List of Tax Cuts in the Senate’s Big Beautiful Bill

The Senate released its full text of the One Big Beautiful Bill Act on Saturday.

The bill delivers on President Trump’s promise of PERMANENT, across the board, pro-growth tax relief for businesses and American households of every income level.

Below are a list of the major tax cuts included in the Senate’s reconciliation package.

Income Tax Cuts: Personal Income Tax Brackets and Rates Permanently Extended for Every Income Level

The bill makes permanent the lower personal income tax rates and the modified income tax brackets enacted by the 2017 Tax Cuts and Jobs Act.

It also provides further tax relief with an additional year of inflation adjustment to the 10 percent, 12 percent, and 22 percent brackets. This extra inflation adjustment further reduces income taxes.

Tax Simplification: Doubled Standard Deduction Increased by $1,500 and Made Permanent

The current standard deduction, which was doubled in the 2017 tax cuts and currently claimed by 90 percent of tax filers, is increased and made permanent.

Beginning in 2025, the standard deduction increases by $1,500 for married couples, $1,125 in the case of a head of household, and $750 for individuals.

This means the new standard deduction for 2025 would increase to $31,500 for married couples, $23,625 for a head of household, and $15,750 for a single filer. These amounts are adjusted for inflation thereafter.  

Tax Relief for Families: Doubled Child Tax Credit Increased by $200 and Permanently Extended 

The bill makes permanent the doubled child tax credit of $2,000 per child that would be slashed in half if the Trump tax cuts were allowed to expire at the end of this year. The bill further increases the child tax credit to $2,200 per child beginning in 2025.

It also makes permanent the increased income phase-out threshold amounts of $200,000 ($400,000 in the case of a joint return), as well as the $500 nonrefundable credit for each dependent of the taxpayer other than a qualifying child.

Small Business Tax Cut: The Deduction for Qualified Business Income (199a) is Permanently Extended and Enhanced

The Deduction for Qualified Business Income (199a) for small businesses (partnership, S corporation, sole proprietorship, etc.) is permanently extended at 20 percent. Further tax relief is provided by a loosening of the phase in of limitations by increasing the $50,000 (non-joint returns) and $100,000 (joint returns) amounts to $75,000 and $150,000, respectively. This provision also introduces a new, inflation-adjusted, minimum deduction of $400 for taxpayers who have at least $1,000 of QBI from one or more active trades or businesses in which the taxpayer materially participates. This ensures small business owners with a certain QBI level are entitled to an enhanced baseline deduction.

Death Tax Relief: Permanent Extension and Increased Exemption Levels

Permanently extends the death tax and lifetime gift tax exemption, increases the exemption amount to $15 million for single filers ($30 million for married filing jointly) in 2026 and indexes the exemption amount for inflation thereafter.

Permanent 100% Expensing  

Permanently allows businesses to immediately expense 100 percent of the cost of qualified property acquired on or after January 19, 2025, reviving one of the most pro-growth provisions of the 2017 Tax Cuts and Jobs Act that is phasing out under current law. Without restoration of immediate 100 percent expensing, businesses can only immediately expense 40 percent of the cost for 2025. This percentage would fall to 20 percent in 2026. Instead, 100 percent expensing is made permanent under this bill. 

Permanently Expands Research and Development Expensing  

Permanently allows businesses to immediately expense 100 percent of the cost of qualified property acquired on or after January 19, 2025, reviving on of the most pro-growth provisions of the 2017 Tax Cuts and Jobs Act that is phasing out under current law. Without restoration of immediate 100% expensing, businesses were only allowed to immediately expense 40 percent of the cost for 2025 before it was scheduled to fall to 20 percent in 2026. Instead, 100 percent expensing is made permanent under this bill.

Permanently Restores Pro-Growth Interest Deductibility 

Permanently restores the ability of businesses deducting net interest payments to include depreciation and amortization costs (Section 163(j)) for taxable years beginning after December 31, 2024. The Tax Cuts and Jobs Act (TCJA) signed into law by President Trump in 2017 allowed businesses to deduct net interest payments against their adjusted taxable income limited to 30 percent of to earnings before interest, taxes, depreciation, and amortization (EBITDA). However, this 30 percent limit tightened in 2022 as the EBITDA standard expired under law. The amount of interest deductions that businesses can take became limited to only using earnings before interest and taxes (EBIT), representing a significant tax increase on firms. Restoring the EBITDA-based interest limitation creates jobs, increases wages and grows GDP by 0.1 percent, according to the Tax Foundation.

