07/05/2025
Beyond the Brink: Unpacking President Trump's 'Big Beautiful Bill' and Its Enduring Impact on American Taxpayers and Enterprise
Due to numerous inquiries from my clients about the recently enacted law, "The One Bill Beautiful Bill," by President Trump, I feel obligated to explain this bill's intricacies and how it impacts taxpayers moving forward.
On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was enacted, marking the most substantial modification of the United States tax code in decades. A foremost feature of this legislation was the permanent reduction of the corporate tax rate from 35% to 21% (rather than the 25% indicated in previously circulated documents). Furthermore, the TCJA lowered individual income tax rates, raised standard deductions and child tax credits, and imposed a cap on the State and Local Tax (SALT) deduction. These measures were specifically designed to enhance economic growth and simplify tax filing for numerous taxpayers.
However, it is important to note that many of the individual tax changes introduced by the TCJA are temporary and are scheduled to expire after 2025. If new legislation is not enacted to extend or permanently adopt the provisions of the TCJA by the end of 2025, American taxpayers and businesses will revert to the tax regulations that existed before the TCJA, leading to considerable tax increases for many individuals and enterprises. This adjustment could result in tax increases exceeding $4 trillion.
To mitigate this impending economic consequence, President Trump has signed into law the "One Big Beautiful Bill" today, thereby preventing the anticipated tax hike exceeding $4 trillion scheduled for the end of 2025 due to the expiration of several provisions established by the TCJA.
The following is a detailed examination of the anticipated impacts of the "One Big Beautiful Bill":
For Individual Taxpayers:
A principal consequence for individual taxpayers will be an increase in overall tax liabilities. Specifically:
Income Tax Rates Will Rise:
The lower individual income tax rates instituted by the TCJA are projected to revert to their pre-TCJA levels across most income brackets. For example, the top rate will increase from 37% back to 39.6%, thus subjecting a larger portion of income to higher tax rates.
Standard Deduction Will Decline:
The standard deduction, which nearly doubled under the TCJA and simplified tax filing for many individuals, will be reduced by nearly half. As a result, numerous taxpayers currently utilizing the standard deduction may find it more beneficial to itemize their deductions, thereby increasing the complexity of tax preparation and potentially elevating taxable income.
Child Tax Credit Will Decrease:
The Child Tax Credit is expected to be diminished from $2,000 per child to $1,000. Additionally, the income thresholds for eligibility will be substantially lowered, significantly impacting the financial support available to many families.
Personal Exemptions Will Return (with Conditions):
While personal exemptions will be reinstated (having been effectively eliminated by the TCJA), their utility is likely to be overshadowed by the reduction in the standard deduction for the majority of taxpayers.
"Pease Limitation" and Expanded AMT Will Resurface:
High-income earners will once again contend with the Pease limitation, a provision that constricts the value of itemized deductions. Furthermore, an increased number of taxpayers are expected to fall under the Alternative Minimum Tax (AMT) due to lower exemption amounts.
Miscellaneous Itemized Deductions May Return:
Deductions for expenses such as unreimbursed employee costs and tax preparation fees are anticipated to reemerge; however, the financial impact of these deductions is generally minimal for most taxpayers.
Estate and Gift Tax Exemption Will Diminish:
The estate and gift tax exemption, significantly increased by the TCJA (currently approximately $13.99 million per individual), is projected to be reduced by nearly half, potentially subjecting a greater number of estates to federal estate taxes.
Tax Filing Will Become More Complex:
Ultimately, with a diminished standard deduction, a larger proportion of individuals are likely to opt for itemization, resulting in increased complexity in their tax returns.
For Businesses:
Businesses too will confront the expiration of several critical deductions:
QBI Deduction (Section 199A) Will Expire:
The 20% deduction for qualified business income from pass-through entities (such as sole proprietorships, partnerships, and S corporations) is scheduled to lapse. This expiration will directly heighten the tax burden on numerous small and medium-sized enterprises.
Bonus Depreciation Will Phase Out:
Although already in decline, the 100% bonus depreciation (which allows businesses to immediately deduct the entire cost of certain capital investments) will continue its scheduled phase-out and ultimately expire. This development will significantly lessen the incentive for businesses to invest in new equipment and machinery.
International Tax Regulations Will Change:
Rates for Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII) are projected to increase. Additionally, the Base Erosion and Anti-Abuse Tax (BEAT) rate will also rise, thereby impacting multinational corporations.
While the "One Big Beautiful Bill" (OBBB) is presented as a measure to avert widespread tax increases, it faces significant criticism for its potential disadvantages, particularly concerning healthcare. Some notable drawbacks of this bill are as follows:
Increased Deficit/National Debt:
The Congressional Budget Office (CBO) and the Staff of the Committee on Taxation estimate that the passage of the "One Big Beautiful Bill" Act would increase the primary deficit by $2.4 trillion during the 2024-2025 period.
Complications of the Tax Code:
This criticism is frequently voiced by tax policy experts when new targeted deductions and exemptions are introduced. Analyses by organizations like the Tax Policy Center and the Tax Foundation often discuss the specifics of these provisions, such as those related to tips and overtime.
Increased Immigration Enforcement Spending:
According to the American Immigration Council, recent legislation allocates $170 billion for immigration and border enforcement, representing the most substantial investment in the history of U.S. detention and deportation efforts. This funding encompasses $45 billion designated for the establishment of new detention facilities and $29.9 billion earmarked for the operations of U.S. Immigration and Customs Enforcement (ICE).
Massive Medicaid Cuts:
The proposed legislation includes significant reductions to Medicaid, which the Congressional Budget Office (CBO) projects may result in millions of individuals losing their coverage. Estimates indicate that between 8.7 million and nearly 12 million individuals could be affected by the year 2034. These reductions represent the most substantial decrease in Medicaid funding since the program's inception.
President Trump's signing of the "One Big Beautiful Bill" today effectively averts a substantial tax increase for millions of individuals, providing essential relief to both individuals and businesses that would otherwise confront higher tax obligations beginning in 2026. However, this financial stability is accompanied by significant trade-offs, particularly in the realm of healthcare, where considerable cuts to Medicaid may adversely affect millions of vulnerable individuals. Consequently, while this legislation mitigates one economic challenge, it concurrently introduces other notable changes that necessitate thorough consideration and strategic planning for all stakeholders involved.
REFERENCES:
https://www.congress.gov/bill/119th-congress/house-bill/1/text (Look for the "Enrolled" or "Public Law" version after presidential signature).
Tax Policy Center, "Don't Expect Much Growth From The One Big, Beautiful Bill" (June 10, 2025)
American Immigration Council, "Congress Approves Unprecedented Funding for Mass Deportation" (July 1, 2025).
Congressional Budget Office (www.cbo.gov) and the Joint Committee on Taxation (www.jct.gov).
Percival Viagoly, MPA, CPA Cand.
Text for H.R.1 - 119th Congress (2025-2026): One Big Beautiful Bill Act
