed: This bill would eliminate the IRS's Direct File Program, which allows some people to file taxes online at no cost. This might make it more expensive for some to file taxes.
Contingent Fees for Tax Preparers: This provision of the bill would allow tax preparers to charge clients a fee based on the size of their refund (this is currently prohibited).
New Cap on Itemized Deductions for High Earners: The bill imposes a new rule for taxpayers in the highest tax bracket that limits the value of itemized deductions to $0.35 per dollar deducted. This would reduce the tax-saving benefit of large institutions like mortgage interest or charitable giving.
Businesses and Entrepreneurs
Qualified Business Income Deduction: The bill proposes to make the 20% deduction for qualified business income permanent and even raise the 20% to 23% after 2025. This would be a provision for small businesses, partnerships, or self-employed individuals so that they would owe less in taxes and keep more of their earnings. The deduction would still be subject to limitations based on income and business type. In particular, specified service trades or businesses (like doctors, consultants, and attorneys) may face phase-outs or limitations at higher income levels.
Bonus Depreciation for Capital Investments: From January 19th, 2025 through December 31st, 2029, if a business purchases qualified property (for example, a truck or equipment), the business would be able to write off 100% of the cost immediately. Additionally, certain manufacturing property will qualify for full bonus depreciation through 2032 if construction begins before 2029 and the property is placed in service by the end of 2032. This allows for immediate tax relief so that the business can invest in their own growth sooner rather than later.
Increased Section 179 Expensing Limits: Small businesses would be able to write off up to $2.5 million in expenses right away, with phaseouts beginning at $4 million. More business expenses would qualify for immediate deduction instead of being amortized over multiple years. This is a powerful tax tool for small businesses.
Immediate Deduction for R&D Expenses: From Jan. 1st, 2025, through 2029, companies would be able to fully deduct R&D costs up front instead of spreading it out over multiple years. This reduction in tax burden encourages businesses to innovate and invest in new technologies.
More Generous Business Interest Deduction Formula: From 2025 through 2029, the bill would expand the amount of loan interest businesses can deduct by using a more generous formula (EBITDA instead of EBIT). This would make it easier for businesses to finance growth.
Floor for Corporate Charitable Deductions: Corporations would only be allowed to deduct charitable contributions that exceed 1% of their taxable income (up to the existing 10% limit). This provision would discourage corporations from making small donations just to receive tax breaks and encourage them to give more.
Community Growth
Expanded Low-Income Housing Credits: The 9% credit allocation for low-income housing tax credits would be increased for 2026–2029, while Indian and rural areas would be designated as “difficult development areas,” and the bond-financing threshold for the 4% credit would be lowered. These changes are intended to incentivize the construction of more affordable housing in low-income communities.
New Round of Opportunity Zones: The bill would end the current opportunity zone designations two years early (by December 31, 2026) and launch a new round of tax-incentivized zones from 2027–2033. The new zones must include at least 33% rural areas and will come with stricter eligibility and reporting requirements to better target job creation in struggling communities.
Wealth and Estates
Estate and Gift Tax Exemption Increase: The increased exemption for estate and gift taxes would be made permanent and would increase to $15 million per person, $30 million per couple. This raises the amount of wealth a family can pass onto their heirs without being taxed.
Large Institutions
Endowment Tax Reform: Endowment taxes would shift from a flat 1.4% to a tiered system, with the highest rate being 21% for institutions with a student-adjusted endowment exceeding $2 million per student. This change would encourage wealthy institutions to use their funds more actively in supporting educational initiatives.
Military
$150 Billion Military Spending Increase: The bill provides that there would be an allocation of $150 billion in new spending to build up the American military. This spending would be allocated towards modernizing the U.S. nuclear arsenal, bolstering munitions production, supporting the mission to protect the U.S. border, and providing a higher quality of life for those who enlist in the military.
Border Patrol
Border Wall and Personnel Expansion: The bill appropriates $46 billion to complete President Trump’s border wall.
Major Border Enforcement Hiring Plan: The bill provides for hiring 10,000 additional Immigration and Customs Enforcement personnel, 5,000 Customs Officers, and 3,000 Border Patrol agents to detain up to 1 million undocumented immigrants annually.
Environmental
Clean Energy Credits Terminated: This bill would terminate or phase out many clean energy credits from the Inflation Reduction Act (IRA). This would shift the government away from supporting clean energy and towards more of a market-driven approach.
EV Mandate Repeals: The bill would repeal electric vehicle mandates enacted under the Biden administration.
Federal Land Leasing for Energy: The bill provides that federal lands and waters would be opened to oil, gas, coal, geothermal, and mineral leasing to promote U.S. energy production.
Government
Debt Ceiling Increase: The bill includes a provision to raise the federal statutory debt limit by $4 trillion—aimed at avoiding default, maintaining the strength of the U.S. dollar, and preventing higher borrowing costs.
Social
Rollback of Medicaid Coverage for Gender Transitions: This bill focuses on phasing out some of the social agendas that were supported in the prior administration. One example of this is the reversal of the gender transitions for minors previously covered by Medicaid.
Medicaid Program Integrity Reforms: The bill would implement critical program integrity for Medicaid, removing deceased individuals from the program and limiting retroactive coverage from three months to one month prior to enrollment.
Here is a chart from AICPA summarizing the key provisions from the bill(note: there are more provisions explained in AIPCA’s chart than outlined in this article).
