What the “One Big Beautiful Bill” Could Mean For You
By Lauri Salverda, CFA, CFP®, AIF®
The Tax Cuts and Jobs Act, fequently called the “one big beautiful bill” by President Trump, recently passed by the House of Representatives and is meant to continue the tax-related provisions of the 2017 Tax Cuts and Jobs Act slated to expire at the end of 2025.
The Benefits
The current tax brackets and tax rates established in the 2017 TCJA (Tax Cuts and Jobs Act) would become permanent.
The standard deductions will be maintained. There will be an additional inflation adjustment and an additional $2,000 for MFJ (Married Filing Joint) tax payors and $1,000 for Single tax payors for years 2025 through 2028.
It maintains the current Child Tax Credit of $2,000, which is scheduled to revert to $1,000 in 2026. Provies for an additional $500 in Child Tax Credit for 2025 through 2028 for a total of $2,500. However, it eliminates the Personal Exemptions scheduled to return in 2026 at a calculated value of $5,300 per person.
It permanently extends the 20% deduction for pass-through business income and increases it to 23% which is currently scheduled to expire.
Sets the Estate tax deduction at $15 million in 2026 and to increase by inflation, thereafter.
Permanently extends the mortgage interest deduction to $750,000 per year. That is one heck of a mortgage!
The state and local tax deduction cap would remain, but will increase to $30,000 rather than the current $10,000. This would phase out beginning at $200,000 in income for single filers and $400,000 for MFJ filers.
There is a new deduction for tip income and overtime pay as well.
This is by no means an all-inclusive list, and we do not know if these proposed tax reductions will become law.
Costs of Tax Cuts
All these cuts come at a cost. Multiple sources estimate that these cuts will cost the federal government approximately $4.4 trillion over the next 10 years, adding roughly $4 trillion to the current national debt. This translates into issuing an additional $4 trillion in US bonds and making us more dependent on foreign governments to purchase these bonds, while currently aggravating these same foreign governments with increased tariffs.
There are also many cuts at the federal level to Medicaid and food supplements. Additionally, the bill proposes cutting state reimbursements for these costs from 50% to 25%. The bill also proposes adding work requirements in many cases, while also redefining the age of a dependent child to age 7 and under, versus the current age of 18 and under. I personally have not met the 8 year old that can fend for and feed themselves.
As stated, this is not a complete list of the benefits and costs of this bill, but it does give us pause to wonder about the long-lasting implications we, along with future generations, will be experiencing if these proposals go through.