What’s Inside the “Big, Beautiful” Tax Bill—and Why It Matters for You
Earlier this month, the House of Representatives passed a sweeping new tax bill aimed at locking in—and expanding—many of the tax rules we've lived under since 2017. While it still needs to make it through the Senate, it’s a big enough deal that it’s worth paying attention now.
This post breaks down what’s in the bill, what’s changing, and what might matter for your financial plan. Here’s what we cover—feel free to jump ahead to what’s most relevant:
- The 2017 Tax Cuts: What’s Sticking Around
- SALT Deduction Cap: Increased to $40,000
- The QBI Deduction: Gets a Boost
- HSAs: More Flexible Use, Higher Contribution Limits
- 529 Plans: Expanded Use for K-12, Professional Certifications
- MAGA Accounts: A New Savings Option for Kids
- Estate Taxes: No Drop in the Exemption (for Now)
The 2017 Tax Cuts: What’s Sticking Around
One of the biggest pieces of the new House tax bill is a simple one: it keeps the core parts of the 2017 Tax Cuts and Jobs Act (TCJA) in place. These provisions were originally set to expire after 2025, but the new bill would make them permanent—or in some cases, extend them temporarily with a few sweeteners.
What’s Included:
- Tax Brackets: The current seven-bracket system stays in place—10%, 12%, 22%, 24%, 32%, 35%, and 37%. These brackets were scheduled to revert to their pre-2017 (higher) levels in 2026, but this bill would prevent that.
- Child Tax Credit: Bumps up to $2,500 per child through 2028 before settling back to $2,000 with inflation adjustments.
- Standard Deduction: The higher standard deduction from TCJA would be locked in and temporarily increased from 2025 to 2028—an extra $2,000 for married couples and $1,000 for single filers.
- Bonus for Age 65+: An additional $6,000 for single filers or $11,200 for married couples where both spouses are over 65—on top of the regular 65+ bump. This bonus phases out for higher earners.
SALT Deduction Cap: Increased to $40,000
The 2017 tax law put a hard $10,000 cap on the amount of state and local taxes (SALT) you could deduct—regardless of whether you were single or married.
The new bill would raise that cap to $40,000 starting in 2026, but with a catch:
The new SALT is fully accessible to those with income under $500,000 and phases out between $500,000 and $600,000. Above $600,000, the cap reverts to the original $10,000.
Unlike the original cap, this one would be indexed to inflation, increasing by 1% annually through 2033.
Planning Takeaway: The higher SALT cap opens the door for more strategic deduction planning. Taxpayers who pay significant property taxes and give charitably may want to bunch those expenses into every other year—taking full advantage of the increased standard deduction in low-deduction years and expanded SALT limit in high-deduction years.
Example: A couple earning $250,000 annually gives $25,000 to charity and pays $15,000 in property taxes each year.
Base case: They itemize both years, deducting $40,000 each year ($25k charitable + $15k SALT), for a total of $80,000 in deductions over two years.
Bunching strategy: They shift both years’ charitable giving and property taxes into a single year, deducting $80,000 in one year—then take the standard deduction (say ~$30,000) the next year. Total deductions over two years = $110,000.
The QBI Deduction: Gets a Boost
If you own a pass-through business—whether it's an LLC, S-corp, or sole proprietorship—you should already be familiar with the Qualified Business Income (QBI) deduction, also known as Section 199A. The new tax bill proposes making this powerful deduction even better.
What’s Changing:
- The deduction would increase from 20% to 23% of qualified income
- It would become permanent, instead of expiring after 2025
- High-income service professionals (like doctors, lawyers, and consultants) would see a more gradual phaseout instead of an abrupt cutoff
Planning Takeaway: If you're a high-income service professional who’s been shut out of the QBI deduction in recent years, this could be a meaningful win. It doesn’t restore the full 23%, but even a reduced deduction could be worth thousands in savings each year.
Example: David is a married consultant with $525,000 of qualified business income and $420,000 in taxable income.
Under current law, he gets no QBI deduction—he’s passed the $394,600 income threshold, and as a service business (an SSTB), his deduction is completely phased out.
Under the proposed rules, he’s still above the threshold, but the deduction doesn’t drop straight to zero. Instead, it’s reduced using a formula: 23% of QBI minus 75% of the amount by which his income exceeds the threshold. Let's break that down:
1. Start with 23% QBI
23% x $525,000 = $120,750 (full deduction)
2. Calculate how far above the threshold is taxable income
$420,000 - $394,600 = $25,400 (excess)
3. Apply the 75% phaseout rule
75% x $25,400 = $19,050 (deduction reduction)
4. Subtract the phaseout amount from the full deduction
$120,750 - $19,050 = $101,700 (Davis's actual deduction)
In the new system, he’d still qualify for a deduction of over $100,000. Not bad!
