President Donald Trump's 2025 tax bill, dubbed the "Big Beautiful Bill," introduces many potential changes to the U.S. tax code. While it has stirred up opposing views about how much it could impact the Federal deficit, the legislation aims to make permanent most of the provisions from the 2017 Tax Cuts and Jobs Act, reduce non-military government spending, and increase defense funding. Yet as currently proposed, certain provisions may stand to disproportionately benefit some households over others.
This article outlines some of the material provisions included in the bill for taxpayers, who may stand to benefit from each provision, and what you can do to prepare.
Note: As of the time of writing this article on June 18, 2025, the bill had been passed by The House of Representatives. On June 16, the Senate unveiled proposed changes, which are reflected here. The bill must still be passed by the Senate and then sent back to The House for another vote. As a result, the bill has not yet been fully passed. Many revisions may still be on the table prior to being signed into law by the self-imposed July 4 deadline.
Permanently Higher Standard Deduction
The bill would permanently raise and extend the standard deduction. The standard deduction is currently $15,000 for single filers and $30,000 if you are married and file jointly. The bill would raise these to $16,000 and $32,000, respectively. The purpose of the standard deduction is to serve as an incentive for taxpayers not to itemize deductions when filing their federal income taxes.
Take inventory of your potential deductions. If they exceed the standard deduction, then it may be in your best interest to itemize. However, you should always seek advice from a qualified tax advisor.
Bonus Deduction for Those Age 65 or Over
While President Trump has long proposed eliminating taxes on Social Security benefits, that did not make it into the bill. However, the bill includes a new $6,000 “bonus” deduction for seniors through 2028. The deduction phases out for single filers with Modified Adjusted Gross Income (MAGI) of $75,000 or more and married couples with $150,000 or more. Individuals over 65 years old with incomes below these thresholds stand to benefit.
If you are planning to retire in the next few years, have not yet started taking Social Security benefits, and you expect your retirement income (with the inclusion of Social Security benefits), to be on the cusp of the phase-out threshold, you may consider the pros and cons of waiting until age 70 to start taking your Social Security benefits, which could serve to decrease your MAGI and may qualify you to receive the deduction.
Permanent Restoration of Bonus Depreciation on Qualified Property
Taxpayers may once again be able to depreciate 100% of the value of qualified property acquired after January 19, 2025 during the first year of ownership. In addition, it would also allow real estate investors to fully deduct the cost of qualifying renovations, property improvements, and certain building components in the year they are placed in service. Qualified property is expected to include investment real estate and certain depreciable business property. If passed in current form, many real estate investors would benefit greatly from this provision.
If you are a real estate investor or business owner, pay close attention to the continued progress of this bill, as it is still undergoing revisions. Cost segregation studies conducted by qualified CPAs and appraisers can help maximize the benefits of bonus depreciation by identifying assets with shorter useful lives.
Permanent Extension of Higher Lifetime Estate Tax Exemption
The bill would permanently extend and increase the Federal lifetime estate tax exemption to $15 million for single tax filers and $30 million for married couples in 2026. The exemptions would be indexed for inflation beyond 2026. In the absence of this permanent extension, the Federal lifetime estate tax exemption would likely drop to $7.14 million per individual ($14.28 million for married couples) in 2026. If the permanent extension passes it would result in potentially millions of dollars of tax savings for couples with estates exceeding $14.28 million. Anyone with a smaller estate would continue to be exempt from Federal estate taxes. If you have a higher net worth, this serves as a benefit to you.
If your net worth is higher than $30 million, the value of your estate in excess of $30 million may be subject to substantial estate taxes without proper planning. There are a variety of estate planning strategies that can help reduce or mitigate the burden, such as removing assets from your estate by transferring to an irrevocable trust, annual gifting strategies, or establishing an Irrevocable Life Insurance Trust.
Permanent Increase to Child Tax Credit and Introduction of New “Trump Accounts”
The bill would permanently increase the maximum Child Tax Credit from $2,000 to $2,200 per child, indexed annually for inflation. Without any further changes in design, this would benefit middle-income households the greatest. Lower income households would not be eligible for the maximum credit if they earn too little to owe federal taxes. Conversely, the maximum credit also starts to phase out for joint filers with combined AGI exceeding $400,000 or $200,000 for all other taxpayers.
