What’s in the “One Big Beautiful Bill”?
Key Tax Changes Ahead for Individuals and Small Business Owners
Congress is working to finalize a sweeping new tax package—unofficially dubbed the One Big Beautiful Bill Act—with hopes of passing it by this Friday, July 4. While the bill isn’t law yet, both the House and Senate have released versions that shed light on what’s likely to come.
And the changes? They’re big. From child tax credits and standard deduction adjustments to expanded business write-offs and 1099 relief, the proposed legislation affects just about everyone: families, employees, retirees, and especially small business owners.
Here’s a breakdown of the most important proposed changes—and how to start preparing now. We’ve also linked helpful IRS resources if you want to dive deeper.
For Individual Taxpayers
1. Child Tax Credit (CTC)
- Current law: $2,000 per qualifying child
- House: Temporarily increases to $2,500, then returns to $2,000 with inflation indexing
- Senate: Raises to $2,200 and indexes for inflation immediately
Resources
2. Energy Credits for Homes & Vehicles
If you’ve been planning to install solar panels or purchase an EV, now may be the time. Both versions propose phasing out popular credits, including:
- §25C: Energy-efficient home improvements
- §30D: Clean vehicle credit
- §25E: Used EV credit
Resources
3. HSAs: A Missed Opportunity?
The House version proposes doubling HSA contribution limits for lower-income earners and allowing deductions for gym memberships and fitness classes. Unfortunately, the Senate version omits these changes.
Resources
4. Mortgage & SALT Deductions
- Mortgage interest cap ($750,000) becomes permanent in both bills
- Senate reinstates mortgage insurance premium deductions starting in 2026
- SALT cap (State and Local Tax):
- House: Raises to $40,000 for higher earners
- Senate: Keeps it at $10,000
5. Tip & Overtime Deductions
New deductions proposed for workers who earn overtime or tips, especially in industries like food, hospitality, or beauty:
- Senate: Caps deductions at $12,500 for overtime and $25,000 for tips, with income phaseouts
- §45B tip credit may expand to beauty professionals
Resource
6. Senior Taxpayers
Seniors age 65+ could receive an additional $4,000–$6,000 deduction, depending on income. This is on top of the standard senior deduction.
Resource
7. Standard Deduction & Tax Brackets
- Senate proposes a major bump: $32,000 for married couples in 2026
- Both bills extend Trump-era tax rates and propose slower inflation adjustments to tax brackets
8. Miscellaneous Provisions
- Permanent casualty loss deductions for federally declared disasters
- Repeal of moving expense and 2% miscellaneous itemized deductions
Resource
For Business Owners: What to Expect
1. §199A Pass-Through Deduction
- Makes the 20% deduction for LLCs and S Corps permanent
- House proposes raising it to 23%
- Senate proposes expanding eligibility thresholds
Resource
2. Bonus Depreciation & §179 Expensing
- 100% bonus depreciation restored
- Senate makes it permanent
- §179 expensing limit raised to $2.5 million
Resource
3. 1099 Reporting Thresholds
Relief is on the way for small businesses and freelancers:
- 1099-K threshold reverts to $20,000 and 200 transactions
- General 1099 threshold raised from $600 to $2,000
Resource
4. Research & Development Deduction
- Senate allows permanent expensing of domestic research
- Retroactive to 2022 for eligible taxpayers
Resource
5. Opportunity Zones & PTET
- New funding round for Opportunity Zones
- Expanded deductibility for PTET payments (helpful for high-income S Corps and partnerships)
What Should You Do Now?
Don’t rush into decisions—yet. This legislation is still in draft form, but the core provisions are expected to pass in some form. Now is the time to start evaluating how they may affect your tax planning.
Start thinking about:
- Adjusting W-2 tip reporting or tracking overtime deductions
- Planning for large equipment purchases or R&D investments
- Strategizing HSA contributions and standard deduction planning
We’ll be keeping a close eye on the bill’s progress and will reach out with personalized tax strategies once the legislation is finalized.
Have Questions About Your Tax Situation?
Whether you’re a small business owner, a freelancer, or navigating retirement, we’re here to help. Reach out to schedule a tax planning session and ensure you’re ready for the changes ahead.
