On May 13, 2025, House Republicans introduced a comprehensive tax reform bill titled “The One, Big, Beautiful Bill,” aiming to extend and expand upon the 2017 Tax Cuts and Jobs Act (TCJA). This 389-page legislation proposes significant tax relief measures for individuals and businesses, while also outlining substantial spending cuts to offset the projected revenue losses.

Key Provisions of the GOP Tax Bill

1. Extension and Enhancement of Individual Tax Cuts

• Permanent Tax Rate Reductions: The bill seeks to make permanent the individual tax rate reductions established under the TCJA, which are currently set to expire at the end of 2025.
• Increased Standard Deduction: For tax years beginning after December 31, 2024, and before January 1, 2029, the standard deduction would see a temporary increase—$1,500 for single filers and $1,000 for married couples filing jointly.
• Expanded Child Tax Credit: The Child Tax Credit would be increased from $2,000 to $2,500 per qualifying child, through 2028.
• SALT Deduction – The Stata and Local Tax Deduction is a deduction available to prevent taxation on funds that were paid to states for state income taxes. The deduction is currently $10,000 and is being increased to $30,000.

2. New Tax Relief Measures

• Elimination of Taxes on Tips and Overtime: The bill proposes to exempt tipped income and overtime pay from federal income taxation through 2028, aiming to benefit service industry and hourly workers.
• Tax Breaks for Seniors: Individuals aged 65 and older would receive an additional $4,000 standard deduction, providing further tax relief for retirees.
• Auto Loan Interest Deduction: Interest on auto loans for vehicles assembled in the United States would become tax-deductible, incentivizing domestic automobile purchases.

3. Business and Investment Incentives

• Bonus Depreciation and R&D Expensing: The bill reinstates 100% bonus depreciation and allows for immediate expensing of research and development costs through 2029, encouraging business investment.
• Estate Tax Adjustments: The estate tax exemption would be increased to $15,000,000 in 2026, allowing individuals to pass on larger estates without incurring federal estate taxes.

4. Introduction of “MAGA” Savings Accounts

• Child Savings Initiative: A new provision introduces “MAGA” (Making America Grow Again) accounts, granting $1,000 in government-funded savings to children born between 2025 and 2028. Families can contribute up to $5,000 annually to these accounts, promoting long-term savings from an early age. Similar to a Roth IRA, contributions are not tax-deductible and the account is tax-free. New accounts must be established before the beneficiary reaches their 8^th birthday.

Offsetting Measures and Fiscal Impact

To counterbalance the estimated $4.9 trillion cost over a decade, the bill outlines significant spending cuts:

• Medicaid and SNAP Reductions: The legislation proposes stricter eligibility requirements for Medicaid and the Supplemental Nutrition Assistance Program (SNAP), potentially reducing enrollment and shifting more financial responsibility to states.
• Elimination of Green Energy Tax Credits: Tax incentives for electric vehicles and renewable energy projects would be phased out starting in 2031, reflecting a shift in energy policy priorities.
• New Revenue Streams: The bill introduces a 5% tax on remittances sent abroad and imposes higher taxes on large university endowments, aiming to generate additional federal revenue.

Political Landscape and Outlook

While the bill aligns closely with President Trump’s tax policy objectives, including making the 2017 tax cuts permanent and introducing new tax relief measures, it faces challenges within the Republican Party. Some fiscal conservatives express concern over the potential increase in the national debt, while moderates are wary of the proposed cuts to social programs.

The House Ways and Means Committee is scheduled to review the bill, with GOP leaders aiming for swift passage ahead of the July 4 deadline. However, the bill’s future in the Senate remains uncertain, as lawmakers continue to negotiate the specifics of the legislation.

This sweeping tax reform proposal represents a significant effort by House Republicans to reshape the federal tax code, offering substantial tax relief while proposing considerable spending cuts. As the legislative process unfolds, the bill’s provisions and their potential impact on the economy and various demographics will surely be closely scrutinized.