New 100% Expensing for New Factories and Qualified Production Property

Allows businesses to immediately deduct 100 percent of the cost of certain new factories, certain improvements to existing factories, and certain other structures for manufacturing, production or refining . Under current law, businesses must deduct the cost of nonresidential real property over a 39-year period. Any portion of a property that is used for offices, administrative services, lodging, parking, sales activities, research activities, software engineering activities, or certain other functions is ineligible for this benefit. To qualify, construction, reconstruction or erection must begin after January 19, 2025, and before January 1, 2029.

Opportunity Zone Tax Cut 

Establishes a permanent Opportunity Zone program, allowing for over $100 billion of investment in rural and low-income communities (a poverty rate of at least 20 percent). This tax cut broadens the Opportunity Zone provision enacted in the 2017 Tax Cuts and Jobs Act.

This provides capital gains tax relief for long-term investment and construction in designated census tracts within all 50 states. ATR has compiled local news reports on the benefits of Opportunity Zone construction.

No Tax on Tips 

Creates a deduction of up to $25,000 for qualified tips received by an individual. This deduction is allowed for both employees receiving a W-2 and independent contractors receiving a 1099-K, 1099-NEC, or reported by the taxpayer on Form 4317. Eligible individuals must be in a job that traditionally and customarily receives tips.

The deduction begins phasing out for individuals with modified adjusted gross income exceeding $150,000 ($300,000 in the case of a joint return). Individuals are required to have a work-eligible SSN to claim. The deduction is allowed through 2028. 

No Tax on Overtime Pay 

Creates an above-the-line income deduction for overtime premium payments, beginning in 2025. This provision provides a deduction of up to $12,500 for qualified overtime compensation received by an individual during a given tax year. The deduction is allowed for both itemizers and non-itemizers. Similar to the No Tax on Tips provision, the deduction begins to phase out when the taxpayer’s modified adjusted gross income exceeds $150,000 ($300,000 in the case of a joint return) and a work-eligible SSN to is mandatory in order to claim the deduction.

Tipped income is excluded from the overtime deduction to ensure there is no double tax benefit provided. This deduction is administered through 2028. 

Enhanced Deduction for Seniors

Provides a deduction for seniors (age 65 or older) of $6,000 per eligible filer. The deduction begins to phase down for filers with a modified adjusted gross income exceeding $75,000 for single filers ($150,000 for married filing jointly). The deduction is allowed for tax years 2025 through 2028.

No Tax on Car Loan Interest 

Creates a deduction of up to $10,000 for qualified passenger vehicle loan interest during a given taxable year starting in 2025. The deduction phases out when the taxpayers’ modified adjusted gross income exceeds $100,000 ($200,000 for a couple). For eligibility, final assembly of the vehicle must occur in the U.S. and the deduction does not apply to used cars. This deduction is allowed through 2028. 

Expands Health Savings Accounts (HSAs)

The bill expands Health Savings Accounts (HSAs) by allowing Bronze and Catastrophic health to be used in connection with HSA by adding them to the definition of a “high deductible health plan.” This allows taxpayers to save and invest more of their own money tax-free to use for health care expenses.

Repeals the IRS 1099-K Venmo Tax Paperwork Nightmare.

Repeals the law imposed by President Biden and congressional Democrats requiring tax paperwork when Americans use third-party payment processors such as Venmo and Paypal. The Biden-era law requires 1099-K paperwork issuance at a mere $600 in total payments in a year, with no transaction threshold, burdening tens of millions of Americans with invasive paperwork.

This bill restores the previous dollar amount and transaction quantity thresholds, which means 1099-K issuance will only occur when both of two thresholds are met: $20,000 in payments in a single year from the same payer AND 200 transactions in a single year from the same payer.

Note: To avoid the political ramifications of the Democrats’ own law, the Biden IRS “delayed” enforcement of the provision while Biden was in office. After Trump won, the Biden-appointed IRS chief declared the 1099-K paperwork nightmare would take full effect in the year 2026 – just in time for the midterm elections – and when voters would assume the nightmare law was imposed by Republicans.

Excise Tax Cut on Firearm Suppressors 

Completely eliminates the $200 transfer tax on suppressors for firearms.

Permanent Deduction on Charitable Contributions for non-Itemizers 

Allows for a permanent deduction of up to $1,000 for single filers that do not elect to itemize for charitable contributions. 

Extends Paid Family and Medical Leave Credit 

Permanently expands credit to all fifty states and lowers minimum employee work requirement to six months from one year. It modifies the credit to allow it to be claimed by an applicable percentage of premiums paid by an eligible employer during a taxable year. In current law, the credit is set to expire after December 31, 2025.