What are the Key Tax Implications for Businesses and Individuals with Trump’s “One Big Beautiful Bill” that is currently being considered by the Senate?
On May 22, 2025, the U.S. House of Representatives passed the "One Big Beautiful Bill Act" (OBBB), which has now moved to the Senate for consideration and includes a tax and spending package which will have a significant impact on tax liability and tax planning options for individual taxpayers and businesses. So what could it mean for you?
Extension of Tax Cuts and Jobs Act (TCJA)
The bill seeks to make permanent several of President Trump’s 2017 TCJA provisions that are currently set to expire in 2026, including extending the TCJA individual income tax rates beyond their scheduled expiration next year. The bill also includes temporarily increasing the standard deduction amount through 2028 (adding $1,000 to the current amount for individual filers and $2,000 for joint filers. If passed as currently presented, the OBBB will also increase the Child Tax Credit by $500 through 2028, bringing the credit to $2,500.
Some of the new legislation that the OBBBA introduces includes the exclusion of overtime pay and tips from taxable income, and the deduction of interest paid on car loans.
Business Tax Provisions
Aside from the impact on individual taxes, the OBBB also includes measures directly affecting business taxes. For example, the OBBB includes the extension of lower tax rates for Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII), which are currently scheduled for increases next year. The bill also allows for a continuation of the current lower rate on base erosion and anti-abuse tax (BEAT) payments to foreign affiliates of U.S. companies.
Fiscal Impact
According to the Tax Foundation, the bill is projected to reduce federal tax revenue by approximately $4.1 trillion from 2025 through 2034 on a conventional basis, before accounting for added interest cost. The legislation is estimated to increase long-run GDP by 0.6%. As states conform to federal tax codes changes at the federal level will also impact state tax calculations and revenues.
Legislative Outlook
As the OBBB moves to the Senate, potential amendments could alter its provisions. You should stay informed about legislative developments, and follow along with us here where we will post any significant updates to the tax provisions in the bill and the potential impacts.
How Can We Help?
As always, our Visibility Team is keeping up to date on the latest tax legislation and working proactively with our clients to assess how these extended and new provisions may impact their tax liability and tax planning options. Book a discovery call today to make sure you aren’t missing out on important tax savings opportunities!