HSAs: More Flexible Use, Higher Contribution Limits
Health Savings Accounts (HSAs) have long been one of the best-kept secrets in personal finance. Tax-deductible going in, tax-deferred while growing, and tax-free when used for qualified medical expenses. The new House tax bill would take things further—making HSAs more generous and more flexible starting in 2026.
What’s Changing:
Contribution limits nearly double: from $8,550 to $17,100 for families, and from $4,300 to $8,600 for individuals. However, the extra contribution has income phaseouts:
- For families, it phases out between $150,000 and $200,000 of modified AGI
- For individuals, it phases out from $75,000 to $100,000
If you're in the middle of that range, you'd still qualify for a partial increase.
Working seniors may remain eligible: Under current rules, signing up for Medicare Part A (which happens automatically if you claim Social Security) disqualifies you from contributing to an HSA. The proposed change would allow individuals who are enrolled in Medicare Part A only—but still working and covered by a qualifying high-deductible health plan—to keep contributing to their HSA.
Fitness expenses get limited coverage: The bill would allow up to $500 per year (individual) or $1,000 (family) in HSA reimbursements for physical activity—like gym memberships, fitness classes, or youth sports leagues. Some activities such as golf, sailing, horseback riding, and one-on-one personal training are excluded.
Planning Takeaway: If you’re already using an HSA—or considering one—these changes could significantly expand its value. Doubling the contribution limit and loosening Medicare restrictions makes the HSA even more powerful as a long-term tax shelter, especially for high earners and late-career workers.
529 Plans: Expanded Use for K-12, Professional Certifications
The bill would broaden what counts as a qualified expense for 529 plans—giving families more flexibility at every stage of education.
What's Changing:
More K–12 expenses qualify: In addition to up to $10,000/year in K–12 tuition, families could also use 529 funds for:
- Curriculum and instructional materials (including online learning)
- Tutoring by qualified individuals
- Standardized test fees (like the SAT or ACT)
- Dual-enrollment college programs for high schoolers
- Educational therapy for students with disabilities
Postsecondary credentials now count: 529s could also be used for expenses related to credentialing programs—like:
- Tuition, books, and fees for certificate programs
- Exams required to earn or maintain a certification or license
- Continuing education, if required to keep the credential active
Planning Takeaway: 529 plans are no longer just for four-year colleges. These changes give families more ways to support learning—whether that’s paying for a child’s dual-enrollment program, reimbursing tutoring and therapy, or helping an adult child pursue a license or certification. That’s meaningful flexibility.
MAGA Accounts: A New Savings Option for Kids
The bill proposes a new type of tax-advantaged savings account for kids: the Money Account for Growth and Advancement—yes, that spells MAGA. The intent is to help kids build savings for early adulthood expenses like college, starting a business, or buying a home. But before you get too excited, let’s take a look at how they actually work—and whether they’re worth it.
How They Work:
- Can be opened for any child before age 8
- Contributions of up to $5,000/year, allowed until the child turns 18
- No withdrawals allowed before age 18
- Between 18–24, only 50% of the account can be accessed
- Full access begins at age 25
- The account must be fully distributed by age 31
Tax Treatment:
- Contributions are not tax-deductible
- Growth is tax-deferred
- Withdrawals: principal is always tax-free; earnings are taxed based on how they're used.
If used for qualified purposes—like college, credentialing, starting a business with a loan, or a first-time home purchase—earnings are taxed at capital gains rates.
If used for anything else before age 30, earnings are taxed as ordinary income and hit with a 10% penalty.
Automatic $1,000 from the Government: If this bill becomes law, every U.S. child born between 2025–2028 would automatically receive a $1,000 contribution from the federal government—unless the parents opt out.
Planning Takeaway: I wouldn't turn down the free $1,000—but MAGA accounts land in an awkward middle ground. They don’t offer the strong tax benefits of 529s, and they’re more restrictive than custodial accounts or even a plain taxable account in a parent’s name. If you’re eligible for the government-funded contribution, great—but it’s probably not the place to put your own savings.
Estate Taxes: No Drop in the Exemption (for Now)
The estate tax exemption is currently $13.99 million per person—and was set to drop by half at the end of 2025. That looming sunset prompted many high-net-worth families to prepare for major gifting strategies before the window closed. The new bill would remove that urgency by raising the exemption instead of letting it shrink.
What’s Changing:
- The exemption would increase to $15 million per person (or $30 million per couple) starting in 2026
- It would continue to be indexed to inflation going forward
Planning Takeaway: If this passes, there’s no longer a rush to make large gifts or restructure your estate plan before the end of 2025. You’ll still want to plan ahead—but the pressure to beat a shrinking exemption may be off the table for now.
Next Steps
If you'd like to discuss how these changes might impact your financial plan, we're here to help.