Understanding the GOP’s “One Big Beautiful Bill”: What It Means for Individual Taxpayers
On May 12, 2025, House Republicans introduced a comprehensive tax and spending proposal known as the “The One Big Beautiful Bill.” This legislation aims to make permanent several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) and introduces several new tax measures that could impact individual taxpayers.
Preliminary analysis by the nonpartisan group, The Tax Foundation, finds that over the long haul, the bill, as currently written, would increase long-run GDP by 0.6 percent and reduce federal tax revenues by $4.1 trillion over the next 10 years. Factoring in economic growth over the same period, the revenue reduction would come in closer to $3.3 trillion. The House passed budget resolution would allow for a $4.5 trillion deficit increase over the next decade as long as spending is cut by $1.7 trillion. The bill is likely to face challenges as it moves through the House Ways and Means Committee, but the current version of the bill gives us some insight as we begin creating tax plans for 2025 and into the future.
Below we will take a closer look at some of the key individual provisions of the bill and the impact they might have on certain taxpayers.
Key Takeaways for Individual Taxpayers
Permanent Extension of 2017 Tax Cuts: The bill seeks to make the individual income tax rates and brackets from the TCJA permanent, increasing the inflation adjustment for all brackets except the 37 percent bracket.
Permanent Extension of Standard Deduction and Elimination of the Personal Exemption: The standard deduction would also be temporarily increased by $2,000 for joint filers, $1,500 for head of household filers, and $1,000 for all other filers from 2025 to the end of 2028.
Temporary Expansion of the Child Tax Credit: The child tax credit would temporarily be increased to $2,500 from 2025 to 2028 reverting to $2,000 thereafter, adjusted for inflation.
New Deductions for Workers: The bill aims to temporarily allow certain classes of taxpayers to deduct tip income and overtime pay. The proposed deductions would apply for tax years 2025 to 2028 and would not be available to highly compensated employees.
Senior Citizen Benefits: An additional $4,000 standard deduction would be available for seniors from 2025 to 2028, with phaseouts to the additional deduction beginning at $75,000 for single filers and $150,000 for joint filers.
State and Local Tax (SALT) Deduction Cap Adjustment: The cap on SALT deductions would be permanently raised from $10,000 to $30,000 for single filers earning under $200,000 and married filers earning under $400,000.
Permanent Limitation on Certain Itemized Deductions and Auto Loan Deduction: The limitation on personal casualty losses and wagering losses would be made permanent and certain moving expenses would be permanently terminated. Auto loan interest on autos with final assembly in the U.S. would temporarily be deductible for both itemizers and non-itemizers for tax years 2025 to 2028. The deduction would be capped at $10,000 and phases out by $200 for every $1,000 of income above $100,000 for single filers and $200,000 for joint filers.
Overall Itemized Deduction Limitation: the total value of itemized would be limited to 35 cents on the dollar. This would impact the highest earners in the top marginal income tax rate of 37 percent
Elimination of Certain Tax Credits: The bill proposes phasing out or eliminating various clean energy tax credits after 2025, specifically those for energy-efficient home improvements and electric vehicles. The bill also takes a new approach at crippling the Affordable Care Act by tightening claims for premium tax credits (PTC) and repealing the limit on repayments of credits received in advance throughout the year in the form of premium subsidies.
Additional Considerations
Deficit Implications: Analysts estimate that the major tax provisions of the bill could lead to a 0.6 percent expansion of the long-run economy. However, they also estimate an addition of approximately $3.3 trillion to the federal deficit over the next decade. These estimates raise concerns about long-term fiscal sustainability as the deficit increase would require the U.S. government to borrow more. As interest payments on debt to foreigners increase, American incomes decrease.
Temporary Provisions: While many tax cuts are made permanent, some new deductions and credits are set to expire after a few years, introducing potential uncertainty for future tax planning.
Final Thoughts
The “One Big Beautiful Bill” presents a significant overhaul of the current tax system, with various provisions that could affect individual taxpayers differently based on their income levels, family situations, and geographic locations. Taxpayers are encouraged to consult with a CPA or tax professional to understand how these proposed changes may impact their personal financial situations.
If you have questions about how these proposed changes could affect you or would like personalized guidance, don’t hesitate to reach out to Platform 3 — we're here to help you navigate what’s next.