House Republicans have introduced legislation that would make permanent many of the individual tax provisions from the Tax Cuts and Jobs Act (TCJA) that are set to expire after 2025. The proposed bill, formally titled the “One Big Beautiful Bill,” seeks to extend the current seven-bracket tax structure, larger standard deduction, and elimination of personal exemptions that have been in place since 2018.
The legislation comes as lawmakers face a December 2025 deadline when several TCJA provisions are scheduled to sunset. Without action, tax rates would revert to pre-2018 levels, potentially increasing tax burdens for many Americans. The proposed changes would affect both individual taxpayers and business owners who rely on pass-through entity structures for their operations.
Key provisions in the proposed legislation include maintaining the current tax bracket structure with rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The bill would also preserve the increased standard deduction amounts, which for 2025 would be $15,750 for single filers, $23,625 for heads of household, and $31,500 for married couples filing jointly.
“These changes would provide tax certainty for millions of Americans who have grown accustomed to the current tax structure,” the Bipartisan Policy Center stated in its analysis. The legislation also includes adjustments to the state and local tax (SALT) deduction cap, raising it from $10,000 to $40,000 for taxpayers with modified adjusted gross income under $500,000.
Impact on Business Owners and High Earners
Under the proposed legislation, pass-through business owners would remain eligible for the Section 199A deduction, which allows qualified taxpayers to deduct up to 20% of their business income. However, the legislation introduces tighter limits on how certain charitable contributions are counted toward the SALT cap for pass-through businesses.
For high-income professionals, the proposal includes both continued favorable tax brackets and new income-based phase-outs for certain benefits. The enhanced SALT deduction cap phases down for higher earners, and a new additional standard deduction for seniors ages 65 and older would be phased out for higher-income taxpayers.
The legislation also includes a provision described as a deduction for qualified tips in traditionally tip-receiving occupations. This provision would be available for taxpayers with income up to $160,000 in 2025, with the limit indexed for inflation in subsequent years.
Changes to Family and Education Benefits
The proposed legislation expands several family-oriented tax benefits. The Family and Medical Leave Employer Credit would be extended, and adoption tax credits would become refundable, allowing families without sufficient tax liability to make full use of the credit.
The proposal includes permanent tax-free treatment for student loans discharged due to death or disability. The legislation also maintains the expansion of qualified tuition programs to include elementary and secondary school expenses, a provision that was added under the TCJA.
The Alternative Minimum Tax exemption levels and phase-outs that were increased under the TCJA would become permanent. The $750,000 mortgage interest deduction cap and enhanced child tax credit would also be preserved under the proposed legislation.
Withholding and Planning Considerations
The IRS continues to emphasize the importance of reviewing paycheck withholding, especially as tax laws evolve. According to the agency, the Tax Withholding Estimator provides an online resource for calculating withholding amounts under current and proposed tax structures.
Tax professionals note that many filers still expect personal exemptions, which were eliminated under the TCJA with limited exceptions. Analysts point out that while the increased standard deduction applies broadly, higher-income taxpayers in high-tax states may be more affected by adjustments to the SALT cap.
The proposed legislation faces an uncertain path through Congress, with final passage and implementation dependent on political negotiations and budget considerations. Observers emphasize that outcomes remain contingent on congressional debate, and taxpayers may need to assess potential changes once legislation advances.
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