大美丽法案的小指南：新法律对你的钱包意味着什么 The Little Guide to the Big Beautiful Bill -What the New Law Means for Your Wallet

TheLittleGuide

totheBig

BeautifulBill:

WhattheNewLaw

MeansforYour

Wallet

JinhongZhang,CPA

HZCPAs&Advisors,P.C.

(949)397-0189

AbouttheAuthor

JinhongZhangisadynamicCPA,educator,andcross-

culturaladvisorwithover25yearsofgloballeadership

experiencespanningtheU.S.,China,andSouthAsia.AsFounderofHZCPAs&Advisors,PC,hedeliverscutting-edgefinancialstrategies,taxplanning,andadvisory

servicestotechventures,entrepreneurs,andservice-basedbusinessesnavigatingcomplexfinanciallandscapes.

CurrentlyservingasaProfessorofPracticeinAccountingatUtahTechUniversity,Jinhongadvocatesformodern

polytechniceducationandchampionsuniversity-industrycollaboration.Histeachingandmentorshiphelpshapethenextgenerationoffinanceleaders,combiningpractical

skillswithethicaldecision-makingandglobalawareness.

Previously,JinhongheldCFOandFinanceDirectorrolesatBrioHealthSolutions,AmericanUniversityofHealth

Sciences,andLosAngelesNeighborhoodHousing

Services,whereheledcapitalraises,structured

internationaloperations,andbuiltfinancialsystemsthat

drovegrowthandimpact.Earlyinhiscareer,hemanagedmulti-million-dollarWorldBankandADB-fundedprojectsinBangladeshforChinaCommunicationsConstruction

Co.,consolidatingglobalfinancialsforoperationsspanning30subsidiaries.

Jinhongisalsoanactivefinancialliteracyeducator,policyspeaker,andcommunityleader.Hehasledworkshopsfornonprofits,developedMandarin-languageprogramsfor

LandmarkEducation,andfoundedculturalinitiativesattheUniversityofWisconsin,whereheearnedhisMBAafter

arrivingintheU.S.asaninternationalstudent.

ATranscendentalMeditationadvocate,Jinhongbrings

mindfulnessintohisprofessionalandpersonallife,helping

othersbalancewealth-buildingwithpurpose,familylegacy,andculturalwisdom.

Expertise:

-AdvancedTaxPlanning&GlobalFinancialStrategy

-Cross-BorderBusinessGrowth&CapitalMarkets

-ExecutiveLeadership&DecisionCoaching

-GlobalEducationandCommunityDevelopment

-MindfulWealthManagementandFamilyOfficeStructuring

Pleasefeelfreetobooka30-minutecomplimentaryZoommeetingwithJinhongtoexplorehowyoucancreate

generationalwealthator

www.TimeWithJ

.

Contents

Introduction 1

2017:TheFoundation 3

TheTCJAof2017:FromCampaignTrailtoLaw 4

TheRoleofBudgetReconciliation 5

2024:TheChallenge 11

Campaign2024:ExpandingtheTaxCutAgenda 12

EconomicExpectations 17

Sidebar:What’sinaName? 18

LowerRates:TheStartingPoint 21

DeductionsandExemptions 25

ChildTaxCredits 29

QualifiedBusinessIncome 31

QualifiedOpportunityZones 36

Depreciation 43

SALTDeductions 49

EstateTaxes 53

GreenEnergyRules 57

Campaign2024Promises 61

NoTaxonTips 61

NoTaxonOvertime 62

NoTaxonSocialSecurity 63

CarLoanInterest 64

SurpriseProvisions 65

Section1202Stock 66

GamblingLosses 67

Section529Expansion 68

CharitableGifts 69

AdoptionCredits 70

TrumpAccounts 70

WildCards 73

“Tariff”IstheMostBeautifulWord 73

Regrets,SecondThoughts,andTechnicalCorrections 76

NothingIsPermanent 79

TheLawIsPassed.TheGameIsOn 83

Introduction

OneBigBeautifulTaxSummary

Welcome!You’reholdingaguidetothebiggesttaxlawyou’veneverseencoming.Butdon’tworry,we’regoingtomakesenseofittogether.Thisisn’tjustalistofnewrulesoraboringrecapoflegislativesausage-making.Thisbookisheretogiveyoucontext:thehow,thewhy,andthewhat-now.We’llexplorewhattheBigBeautifulBill(BBB)meansforyourtaxes,youroverallfinances,andyourplanningopportunitiesinplainEnglish.

