Early yesterday morning, the House passed President Trump’s One Big Beautiful Bill Act by a single vote. While the Bill still needs to make its way through the Senate, below are some notable parts to the 1,000+ pages that we find meaningful for our clients.  The full text may be found here:  https://www.congress.gov/bill/119th-congress/house-bill/1/text

Estate and Generation Skipping Tax

The Estate Tax and GSTT exemption ($13.99MM this year and otherwise set to sunset to approximately $7MM next year) rises to $15 million and will be adjusted for inflation going forward.  The Bill does not address Estate Tax rates, which had previously been examined by Congress.

Medicaid and the Elderly

Although Social Security income will still be subject to income tax, the standard deduction is temporarily increased to $4,000 for individuals 65 and over until 2028. These deduction extensions are decreased after certain thresholds ($150,000 married and $75,000 individually) are met. The Bill also creates financial incentives for states not to expand Medicaid coverage to people who are still near the poverty line but have higher incomes than other enrollees. Further, there is a reduction on food aid (commonly known as SNAP) and an expansion to the work requirements to receive food aid. Currently, the work requirement (for childless adults without disabilities) ends at age 54, the Bill increases that age to 64. Many additional Medicaid programs are also facing “community engagement requirements” and requalification every six months rather than once per year.

In addition to the Estate Tax and Medicaid concerns, the Bill could also have huge impacts to our clients who own small to medium-sized businesses. There are numerous business and tax provisions, below are some highlights.

SALT cap

Maybe the most popular and contentious item for discussion in the Bill is the chatter around the SALT cap. “SALT” is the state and local tax deduction, now capped at $10,000. The Bill raises the floor to $40,000 with phase outs downward for those with higher incomes. Additionally, the cap and income threshold will increase on SALT 1% annually over 10 years.

QBI

The Qualified Business Income (QBI or 199a deduction) provisions give businesses, including partnerships and S Corporations the ability to subtract 23% of their qualified business income from their taxes. This is an increase from the current 20%. This should have significant income tax savings for these tax paying entities.

R&D Expenditures

The Bill revises the current domestic research and development expenditures from a five-year capitalization and amortization timeline to various elections. Under the Bill, the taxpayer (until January 1, 2030), may 1) elect to immediately deduct the costs, 2) capitalize and amortize over the useful life, or 3) capitalize and amortize the cost over 10 years. There are additional tax credits for qualified R&D activities and more eligible expenses.

Additional Business-Related Notes

There are additional depreciation allowances to encourage businesses to invest in development, research, and productivity and new incentives for rural and agricultural investments. The Section 179 deduction cap is extended to $2.5 million from $1 million (with phase outs beginning at $4MM). The Qualified Opportunity Zone Program was renewed to stimulate economic development in certain communities, but with modified eligibility requirements and new tax and informational returns. Further, there are new restrictions on Employee Retention Credit claims and changes to the statute of limitations.

The Bill will make its way to the Senate for approval where changes can (and likely will) be imposed. If that occurs, the Bill will be sent back to the House for another vote. We will continue to monitor the Bill’s progress for our clients. For today, while intriguing (and dare we say, exciting, for the tax and estate nerds) this Bill is still just a Bill on Capitol Hill.