Introduction: Why This Matters
On May 13, 2025, House Republicans unveiled a sweeping 1,116-page bill—nicknamed the “One Big Beautiful Bill Act.” With over $5 trillion in proposed tax cuts, the bill aims to reshape everything from your tax bracket to EV incentives. Here’s a breakdown of what’s included, and how it may affect your wallet.
1. Current Tax Rates May Become Permanent
The bill seeks to make permanent the individual tax rates set by the 2017 Tax Cuts and Jobs Act (TCJA). Without action, those rates would expire in 2025, pushing the top rate back to 39.6%.
Why it matters: Stability in tax brackets allows for better long-term income and investment planning.
2. Major Clean Energy Credits Will Be Cut
Clean energy incentives are on the chopping block:
- 30% tax credit for solar panels ends in 2025.
- $7,500 EV credit expires unless the manufacturer sold fewer than 200,000 units.
- Clean hydrogen credit (45V) disappears after this year.
Action step: Move quickly if you’re planning a clean energy investment.
3. Health Savings Accounts Get More Flexibility
Proposed HSA expansions include:
- Contributions allowed for Medicare Part A enrollees.
- Use of HSA funds for direct primary care memberships ($150/month).
Takeaway: These changes could make HSAs more accessible and practical for older Americans.
4. Bigger Deductions for Small Business Owners
If passed, the bill would:
- Make the 20% Qualified Business Income deduction permanent.
- Increase it to 23%.
- Adjust thresholds for inflation.
Benefit: More savings and planning predictability for pass-through entities.
5. New “MAGA” Accounts for Children
Money Accounts for Growth and Advancement (MAGA) would:
- Provide $1,000 to children born from 2025–2028.
- Allow family contributions up to $5,000/year.
- Enable tax-deferred growth and capital-gains taxed withdrawals for specific life milestones.
Why it’s unique: It combines features of 529 plans and Roth IRAs.
6. 1099-K Threshold Rollback
The $600 reporting threshold would be repealed. Instead, the previous $20,000 and 200 transaction rule would return.
Who this helps: Casual sellers and gig workers on platforms like Venmo, Etsy, and PayPal.
7. Estate and Gift Tax Exemption Increases
Starting in 2026:
- The exemption rises from $13.99 million to $15 million.
- Adjusted annually for inflation.
Planning note: More room for tax-efficient wealth transfer.
8. Temporary Boost to Child Tax Credit
The Child Tax Credit would:
- Increase from $2,000 to $2,500 through 2028.
- Return to $2,000 in 2029.
Caveat: Low-income households may still face access barriers.
9. Additional Proposals Worth Noting
- Tip and Overtime Tax Relief: Tips and overtime could be exempt from federal income tax.
- Standard Deduction Bump: Increased to $16,000 (single), $24,000 (head of household), and $32,000 (joint).
- Senior Bonus: Additional $4,000 standard deduction for seniors.
- Car Loan Interest Deduction: Interest on up to $10,000 may be deductible.
- Extended Depreciation: Accelerated depreciation through 2030.
The 2025 tax proposal presents major changes that may affect your financial future. While it is not yet law, now is the time to start preparing. Speak with your tax advisor to stay ahead of the curve.
The information above is based on a legislative proposal introduced in the House on May 13, 2025. As of now, these changes are not law. The bill may be revised during the legislative process, and some provisions could be modified or removed entirely.
Disclaimer: Nothing here should be considered investment advice. All investments carry risks, including possible loss of principal and fluctuation in value. Finomenon Investments LLC cannot guarantee future financial results.
