Three Things You May Not Know About the Big Beautiful Bill

The “One Big Beautiful Bill Act” (OBBBA), now before Congress, would make permanent many of the 2017 Tax Cuts and Jobs Act provisions that were set to sunset at the end of 2025, and it includes some new tax nuggets that you may not know about:

• In the House-approved version of the bill, the SALT (state and local tax) deduction limitation would increase from $10,000 to $40,000 starting in 2025. The deduction would be phased out for married taxpayers filing jointly with $500,000 of income, or single taxpayers earning $250,000. The bill would also eliminate the often-utilized SALT workaround strategies for taxpayers with pass-through entities. The Senate version of the bill makes the $40,000 increase temporary through 2029 and does not eliminate the SALT workaround strategies.
• The OBBBA includes a provision that would allow a new deduction for interest paid on auto loans. Taxpayers would be allowed to write off up to $10,000 a year in interest paid on a qualified car loan made in 2025 through 2028. To qualify, the vehicle must be assembled in the United States and the deduction would start to phase out for taxpayers with income over $200,000 for a joint filer and $100,000 for a single filer.
• “Trump Accounts” would be created for qualifying children under 8 years old starting next year. The federal government would make a one-time $1,000 contribution to each child born in the United States after Dec. 31, 2024, and before Jan. 1, 2029. The accounts would track a stock index and would be eligible for additional private non-deductible contributions of up to $5,000 per year. An account holder could not take distributions until age 18. At this time, the account holder may take qualified distributions up to 50% of the balance for higher education, qualified post-secondary credentialing, small business loans or a first-time home acquisition. At age 25, account holders would have access to the full balance for qualified distributions. At age 30, the account holder would have full access to the account for any purpose. At age 31, the account would cease to be a Trump account, and the balance would be treated as distributed and taxable.