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Tax Bill Clears the House: What It Means for Americans and What’s Next
On May 22, the U.S. House of Representatives passed a sweeping tax package, advancing a bill that could significantly reshape the federal tax landscape heading into the 2025 filing season. Dubbed by supporters as “The One Big Beautiful Bill,” the legislation now heads to the Senate, where its fate remains uncertain amid partisan disagreement.
The bill proposes a series of extensions to the 2017 Tax Cuts and Jobs Act (TCJA), including the continuation of reduced individual income tax rates and expanded deductions for small businesses. Republicans argue the legislation will offer critical tax relief to working families and maintain economic momentum. Critics, however, warn the bill could worsen the national deficit and disproportionately benefit higher-income earners.
What’s In the Bill?
According to the House Ways and Means Committee summary (linked above), the bill includes:
A permanent extension of TCJA’s lower individual income tax brackets.
Continuation of the increased standard deduction.
An extension of the expanded Child Tax Credit from the TCJA era (though not as generous as the temporary 2021 expansion).
A permanent 20% deduction for pass-through business income (Section 199A) for qualifying small businesses.
Provisions to curb the $10,000 cap on state and local tax (SALT) deductions — a point of contention for many coastal states.
It does not include any corporate tax hikes, and it avoids adjustments to capital gains rates or estate tax thresholds. The legislation is estimated to cost nearly $4.5 trillion over a decade, according to nonpartisan projections from the Congressional Budget Office.
In a CNBC report, House Ways and Means Chairman Jason Smith (R-MO) described the package as “a win for every American who wants to keep more of what they earn.” He added, “We’re delivering on the promise of pro-growth, pro-worker tax relief without raising taxes on anyone.”
Senate Prospects Unclear
The bill’s path forward in the Senate is far from guaranteed. While Republicans are largely united behind the effort, Democrats have criticized the legislation as fiscally irresponsible.
Some moderate Democrats, particularly those from high-tax states affected by the SALT deduction cap, have signaled openness to negotiation. However, any final package will likely require significant revision to garner the 60 votes needed to pass the Senate.
Impact on Taxpayers
If enacted, the bill would largely maintain the current individual income tax rate structure, which is set to expire at the end of 2025. For most middle-income Americans, this would avoid an automatic tax increase and preserve higher deductions.
Small business owners could also see continued benefits from the pass-through income deduction, which has been a hallmark of the TCJA’s pro-business reforms. According to the National Federation of Independent Business, making Section 199A permanent is a “top priority” for its members.
However, critics argue the bill doesn’t do enough for low-income earners and that its benefits are skewed toward the upper brackets. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, warned that “extending these tax cuts without offsets is a recipe for long-term fiscal strain.”
Political Timing
As the bill moves to the Senate, negotiations are expected to intensify. Key holdouts — including some Senate Democrats and deficit hawks in both parties — may demand revisions or offsets to win their support.
In the meantime, tax professionals and financial advisors are watching closely. Whether the bill passes in its current form or not, the outcome will have major implications for tax planning in 2025 and beyond.
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