In the early hours on May 22, the U.S. House of Representatives passed the “One Big Beautiful Bill Act”, solidifying and reshaping key parts of the tax code. While the bill still needs to clear the Senate, and is likely to be revised in the process, it marks a significant shift in tax policy and long-term planning opportunities.

We’ve reviewed the entire 1,116-page tax reform bill so you don’t have to, but if you’re curious to dive in yourself, you can read it here. Here’s a summary of the most relevant and confirmed provisions from the bill in its current form as passed by the House.

Key Tax Provisions Made Permanent (Originally Set to Expire After 2025)

These measures were set to expire under the 2017 Tax Cuts and Jobs Act (TCJA) but are now extended or made permanent:

Lower Individual Tax Rates

The current income tax brackets, including the reduced top marginal rates, are made permanent beyond 2025.

Increased Standard Deduction

The higher standard deduction stays and gets a temporary boost from 2025 to 2028 of $1,500 more for single filers, $1,000 for joint. Since the majority of Americans take the standard deduction, this means lower taxes for most people without extra paperwork.

Enhanced Child Tax Credit

The bill increases the child tax credit to $2,500 from 2025 through 2028, before reverting to $2,000 starting in 2029. The $1,400 refundable portion will be indexed for inflation.

Alternative Minimum Tax (AMT) Relief

Higher AMT exemption levels and thresholds for phase-outs are preserved, helping high-income taxpayers avoid complex parallel tax calculations and simplifying taxes for some filers with certain types of equity compensation.

Estate & Gift Tax Exemption Increased

The lifetime exemption is permanently increased to $15 million per person, indexed for inflation starting in 2026. This provides much needed clarity for many advanced estate planning strategies.

Qualified Business Income (QBI) Deduction Increased

The Section 199A deduction for pass-through businesses is increased from 20% to 23% and made permanent. The bill also expands eligibility and allows qualified BDC (Business Development Company) interest dividends to count toward the deduction.

New Tax Relief and Deductions

The bill also introduces several new provisions benefiting middle-income families, retirees, and small business owners:

SALT Deduction Cap Increased

The state and local tax deduction cap is raised to $30,000 for individuals and $40,000 for joint filers, with reductions phased in at higher income levels, providing some relief to filers in high tax states (this provision is referenced in the outline but not fully detailed in the text—monitor Senate amendments closely).

Charitable Deduction for Non-Itemizers Reinstated

A deduction for charitable contributions is allowed even if you don’t itemize, a notable return of a pandemic-era provision, now set to expire after 2028.

No Federal Tax on Tips and Overtime

Income from tips and overtime is now federally tax-exempt, a notable benefit for service and entertainment professionals, provided certain criteria are met.

Enhanced Senior Deduction

Seniors are eligible for an additional $4,000 deduction, phased out at $75,000 single / $150,000 joint income thresholds.

529 Plan Expansion

529 accounts can now be used for K-12 tuition, homeschooling, and workforce credentialing expenses, but be sure to confirm state-level alignment before implementing these strategies.

Healthcare-Related Tax Enhancements

Several healthcare-related tax benefits have been expanded:

• HSA Contributions by Medicare Enrollees: Individuals on Medicare can now contribute to Health Savings Accounts.
• FSA/HRA Rollovers to HSAs: Unused balances from Flexible Spending or Health Reimbursement Accounts can be rolled into HSAs.
• Fitness Expenses Qualify as Medical Deductions: Gym memberships and fitness programs qualify if paired with an HSA (details on eligible services pending IRS clarification).

Energy and EV Credits Rolled Back

Clean energy incentives see major cutbacks:

• EV Tax Credits End: Credits expire after December 31, 2025, or one year later for manufacturers with fewer than 200,000 units sold.
• Other Energy Credits Phased Out: Various renewable energy and home efficiency credits are repealed or sunset, signaling a reversal of the Inflation Reduction Act’s climate emphasis (details in energy provisions not specified, monitor Senate negotiations).

What About Social Security Tax Relief?

One widely discussed proposal that didn’t make it into the final House bill was the elimination of federal income tax on Social Security benefits. While many lawmakers supported the idea, changes to Social Security are generally prohibited in reconciliation bills, which is the legislative process used to pass this package. That restriction is the primary reason this tax cut was excluded, though it may return in future standalone legislation. For now, Social Security benefits remain subject to federal tax based on income thresholds.

Final Thoughts

This House-passed bill represents a roadmap for future tax policy. While we fully anticipate changes to be made before the bill passes in the Senate, if enacted in its current or similar form, it would create:

• Long-term estate and income tax clarity for families and high-net-worth individuals.
• Enhanced planning opportunities for business owners using pass-through entities.
• Urgency around clean energy investments, especially electric vehicle and utility purchases.
• New advantages in health, education, and family financial planning.

We’re actively monitoring the Senate’s next steps. In the meantime, now is an excellent time to review your tax planning strategy with your advisor and Navalign’s fiduciary wealth management team.