Breaking Down the One Big Beautiful Bill Act
Breaking Down the One Big Beautiful Bill Act
The much-awaited bill was passed on July 4th and there are far too many provisions to still research and the discuss. However, today, I will do a broad overview for your initial review.
Overview of Provisions
The overall bill basically extends all the provisions of the original bill that were set to expire if no action were taken. Most financial people felt that not extending the basics of that previous bill would have been cause for alarm. However, the bill went further by creating additional tax benefits as follows:
- No tax on overtime
- No tax on tips
- A $6000 per person deduction for people over 65 who collect Social Security and meet certain income requirements.
- The SALT tax (tax deduction for state and local taxes) was increased from $10,000 to $40,000 for taxpayers earning less than $500,000. This reverts to $10,000 after 2029.
- The estate tax exemption was increased to $15 million starting in 2026 and made permanent.
- The 20% Qualified Business deduction was made permanent.
There are many other parts of the bill that are merely carve outs and political gimmicks. Many of which will need further clarity by the IRS before most people can act on them. Unfortunately, many pieces are complicated, and the benefits will be small. In general, the bill in its entirety will likely reduce revenue to the government and add to the growing deficit. However, President Trump insists that tax cuts will spur growth leading to more revenue and a smaller deficit. Only time will tell.
