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Can a 940-page bill be "beautiful"?

Beauty is in the eye of beholder, who is probably not the bleary-eyed person responsible for reviewing all 940 pages of this law. 

As you can imagine, we are still analyzing the details of this recently enacted law, but here are the highlights. We will keep you updated as additional information becomes available. 

Business Income Tax

Domestic Research and Development (R&D) (beginning January 1, 2025)

  • The bill allows Domestic R&D expenses to be fully expensed in the year in which they were incurred. 
  • The bill also has provisions for taking the R&D credit, and retroactively correcting 2022 - 2024 returns.  It offers two different methods of applying for relief.  Full details as to exactly how to go about applying for the relief have not been provided. 

Depreciation & Investment Incentives (for taxable years beginning January 1, 2025)

  • Section 179 expensing limits are increased beginning in 2025 to $2.5 million (from $1.25 million) with a new phase-out threshold of $4 million (previously $3.13 million), both indexed for inflation.
  • 100% bonus depreciation is allowed in the first year of purchased qualified production property.

Interest Deduction (taxable years beginning January 1, 2025)

  • Limited to 30% of EBITDA (earnings before interest, taxes, depreciation, and amortization) versus 30% of EBIT under prior law (for those with average annual gross receipts in excess of $31 million). 

Employer Childcare Credit (for amounts paid or incurred after December 31, 2025)

  • The standard credit for qualifying expenses incurred by the employer will increase from 25% to 40% and the annual cap on these expenses will increase to $500,000 for larger employers.  (Note: Eligible small business can receive a 50% credit with a $600,000 cap. )

Estate Tax

Exemption for Estate and Gift Tax (applies to decedents dying and gifts made after December 31, 2025)

  • Will increase the exemption from $13.61 million per person in 2025 to $15 million per individual and from $27.22 million per married couple to $30 million indexed for inflation after 2025. 
  • Rather than sunsetting as scheduled under the  TCJA, this is to be a permanent increase. 

Individual Tax

Tax Rates and Brackets (taxable years beginning January 1, 2025). 

  • The top rate is set permanently at 37% for individuals (previously scheduled to expire and increase to 39.6% after 2025).

Standard Deduction (taxable years beginning January 1, 2025). 

  • Increases the (now permanent) standard deduction as indexed for inflation and adds a temporary increase of $1000 for single filers and $2000 for married filing jointly, $1500 for head of household through 2028. 

State and Local Tax Deduction (taxable years beginning January 1, 2025)

  • Increases the federal state and local deduction cap from $10,000 to $40,400 (or $20,200 for married filing separately), for taxpayers with AGI over $505,000 (or $202,500 MFS), the cap is gradually reduced — but never below $10,000 (or $5,000 MFS). 

Senior Bonus Deduction (taxable years beginning after December 31, 2024, and before January 1, 2029)

  • Seniors (aged 65) and up qualify for an additional temporary deduction of $4000 per taxpayer which is available even if a taxpayer itemizes their deductions.  It is phased out at AGI over $75,000 for singles, $150,000 for married filing jointly. (Valid, work-eligible Social Security numbers are required.)

Auto Loan Interest (indebtedness incurred during tax years beginning after December 31, 2024, and before January 1, 2029)

  • Interest incurred to buy a passenger vehicle for personal use will be deductible above the line (for calculating AGI).  This is subject to phase out above MAGI(Modified Adjust Gross Income) of $100,000 for a single taxpayer and $200,000 for married filing jointly.  

Tip  and Overtime Income Deduction (for tax years beginning after December 31, 2024, and before January 1, 2029)

  • For individuals whose earned income does not exceed $160,000 annually, there is a new above the line deduction (this means it is not an itemized deduction) for:
    • Qualified tip income
    • Overtime income

Other Individual Provisions 

529 Plan Expansion (for distributions made after July 4, 2025)

  • K–12 Education: Expands tax-free 529 withdrawals to cover elementary, secondary, or homeschool expense
  • Costs for Credentials: Plans can now cover fees, books, supplies, and other costs for recognized postsecondary credentialing programs

Above-the-Line Charitable Deduction (for taxable years beginning after December 31, 2024)

  • Non-itemizers can deduct up to $150 (single) or $300 (joint) in qualified charitable contributions

Trump Accounts for Children (effective October 4, 2025 which is 3 months after enactment)

  • New tax-advantaged account for children under 8
  • Contribute up to $5,000/year, inflation-adjusted
  • With some limitations, funds can generally be used for education, small business, or a first-time home purchase

Trump Account Kickstart (children born after December 31, 2024, and before January 1, 2030)

  • One-time $1,000 federal deposit into Trump accounts, subject to eligibility

Statutory Debt Limit

  • Increased by $4 Trillion.