Legislative Blog
J.B. Williams, J.D.
One Big Beautiful Bill Taxes
A Blog about One Big Beautiful Bill
A Bit of Background
The following backgrounds help summarize the author's views on both the general topic: Federal and more specifically One Big Beautiful Bill as it relates to that topic.
Brief Summary of Federal
This should be a fairly limited bills area for management the overall structures like highways, military, federal buildings, federal laws, and the like. However it has become the micro manager of all micro managers. They get involved in areas that no federal government should be involved in, and shift more power upward. This has led to each party trying to run over the other party in the eyes of the voters, all the while doing everything possible to maintain their power. They do this by holding onto all of the money, and claiming they know best how it should be spent. But they run debts so badly that no one should be looking to them as an example of anything other than the way to overspend and go further into debt.
Summary of One Big Beautiful Bill
In this subtopic I plan to breakdown the current One Big Beautiful Bill that passed the House and now is in the Senate. This will be subject to change should the bill move forward modified. I'm trying to focus on taxes and health care, but don't want to neglect the massive spending.
Blog Summary
This bill is 1,118 pages long, including outline. Text of the bill begins on page 15.
This portion is directed to the tax changes that the bill would make. There seems to be a lot of good additions to deductions/credits in this bill. They would benefit lower income US citizens. The standard deductions that are set to expire would continue.
One Big Beautiful Bill Taxes
Published: 2025-05-28
Make American Families and Workers Thrive Again
This portion focuses on the changes to the Tax Code.
It makes the modifications in the Internal Revenue Code Section 1(j) permanent. Currently it reads as for 2018-2025.
The following table is for Married Filing Jointly and surviving spouses.
| If taxable income is: | Current tax if this isn't passed: | Tax if this is passed (was in 2018-2025): |
|---|---|---|
| Not over $19,050 | 15% | 10% |
| Over $19,050 but less than $36,900 | 15% | $1,905 plus 12% of amount over $19,050 |
| Over $36,900 but less than $77,400 | $5,535 plus 28% of amount over $36,900 | $1,905 plus 12% of amount over $19,050 |
| Over $77,400 but less than $89,150 | $5,535 plus 28% of amount over $36,900 | $8,907 plus 22% of amount over $77,400 |
| Over $89,150 but less than $140,000 | $20,165 plus 31% of amount over $89,150 | $8,907 plus 22% of amount over $77,400 |
| Over $140,000 but less than 165,000 | $35,928.50 plus 36% of amount over $140,000 | $8,907 plus 22% of amount over $77,400 |
| Over $165,000 but less than $250,000 | $35,928.50 plus 36% of amount over $140,000 | $28,179 plus 24% of amount over $165,000 |
| Over $250,000 but less than $315,000 | $75,528.50 plus 39.6% of amount over $250,000 | $28,179 plus 24% of amount over $165,000 |
| Over $315,000 but less than $400,000 | $75,528.50 plus 39.6% of amount over $250,000 | $64,179 plus 32% of amount over $315,000 |
| Over $400,000 but less than $600,000 | $75,528.50 plus 39.6% of amount over $250,000 | $91,379 plus 35% of amount over $400,000 |
| Over $600,000 | $75,528.50 plus 39.6% of amount over $250,000 | $161,379 plus 37% of amount over $600,000 |
I've computed the following to show the difference for a specified amount that falls within each category.
| If taxable income is: | Current tax if this isn't passed: | Tax if this is passed (was in 2018-2025): |
|---|---|---|
| Not over $19,050 - Using $19,000 | $2,850 | $1,900 |
| Over $19,050 but less than $36,900 - Using $36,000 | $5,400 | $3,939 |
| Over $36,900 but less than $77,400 - Using $77,000 | $16,763 | $8,859 |
| Over $77,400 but less than $89,150 - Using $89,000 | $20,123 | $11,459 |
| Over $89,150 but less than $140,000 - Using $139,000 | $35,618.50 | $22,459 |
| Over $140,000 but less than 165,000 - Using $160,000 | $43,128.50 | $27,079 |
| Over $165,000 but less than $250,000 - Using $240,000 | $71,928.50 | $46,179 |
| Over $250,000 but less than $315,000 - Using $310,000 | $99,288.50 | $62,979 |
| Over $315,000 but less than $400,000 - Using $390,000 | $130,968.50 | $88,179 |
| Over $400,000 but less than $600,000 - Using $590,000 | $210,168.50 | $157,879 |
| Over $600,000 - Using $700,000 | $250,728.50 | $198,379 |
The increase in standard deduction is extended through the end of 2028. Thereafter it appears there may be inflation adjustments made automatically. And it would permanently get rid of the personal exemption. For tax years 2018 through 2025 there was no personal exemption. The Child Tax Credit expansion would be made permanent. For 2024 through 2028 it is bumped to $2,500 and then goes to $2,000 thereafter (double the amount it would currently drop to). Credits will require the social security number of the filer, the child, and the spouse should the filer be married. The social security number must be issued to a US citizen. The child tax credit has an inflation adjustment as well.
The Qualified Business income deduction would become permanent. My business qualified for this. This does not apply to corporations and there are phase-out rules.