If your household income is on the cusp of the phase-out threshold and you are not currently maximizing your retirement contributions, increasing your contributions may be enough to lower your AGI below the $400,000 threshold while also setting you up for a financially healthier retirement.
The bill would also introduce new tax-exempt investment accounts meant to benefit newly born children. These investment accounts would be funded with a one-time $1,000 government payment for U.S. citizens born between from 2025 through 2028. In addition, parents would be allowed to contribute up to $5,000 annually to each qualifying child’s Trump Account.
If you are a parent with a child born in 2025 or plan to have any children by the end of 2028, your children stand to benefit from Trump Accounts, which they’ll be able to use to purchase homes, start a business, or pay for an education after reaching age 18.
Permanent Renewal of The Qualified Opportunity Zone (QOZ) Tax Incentive
Since QOZ was put into legislation as part of the 2017 Tax Cuts and Jobs Act, it has led to 313,000 new housing units at a low subsidy cost. That makes QOZ one of the most efficient and effective housing supply programs in existence. Current QOZ designations will expire at the end of 2026. Under the proposed permanent renewal, those who have recently realized capital gains from an asset sale that invest the gains in a QOZ fund may be eligible for the following tax incentives:
Deferral of capital gain through 2033 if QOZ investment is made between 2027 and 2033. Capital gains invested on or after January 1, 2034 would be eligible for deferral until December 31, 2043, and so forth with rolling decennial gain recognition dates.
Discount of up to 10% of deferred gains if QOZ investment is made on or after January 1, 2027 (by way of a tax basis step-up). The discount would be applied over the first six years of the investment. The deferred gain discount schedule is as follows:
3% total discount after first three years of investment
5% total discount after first four years of investment
7% total discount after first five years of investment
10% total discount after the first six years of investment
Those who hold the QOZ investment for at least 10 years would be exempt from taxation on all capital appreciation of the QOZ investment.
Higher net worth individuals that expect to realize capital gains from substantial asset sales between 2027 and 2028 stand to benefit the greatest from the QOZ renewal proposed deferral discount schedule. If you are tax-sensitive and in the planning stages of selling your business or any other highly appreciated asset, it may be worth considering the pros and cons of incorporating a QOZ investment in your portfolio. A prudent level of due diligence is key to understanding if the investment is suitable for your investment portfolio and overall tax strategy. QOZ entails investment risks and a financial planner can help you navigate whether it is a suitable investment for your specific situation.
Ability to Deduct Interest On Auto Loans
This would allow taxpayers to deduct up to $10,000 of interest paid on auto loans annually. The catch is that the car’s final assembly must take place in the United States. The maximum deduction is subject to income phase-outs starting at $100,000 for single filers and $200,000 for joint filers. All owners of U.S. assembled cars that have an auto loan stand to benefit.
If you drive a car that wasn’t produced in the U.S. and are in the market for a new car, you may want to consider switching to a car that is produced in the U.S. to take advantage of the interest deduction.
Permanent Extension and Enhancement of Mortgage Interest Deduction
The bill would permanently extend the current provision limiting the residential mortgage interest deduction to the first $750,000 in home mortgage acquisition debt. The bill would also treat certain mortgage insurance premiums on acquisition indebtedness as qualified interest that can be deducted. Homeowners subject to paying mortgage insurance premiums stand to benefit the greatest.
If you are subject to mortgage insurance premiums, be sure to inform your tax accountant to learn if you are eligible to take advantage of the enhanced deduction.
Conclusion
Trump's 2025 tax bill has not yet been signed into law and is potentially subject to many additional changes and revisions before being passed. It introduces significant changes with varied impacts across demographics. In current form, certain provisions stand to benefit some households and taxpayers more than others.
Planning for taxes can be overwhelming. Working with a financial planner or advisor can provide you with clarity, confidence, and a strategic action plan to optimize your tax efficiency and keep you on track to meet your long-term financial goals and objectives.
Disclosure
RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.