2025 Big Beautiful Bill Act

Make the expiring rate and bracket changes permanent and increase the inflation

adjustment by an extra year for 10 percent, 12 percent, and 22 percent brackets.

Make the standard deduction

increase permanence with an enhancement, starting in 2025 at $31,500 for joint filers, $23,625 for head of household, and $15,750 for all other filers, inflation adjusted thereafter.

Make the personal exemption elimination permanent.

Temporarily add a senior deduction of $6,000 for each qualifying individual for both itemizers and non-itemizers that phases out when modified adjusted gross income

exceeds $75,000, available from 2025 through 2028.

Make the expiring child tax credit

permanent with an increased maximum of $2,200 in 2026, inflation adjusted thereafter.

Make the $750,000 principal limit for the home mortgage interest deduction

permanent.

Temporarily increase the cap on the itemized deduction

for state and local taxes (SALT) to $40,000 for 2025 and increase the cap by 1 percent from that level through 2029, subject to a phaseout for taxpayers with incomes above $500,000, then reduce the cap to a flat $10,000 thereafter.

Make other changes and limitations to itemized deduction permanent, including the limitation on personal casualty losses, termination of the miscellaneous itemized deduction (except for educator expenses), Pease limitation on itemized deductions, and certain moving expenses (except for active-duty members of the armed forces and members of the intelligence community).

Limit the value of itemized deductions to 35 cents on the dollar for taxpayers in the top tax bracket.

Make the increase in the alternative minimum tax (AMT) exemption permanent; revert AMT exemption phaseout thresholds to 2018 levels of $500,000 for single filers and $1 million for joint returns, indexed for inflation thereafter; increase the phaseout rate.

Create a 0.5 percent floor on itemized deductions for charitable contributions.

Create a permanent $1,000 above-the-line deduction for charitable contributions ($2,000 for joint filers).

Repeal several Inflation Reduction Act green energy tax credits primarily aimed at individuals, such as electric vehicle and residential energy efficiency credits, either after 2025 or within a year of the law’s enactment.

Temporarily make up to $25,000 of tip income deductible for individuals in traditionally and customarily tipped industries for tax years 2025 through 2028; deduction phases out at a 10 percent rate when adjusted gross income exceeds $150,000 ($300,000 for joint filers).

Temporarily make up to $12,500 ($25,000 for joint filers) of the premium portion of overtime compensation deductible for itemizers and non-itemizers for tax years 2025 through 2028; the deduction phases out at a 10 percent rate when adjusted gross income exceeds $150,000 ($300,000 for joint filers).

Temporarily make auto loan interest deductible for itemizers and non-itemizers for new autos with final assembly in the United States for tax years 2025 through 2028; deduction limited to $10,000 and phases out at a 20 percent rate when income exceeds $100,000 for single filers and $200,000 for joint filers.

Permanently increase the estate and lifetime gift tax exemption

to an inflation-indexed $15 million for single filers and $30 million for joint filers beginning in 2026.

Permanently restore immediate expensing for domestic research and development (R&D) expenses; small businesses with gross receipts of $31 million or less can retroactively expense R&D back to after 12/31/21; all other domestic R&D between 12/21/21 and 1/1/25 can accelerate remaining deductions over a one- or two-year period.

Permanently reinstate the EBITDA-based limitation on business net interest deductions.

Permanently restore 100 percent bonus depreciation

for short-lived investments.

Temporarily provide 100 percent expensing of qualifying structures, with the beginning of construction occurring after Jan. 19, 2025, and before Jan. 19, 2029, and placed in service before Jan. 1, 2031.

Make the Section 199A pass-through deduction permanent; increase phase-in range of limitation by $50,000 for non-joint returns and $100,000 for joint returns; create a minimum deduction of $400 for taxpayers with $1,000 or more of qualified business income (QBI) for material participants.

Implement a 1 percent floor on deduction of charitable contributions made by corporations.

Eliminate clean electricity production credit (45Y) and investment credit (48E) for projects placed in service after 2027, except for projects that begin construction within 12 months of passage and baseload power sources such as nuclear, hydropower, geothermal, and battery storage; introduce restrictions related to foreign entities of concern (FEOC).

Extend the clean fuel production credit (45Z) until 2030 and expand eligibility.

Introduce FEOC restrictions for several other credits, including the nuclear production credit (45U), the clean fuel production credit (45Z), the carbon oxide sequestration credit (45Q), and the advanced manufacturing production credit (45X); alter phaseouts and eligibility for 45X and 45Q.

Require intangible drilling and development costs to be taken into account for the purposes of computing adjusted financial statement income.

Add income from hydrogen storage, carbon capture, advanced nuclear, hydropower, and geothermal energy to qualifying income of certain publicly traded partnerships treated as C corporations.

Rename GILTI to Net CFC Tested Income (NCTI) and establish a 12.6 percent to 14 percent top rate after foreign tax credit treatment. Eliminate indirect expense allocation, raise foreign tax creditability to 90 percent, and remove the QBAI (qualified business asset investment) exclusion for the deemed return on physical capital. Also includes some miscellaneous base broadeners that we do not model.

Rename FDII to Foreign-Derived Deduction Eligible Income (FDDEI), and establish a 14 percent rate, with parallel changes to those in GILTI.

Raise the BEAT rate to 10.5 percent and preserve current policy on allowability of US tax credits under BEAT.

Make permanent the CFC “Look-Through” Rule.

Establish a 1 percent remittances tax, with many more transactions presumed exempt than under the House version.

Change rules for premium tax credits (PTCs), the CTC, and the earned income tax credit (EITC).

Expand the Section 179 expensing cap to an inflation-adjusted $2.5 million with a phasedown starting when the cost of qualifying property exceeds an inflation-adjusted $4 million; applies after Dec. 31, 2024.

Raise the tax on student-adjusted endowment of certain private colleges and universities in a new bracketed structure with a top rate of 8 percent, exempting institutions with fewer than 3,000 full-time students.

Expand the Section 4960 tax on excess compensation to any employee of an applicable tax-exempt organization that receives remuneration in excess of $1 million