Tax Law Center Blog

The “One Big Beautiful Bill Act,” the latest legislative achievement of the current Trump administration, brings major changes to the tax code and broader economic policy. Its impact spans a wide range of industries and taxpayers. As a tax lawyer, I reviewed the new law to identify the primary beneficiaries and those adversely affected under the new law, with a focus on tax implications.

Winners

High-Net-Worth Individuals and Estates
The legislation significantly increases the federal estate tax exemption to $15 million per individual ($30 million per married couple), indexed for inflation. This permits ultra-high-net-worth individuals to transfer substantially more wealth without incurring estate tax liability. In addition, the individual income tax rate cuts enacted under the 2017 Tax Cuts and Jobs Act are made permanent, disproportionately benefiting top earners.

Residents of High-Tax States
The cap on the state and local tax (SALT) deduction is temporarily raised to $40,000 annually through 2029, providing significant relief for taxpayers in states with high property or income taxes. However, the cap phases out for those with incomes exceeding $500,000, and reverts to the $10,000 limit thereafter.

Owners of Pass-Through Businesses
The qualified business income (QBI) deduction under IRC §199A, originally scheduled to sunset in 2025, is made permanent. Eligible pass-through entities—including sole proprietorships, partnerships, and S corporations—may continue to deduct up to 20% of qualified income, subject to applicable wage and capital limitations.

Automobile Dealers
The legislation introduces a new deduction allowing up to $10,000 of annual loan interest on U.S.-manufactured automobiles to be deducted through 2028. The deduction is phased out for higher-income earners ($100,000 for single filers; $200,000 for joint filers), providing a potential incentive to purchase domestically-produced vehicles.

Manufacturing & Research Sectors
Immediate expensing for domestic research and development costs has been permanently reinstated. Small businesses with gross receipts of $31 million or less are allowed to retroactively expense research and development expenditures incurred after December 31, 2021. These changes were welcomed by manufacturers and are expected to spur capital investment and research.

Elderly and Tipped Wage Workers
Taxpayers aged 65 and older receive an increased standard deduction. In addition, income from tips and overtime pay is excluded from taxable income through 2028, albeit subject to expiration and fiscal limitations.

Families with Children
The child tax credit increases by $200 (to $2,200 per child) starting in 2025, and is indexed to inflation thereafter. A new provision permits eligible families to establish new “Trump Accounts” with a $1,000 deposit for children born between 2025 and 2028.

LOSERS

Low-Income Households
To offset the bill’s cost, reductions are made to social safety net programs. Medicaid eligibility becomes contingent on expanded work requirements, except for the elderly, disabled, or caregivers of young children. Food assistance under SNAP (food stamps) is also curtailed, extending work requirements to age 65 and requiring states to contribute toward benefits beginning in 2028.

Renewable Energy Sector
Several tax incentives enacted under the prior administration’s climate legislation are repealed or phased out. This includes the investment and production tax credits for solar and wind projects, as well as residential energy efficiency credits.

Electric Vehicle Manufacturers
The consumer tax credit of up to $7,500 for electric vehicle purchases is eliminated, adversely affecting manufacturers such as Tesla and General Motors and potentially slowing EV adoption.

Private Universities with Large Endowments
The excise tax on university endowments is increased significantly, with a new progressive rate structure reaching up to 8% for institutions with the highest endowment income per student. The measure targets elite private universities and is part of a broader campaign against perceived institutional privilege.

Immigrants
The new law imposes a 1% tax on remittances—money transfers to foreign countries—which disproportionately impacts lower-income and new immigrants sending support to family abroad.

Gamblers
Gambling losses are deductible only up to 90% of winnings, rather than on a dollar-for-dollar basis. This could result in tax liability even when a taxpayer’s net gambling result is a loss.

The “One Big Beautiful Bill Act” marks a profound shift in federal tax and fiscal policy, with major implications for estate planning, pass-through entities, multinational corporations, and individuals across income brackets. With some winners and losers, tax professionals should carefully evaluate the Act’s impact on clients and consider proactive planning in light of these substantial changes.