The bill also extends the increased estate and gift tax exemptions and makes this permanent. Generally increasing to $15,000,000. It increases the alternative minimum tax exemption and phase-out threshold. Keeping those at the rates set for 2018 through 2025.
It makes permanent the increase interest deduction for qualified residence. It makes permanent the increased limitation on casualty loss deduction. It eliminates the Miscellaneous itemized deduction. It limits itemized deductions on those with higher incomes. It eliminates the qualified bicycle commuting reimbursement exclusion. It eliminates the deduction for moving expenses. (This makes sense to me because I think most people are reimbursed moving expenses from the company they are working for when they move. Perhaps some are not reimbursed, but I'd imagine those would be more likely to move within a company because of a preferred location and would be higher up in the company as well.)
Wagering losses are limited as they have been in recent years.
It keeps the increased amount for contributions to ABLE accounts. (These seem similar to 401K in public companies.) Savers credit are allowed for ABLE contributions as well.
Those performing services in the Sinai Peninsular and enhancement will have the hazardous duty remain in place.
A student loan that is discharged due to death or disability will no longer be treated as gross income. (In case you didn't realize it, if you are able to get a credit card debt written off in part or in whole, the credit card company will issue you a 1099-Misc or similar 1099 for you to claim the amount written off as income for tax purposes. But it seems understandable that if a party dies, then their spouse should not be burdened with a student loan that is written off. The deceased is no longer there to provide the income that should have supported the incurrence of the student loan debt.)
There is a no tax on qualified tips section. Qualified means it is paid in cash and is being included in your income either by the employer or by the employee. Further, it must have been paid voluntarily and the amount must have been determined by the payor. The individual does not qualified if they are highly compensated, that means earning above an amount set each calendar year. (This amount seems to be set at $80,000 currently.) Again the filer must have a social security number, and their spouse, if they have one, must have a social security number. This section is set to expire December 31, 2028.
Further details are listed as to the type of business where tipping is excludable. These include delivering or serving food or beverages; services to a customer in relation to barbering and hair care, nail care, esthetics, body and spa treatments. The Secretary of Treasury will provide a published list of occupations that traditionally received tips.
A deduction is created for qualified overtime compensation. The overtime pay must be included as W-2 income. This follows the law already set out for what is considered in excess of the regular rate at which an individual is employed. (This is time paid for over a 40 hour work week.) The following are not included: a qualified tip, or the amount paid to a highly compensated employee. Again social security numbers are required, and that of a spouse, if the person is married. This section is set to expire December 31, 2028.
For seniors the deduction is increased by $4,000. However, it is reduced by 4% as the modified adjusted gross income exceeds $75,000 for single or $150,000 for joint returns. This again requires social security numbers for the filer, and the spouse, if any. This amount is not adjusted for inflation and is set to expire December 31, 2028. Those itemizing may still be able to take some portion of the $4,000 increased deduction.
There is a no tax on car loan interest section. This would be in effect for 2024 through 2028. It includes interest on a passenger vehicle loan for personal use. The following do not apply: loan to finance fleet sales, personal cash loan secured by a vehicle previously purchased, loan incurred for a commercial vehicle, lease financing, loan to finance a salvage title vehicle, or a loan to purchase a vehicle to be used as scrap or parts. The amount cannot exceed $10,000. The interest deduction will be reduced by $200 for each $1,000 the adjusted gross income exceeds $100,000 single or $200,000 for joint return. The vehicle final assembly must have occurred in the United States. This deduction is allowed whether the taxpayer itemizes or not.
For employer-provided child care credit, the amount is increased for eligible small businesses to 40%, previously 25%. The maximum amounts are adjusted and an inflation connection is made for future adjustments. Business may deduct certain costs related to use of Family and Medical Leave.
The adoption credit will now provide a portion as a refundable credit, and this amount will be adjusted for inflation.
A deduction of 10% of adjusted gross income or $5,000 may be deductible for funds put into elementary and secondary scholarship. It delineates what is included for an eligible student, and for eligible tuition. The amount is reduced by any State tax return credit. In addition funds in a 529 account are now eligible for payment for elementary or secondary public, private or religious schools. Specifics are provided for what is eligible, such as tuition.
Charitable contributions are re-added as non-itemized deductions for tax years 2024 through 2028.
Accounts set up as money account for growth and advancement, that are created as a trust in the United States for the exclusive benefit of an individual, are exempt from taxation. A social security number must be provided, other than qualified roll overs it cannot be funded before 1/1/2026 or if the beneficiary is not yet 18. There can be no distribution before the beneficiary is 18. The trustee must be a bank or person who qualifies as determined by the Secretary. Investments must be in the following: tracking a well-established index of the United States equities, does not use leverage, minimizes fees and expenses, and meets other requirements set out by the Secretary. Each tax year can fund $5,000. This amount to be adjusted for inflation. When the beneficiary reaches the age of 31, the account no longer qualifies for this exemption and all funds are treated as distributed.
They are wanting to again increase the debt limit - this time to $4,000,000,000,000 - FOUR TRILLION
Webpage created by and for J.B. Williams, J.D. - all rights reserved