Since the original article was released (link to original article), the One Big Beautiful Bill Act has passed, and Title XI is now law. This follow-up analysis provides a concise update on how the final tax provisions compare with the version that was originally introduced. Most of the major items moved through the Senate with only minor adjustments. The overall structure of the tax changes remains very close to what was outlined earlier:
Individual Tax Changes
- Individual Income Tax Rates The permanent extension of the lower individual tax brackets is now law. The higher standard deduction is also permanent.
- Child Tax Credit The credit remains at $2,000 per child. Senate adjustments were technical only.
- Qualified Business Income Deduction The deduction is set permanently at 23% for eligible pass-through income. Adopted as proposed.
- Tax-free Tips and Overtime Qualifying tips and overtime income for eligible taxpayers are now exempt from federal income tax. Final language remains consistent with the earlier proposal.
- MAGA (“Trump”) Accounts MAGA Accounts are established as a new tax-advantaged savings vehicle. The $1,000 federal contribution for individuals born between 2025 through 2029 is included. Administrative details were clarified but the core structure is unchanged.
State and Local Tax (SALT) Deduction
The deduction limit has been increased to $40,000 for single and married couples filing jointly and to $20,000 for married couples filing separately. This deduction limit begins to phase out for taxpayers with a modified adjusted gross income (MAGI) of $500,000. For taxpayers with a MAGI of $600,000 or more, the deduction continues to be capped at $10,000.
Estate, Gift, and GST Taxes The exemption increases to $15 million per person for estate, gift, and generation-skipping transfer taxes are now permanent. The previous sunset schedule has been removed, and this exemption amount will increase annually, indexed to inflation.
Business-Related Tax Provisions
- Bonus Depreciation The law maintains 100% bonus depreciation for qualified property placed in service through 2029.
Section 179 Expensing The new limits are $2.5 million for expensing and $4 million for the phaseout. These provisions were adopted as written. - Research and Experimental Costs Domestic R&E expenditures can continue to be expensed. Unchanged from the original.
Information Reporting Thresholds - The $600 1099-K threshold is repealed. The prior 200 transaction and $20,000 thresholds are reinstated for third party payment settlement organizations such as Venmo and PayPal.
- The 1099-MISC and 1099-NEC thresholds rise from $600 to $2,000.
- Industry-specific incentives Credits for sound recording and small manufacturers remain in place. Interest on qualifying rural and agricultural real estate loans continues to be exempt.
- Low-Income Housing Tax Credit The expanded LIHTC allocations were accepted without revision.
Energy and Environmental Provisions
The final law retains the phaseout and termination of several clean-energy and efficiency credits, including the clean vehicle credit, clean hydrogen credit, and home energy improvement credits. Some implementation dates were shifted slightly to provide transition time. The policy outcome is the same as originally proposed.
IRS Administration and Compliance
The law directs the IRS to adopt artificial intelligence tools for fraud detection and compliance, and includes stronger enforcement measures for the Employee Retention Credit. The IRS Direct File pilot is formally discontinued, while Social Security Number requirements for education credits remain in place.
Provisions Removed or Adjusted During the Process
A small number of items were removed from the final version, including the repeal of the 10 percent excise tax on tanning services. Several limits on high-income itemized deductions were narrowed, Medicare-related eligibility restrictions were taken out and moved to a separate policy discussion, and certain rules affecting contingency-fee tax preparation were softened.
Final Takeaways
Title XI ultimately passed with fewer changes than many expected. The permanent extensions of key Tax Cuts and Jobs Act provisions, the expanded estate and gift tax exemption, the new MAGA Accounts, the continuation of bonus depreciation, and the adjusted reporting thresholds are all now part of federal tax law.
Everyone should expect planning strategies to adjust to these provisions over the next several months. Our team is available to discuss how these changes may affect your individual, business, or estate planning situation. Please reach out to your advisor to schedule a conversation.
The opinions expressed in this Commentary are those of Baldwin Investment Management, LLC. These views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. The reported numbers enclosed are derived from sources believed to be reliable. However, we cannot guarantee their accuracy. Past performance does not guarantee future results. We recommend that you compare our statement with the statement that you receive from your custodian. A list of our Proxy voting procedures is available upon request. A current copy of our ADV Part 2A & Privacy Policy is available upon request or at www.baldwinmgt.com/disclosure.
Benjamin Meck, CPA
Deputy Managing Director of Accounting Services
Benjamin joined Baldwin Family Office in 2023 after spending 8 years gaining experience in corporate, cost, construction, and property accounting. He holds a B.S.B.A in both Accounting and Finance from Bloomsburg University of Pennsylvania. He earned the CPA designation in 2022. He is a member of the Pennsylvania Institute of Certified Public Accountants, the National Association of Tax Professionals, and the Construction Financial Management Association