Understanding the One Big Bill: What It Means for Everyday Taxpayers

Individual Tax Highlights

• Standard Deduction: Permanently increased to

  • $15,750 (Single) / $31,500 (Married, 2025).

• Personal Exemptions: Permanently repealed.

• Tax Brackets: Seven brackets (10%–37%) remain permanent.

• Mortgage Interest: Interest deduction capped at $750K ($1M for older mortgages).

• SALT Cap (State & Local Taxes): Raised from $10,000 to $40,000 (2025), gradually increasing through 2029 before reverting.

• Deduction for Seniors: +$6,000 per person (65+), on top of existing standard deduction.

• New Deductions:

  • Tip Income: Up to $25,000 deductible (for qualified occupations).

  • Overtime Pay: Up to $12,500 deductible ($25,000 joint).

  • Car Loan Interest: Up to $10,000 deductible for new U.S.-made vehicles.

• Charitable Contributions:

  • Above-the-line deduction for non-itemizers ($1,000 single / $2,000 joint).

  • Itemizers must now exceed 0.5% AGI floor to deduct.

• New “Trump Accounts”: Tax-favored savings for minors (similar to IRAs).

  • Government adds $1,000 for children born 2025–2028.

  • Funds grow tax-deferred; taxable upon withdrawal after age 18.

• Estate/Gift Tax Exemption: Raised to $15 million in 2026, indexed annually.

• Wagering Losses: Deduction limited to 90% of losses (from 2026).

• Energy Credits: Repealed starting 2026 for home efficiency, clean vehicles, and upgrades.

🔹 Business Tax Highlights

• Section 1202 (Qualified Small Business Stock)

  • Lifetime gain exclusion increased to $15M (was $10M).

  • Holding period reduced to 3 years (from 5) for partial exclusion.

  • Applies to C Corporations only; phased exclusions at 3/4/5-year holds.

  • Now recognized by New Jersey and New York.

• Section 199A (QBI Deduction)

  • 20% deduction for pass-through income made permanent.

  • Income thresholds expanded for 2026 and beyond.

• Bonus Depreciation (Section 168(k))

  • 100% expensing made permanent.

• Section 179 Expensing

  • Cap doubled to $2.5M; phase-out begins at $4M purchases.

• Qualified Production Property

  • 100% expensing for new U.S. manufacturing buildings (2025–2031).

• Business Interest Deduction (163(j))

  • Limit now 30% of EBITDA (rather than EBIT).

  • Applies to businesses with >$31M in receipts.

• Employer Moving Expenses

  • Permanently taxable to employees (no exclusion).

🔹 Medicaid & Healthcare

• Nursing Home Staffing Rule delayed until 2034.

• Work Requirements for certain Medicaid recipients (19–64) begin 2027.

• Home Equity Limit for LTC Medicaid capped at $1M.