Proposed Tax Bill Addresses Trump Campaign Promises and Expiring TCJA Provisions

Earlier this week, the House Ways and Means Committee released details of a multi-trillion-dollar tax-cut bill. The legislation closely follows President Donald Trump’s campaign promises of no tax on tips and overtime, tax breaks for seniors and car buyers, and extension of much of the expiring 2017 Tax Cuts and Jobs Act. The bill also addresses the “big three” business tax provisions: deducting research and development expenses, 100% bonus depreciation, and loosening the rules for the deductibility of business interest.

Key Provisions

• Permanent extension of individual income tax rates (no new millionaire’s tax rate)
• Permanent extension of the higher standard deduction with temporary increases for 2025 through 2028
• Additional $4,000 standard deduction for seniors (subject to income limitations)
• Estate and gift exemption increased to $15MM 
• State and local tax deduction is increased from $10,000 to $30,000 (subject to income limitations)
• Child tax credit of $2,000 made permanent with an increase to $2,500 for 2025 through 2028
• Return of the $300/$600 above-the-line deduction for charitable contributions
• 100% bonus depreciation for assets placed in service after 1/19/25 and before 1/1/2030
• Full expensing of Section 174 domestic research and experimental expenses for 2025 through 2029
• Increase in the Section 179 deduction to $2.5MM with the phaseout beginning at $4MM
• Qualified business income deduction made permanent and increased to 23%
• Addition of a special deduction for “Qualified Production Property” which allows 100% depreciation for manufacturing buildings
• Eliminates many business, home and vehicle energy tax credits
• Creating a new round of Qualified Opportunity Zones with investor tax benefits

There is still substantial debate to come as this bill moves through Congress. We will continue to monitor developments and keep you updated on any changes that may affect your tax situation. Please contact HBK with any questions or to discuss how these potential tax changes might impact your specific financial circumstances.