Jul
Below are details of many of the tax provisions in the One Big Beautiful Bill Act, which was signed into law Friday by President Donald Trump.
The House approved the measure Thursday in a 218-214 vote, after the Senate approved it Tuesday by a 51-50 vote, with Vice President JD Vance casting the tie-breaking vote.
The bill extends many of the expiring provisions from the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. It also addresses other tax priorities of the Trump administration, including providing deductions to eliminate income taxes on certain tips and overtime pay.
The bill also revamps some of the TCJA’s provisions on the taxation of corporations’ foreign income and terminates a large number of clean energy tax incentives.
In a statement, AICPA President and CEO Mark Koziel, CPA, CGMA, called the bill “a win for millions of businesses, taxpayers, and tax practitioners across the country.”
Additionally, Koziel said in the statement: “No bill is perfect — however, there are many beneficial tax provisions in this bill that I believe support the business community and will help grow our economy. The tax provisions in this bill will help facilitate tax planning earlier in the year, which can help reduce the anxiety of the unknown for many taxpayers.”
The AICPA has published charts comparing tax and personal financial planning provisions of the bill with current law (free site registration required).
Provisions for individuals
Tax rates: The bill generally makes the tax rates enacted in 2017 in the TCJA permanent. The bill adds an additional year of inflation adjustment for determining the dollar amounts at which any rate bracket higher than 12% ends and at which any rate bracket higher than 22% begins.
Standard deduction: The bill makes the TCJA’s increased standard deduction amounts permanent. For tax years beginning after 2024, the standard deduction increases to $15,750 for single filers, $23,625 for heads of household, and $31,500 for married individuals filing jointly. The standard deduction will be adjusted for inflation after that. These changes have been made retroactive to include 2025.
SALT cap: The bill temporarily increases the limit on the federal deduction for state and local taxes (the SALT cap) to $40,000 (from the current $10,000) and adjusts it for inflation. In 2026, the cap will be $40,400, and then will increase by 1% annually, through 2029. Starting in 2030, it will revert to the current $10,000.
The amount of the deduction available to a taxpayer phases down for taxpayers with modified adjusted gross income (MAGI) over $500,000 (in 2025). The MAGI threshold will be adjusted for inflation through 2029. The phasedown will reduce the taxpayer’s SALT deduction by 30% of the amount the taxpayer’s MAGI exceeded the threshold, but the limit on a taxpayer’s SALT deduction could never go below $10,000.
The version of the bill that passed the House in May also increased the SALT cap to $40,000, but included provisions to limit taxpayers’ attempt to circumvent the cap, including not allowing specified service trades or businesses (SSTBs) to deduct state and local income taxes. This provision would limit the usefulness of state passthrough entity taxes (PTETs) in avoiding the SALT cap. The Senate Finance Committee’s version of the bill took a different tack and would have limited all passthrough entity owners’ PTET SALT deduction to the unused portion of their SALT deduction plus the greater of $40,000 of their allocation of the PTET or 50% of their allocation of the PTET.
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