Now,justsowe’reclear:thisisn’tapoliticalmanifesto,andwe’renotheretowadethroughthebill’snon-taxprovisions.Yes,theBBBhasalottosayaboutbordersecurity,studentloans,andMedicaid.Butwe’releavingthosehotpotatoesonsomeoneelse’splate.Ourfocusistaxes,becausethat’swheretherealactionisforyourfinancialfuture.

Sobuckleup.You’reabouttolearnnotjustwhatchanged,butwhatitmeansandwhatyoucandoaboutit.Andif

JinhongZhangCPA

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you’vegotquestions,feedback,orjustwanttotalkshop,I’mjustanemailorphonecallaway.Let’sgettoit!

2017:TheFoundation

TCJAataGlance

Provision

Before

After

CorporateTaxRate

35%

21%

TopIndividualRate

39.6%

37%

StandardDeduction

$12,700

$24,000

SALTDeduction

Unlimited

$10,000

Pass-ThroughBusinesses

OrdinaryIncome

20%Deduction

EstateTaxExemption

$5.5M

$11M+

DonaldTrump’s2016presidentialcampaignwasbuiltonapromiseofsweepingtaxreform.Hisinitialplan,releasedinSeptember2015,aimedtoreducethehighestindividualincometaxratefrom39.6%to25%andcollapsethenumberofincometaxbracketsfromseventothree.Healsoproposedeliminatingthefederalincometaxforindividualsearninglessthan$25,000andcouplesearninglessthan$50,000,abolishingtheestatetax,andmakingchildcarecoststax-deductible.

Trump’srhetoricwaspopulist.Heclaimedthemiddleclasshadbeen“shunned,”andhepromised“massive”taxcutsforworkersandsmallbusinesses.Hecriticizedhedgefundmanagers’useofthe“carriedinterest”loophole,andpledgedtocloseit,arguingthat“thehedgefundguysdidn’tbuildthiscountry”andshould“paysometax,becauserightnowtheyarepayingverylittletaxandIthinkit’soutrageous.”(“Carriedinterest”ruleslethedgefundandprivateequityfundmanagerstreattheirincomes–whichcansometimesclimbintothebillionsperyear–ascapitalgains,

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taxedatamaximum20%,ratherthanordinaryincometaxedat37%.)Trumpalsocalledforloweringthecorporatetaxratefrom35%to15%,arguingthiswouldspurjobcreationandeconomicgrowth.

ByAugust2016,Trumprevisedhisplan,settingthetopindividualrateat33%andproposingbracketsat12%,25%,and33%.Healsoemphasizedmakingchildcarecoststax-deductible,endingthedeathtax,andplacingamoratoriumonnewfederalregulations.IndependentestimatesprojectedthecostofTrump’s2015taxplanat$9–10trillionoveradecade,withthe2016revisionreducingthepricetagbutstillrepresentingamajortaxcut.

Trump’scampaignmaintainedthathisplanwouldbe“revenueneutral.”Outsideanalysesdisagreed.Nonetheless,thepopulistappealoftaxcuts,simplification,andafocusonthemiddleclasshelpedpropelTrumptovictory.