Restructuring of Government Spending
The bill focuses on supporting middle-class citizens and small businesses, while restructuring government funding—shifting resources away from social and environmental agendas and toward national defense and economic growth. The Big Beautiful Bill’s cut in personal income taxes and expanded deductions will reduce federal net revenue by almost $3.2 trillion over the next decade before added interest costs (Tax Foundation, 2025). With federal revenue reduced through tax cuts the real question is: Where will the government cut spending to offset the losses and justify the expanded budget for new agendas, such as increasing national security?
In addition to proposed cuts to social programs like Medicaid, the now-former head of the Department of Government Efficiency (DOGE), Elon Musk, had been working to identify other areas of government spending to help offset the costs of this bill. Before his recent resignation, DOGE announced an initiative to target spending in programs not aligned with the current administration’s priorities. Among its findings: the Environmental Protection Agency (EPA) had allocated $20 billion to clean energy and climate-related projects under the Biden administration — funding that is currently under legal scrutiny for possible waste and grant mismanagement (AP News, 2025). DOGE also reported that FEMA provided over $59 million in housing assistance to undocumented immigrants in New York City, and identified a $20 million grant to Sesame Workshop to produce a Sesame Street TV show in Iraq (Fox News, 2025). While Musk has stepped down, DOGE’s recommendations remain under review as lawmakers consider further avenues for spending cuts.
It is also important to highlight how this bill is strategically structured to offset spending by stimulating economic growth. Consider the Laffer curve, an economic theory that charts the relationship between tax revenue and tax rates. On the one hand, if the government imposed a 0% tax rate, the government collects no revenue and does not have any money to spend. On the other hand, if the government imposed a 100% tax rate, the results are the same. Why is that? If the government taxes income before it can be reinvested—whether in starting a business or entering the stock market—that money loses its potential to grow and instead remains idle. Therefore, beyond benefiting everyday Americans, this theory also suggests that lower taxes can indirectly boost government revenue by encouraging economic activity.
Based on this theory, the government needs to find a “sweet spot” for tax rates: a tax rate that brings in revenue for the government while encouraging economic growth at the same time.
An important principle to think about in terms of the “sweet spot” for tax rates is this: Private money grows faster than government money. If people have incentive to work because they are not overtaxed and the economy is booming, that is a win for the government because it is putting the people’s money to work. If the government takes away income before it has been reinvested to start a new business or buy into the stock market, that money will not have the opportunity to grow and will remain stagnant. In addition to lower taxes being beneficial to the everyday U.S. citizen, this theory also argues that it indirectly increases government revenue as well.
Tax cuts and deductions from this bill are predicted to increase the U.S. GDP by 0.6%, which means the U.S. economy is expected to produce about $170-180 billion more in goods and services (Tax Foundation, 2025). This bill heavily leans into the Laffer curve theory of decreasing tax rates in order to increase economic activity.
What's Next?
Although the Big Beautiful Bill Act is very expansive and complex, the provisions in the bill are very impactful on the U.S. economy, family, and businesses and is important to pay attention to. While no official vote date has been scheduled, Senate Republicans are aiming to pass the bill by July 4th. It is important to note that the bill’s passage is put at risk currently because some of the GOP senators raise concerns about food stamp changes, repealing clean energy tax credits, and rural hospital changes. With only 53 Republicans in the Senate and 51 votes required for this bill to pass, this could be a narrow margin for passing. As the Senate approaches its target date, all eyes will be on Capitol Hill to see whether the bill advances or stalls amid internal debate.
Summary
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SOURCES:
Congressional Budget Office (CBO), 2025.Estimated Budgetary Effects of H.R. 1.
https://www.cbo.gov/system/files/2025-05/61422-Reconciliation-Distributional-Analysis.pdf
Clerk of the U.S. House of Representatives, 2025.Final Vote on H.R. 1 – One Big Beautiful Bill Act.
https://clerk.house.gov/Votes/2025145
Congress.gov, 2025.Full Text of H.R. 1 – One Big Beautiful Bill Act.
https://www.congress.gov/bill/119th-congress/house-bill/1/text
Tax Foundation, 2025.House GOP’s Big Beautiful Bill: Revenue, Growth, and Distributional Impact.
https://taxfoundation.org/research/all/federal/big-beautiful-bill-house-gop-tax-plan/
Tax Foundation, 2025.Budget Reconciliation: Tracking the 2025 Trump Tax Cuts.
https://taxfoundation.org/research/all/federal/trump-tax-cuts-2025-budget-reconciliation/
DOGE.gov, 2025.Live Running Total of Government Savings.
AP News, 2025.EPA Can't End Grants From $20 Billion Green Bank Without Further Review, Judge Says.
AP News, 2025.FEMA Under Scrutiny Over $59M in Migrant Housing Payments in NYC.
https://apnews.com/article/fema-migrant-funding-new-york-hotels-immigration-elon-musk-doge-
268ca7eda43011a501dfad0fa88a4775
Fox News, 2025.USAID Gave $20M to Sesame Workshop for Iraq-Based Sesame Street Show.
Investopedia. (n.d.).Laffer Curve Definition.
https://www.investopedia.com/terms/l/laffercurve.asp
AICPA, 2025.Client Letter – Key Tax Provisions in the One Big Beautiful Bill.
LiveNOW Fox, 2025.Trump’s “Big Beautiful Bill” Faces These Challenges in the Senate.
https://www.livenowfox.com/news/trumps-big-beautiful-bill-challenges-senate
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