TheTCJAof2017:FromCampaignTrailtoLaw

Afterhiselection,TrumpandcongressionalRepublicansmadetaxreformtheirtoplegislativepriority.TheresultwastheTaxCutsandJobsAct(TCJA)of2017,themostsweepingoverhauloftheU.S.taxcodeindecades.TheTCJAloweredthecorporatetaxratefrom35%to21%,reducedindividualincometaxrates,nearlydoubledthestandarddeduction,andincreasedthechildtaxcredit.Italsocappedthestateandlocaltax(SALT)deductionat$10,000,limitedthemortgageinterestdeduction,andintroducedanewdeductionforpass-throughbusinessincome.

TheTCJA’sindividualtaxcutsweresettoexpireafter2025,whilemostcorporateprovisionswerepermanent.This

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expirationwasnoaccident,butwasadirectresultofthelegislativeprocessthatgotthelawpassedinthefirstplace.

TheRoleofBudgetReconciliation

AcriticalfactorintheTCJA’spassagewastheuseofbudgetreconciliation,aproceduraltoolthatallowscertainbudget-relatedbillstopasstheSenatewithasimplemajority,bypassingthe60-votefilibusterthreshold.Reconciliation,createdbytheCongressionalBudgetActof1974,limitsdebateto20hoursandrestrictsamendmentstothosedirectlyaffectingfederalspendingorrevenues.

RepublicansheldonlyanarrowSenatemajorityin2017,makingreconciliationessential.However,thereconciliationrulesimposedsomecrucialspecificlimits.Underthe“ByrdRule,”provisionsthatincreasethedeficitbeyondthe10-yearbudgetwindowaren’tallowed.ThisforcedRepublicanstomaketheindividualtaxcutstemporary,expiringafter2025,tocomplywithreconciliationrulesandavoidaDemocraticfilibuster.

TheTCJA’sjourneythroughCongresswasmarkedbyintensenegotiationsbetweenHouseandSenateRepublicans.TheHouseandSenatebillsdifferedonthenumberoftaxbracketsandthetreatmentofdeductions.Thefinalcompromiseincludedatonofchangesthatwe’lldiscussthroughouttherestofthisbook,asawayoflayingafoundationfortheBBB.

•Loweringsixoftheseventaxbrackets,

•Doublingthestandarddeduction,

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•Cappingmanyoftheclassicitemizeddeductions,

•Creatinganewkindofincomecalled“qualifiedbusinessincome,”

•Creatinganewopportunitytorollcapitalgainsintosomethingcalled“qualifiedopportunityzones,”

Thosechangesareprettystraightforward–nohidingtheballanywhere.Buthere’sanotherimportantchangethatyouwon’tseereflectedonthechart,andit’sbecomeevenmoreimportantsinceinflationroseafterCovid.In1985,Washingtonstartedindexingspecificelementslikestandarddeductions,personalexemptions,andtaxbracketssothatrisinginflationwouldn’tpushtaxpayersintohigherbrackets.

TheIRShastraditionallyusedtheConsumerPriceIndex,orCPI,tomeasureinflation.However,the2017Actspecifiesadifferentindex,calledthe“chained”consumerpriceindex.Thisindexassumesthataspricesgoup,consumersreactbychoosingcheapergoods.Forexample,ifthepriceofapplesgoesup,youprobablywon’tstopeatingthem–butyoumightswitchfromGoldenDelicioustoGrannySmith.(Ifyou’reamillennial,substitute“avocadotoast”forapples,andyou’llgetthepoint.)

Thebottom-lineresulthereisthatthat“chained”CPIrisesmoreslowlycomparedtotheregularCPI.ThenonpartisanTaxPolicyCenterestimatesthatchangingtochainedCPIwouldincreasetaxespaidby30%ofthebottomquintileoftheincomedistribution,70%ofthenextquintile,andnearlyallofthetaxpayersinthetop60%ofincome.Bottomline,switchingtochainedCPIwillfunctionlikeasmallbutnoticeableannual,across-the-boardtaxhike.

Thebillpassedbothchambersonparty-linevotesandwassignedbyPresidentTrumpinDecember2017.SupportersarguedtheTCJAwouldboostgrowthandbenefitworkingfamilies,whilecriticssaiditdisproportionatelyfavoredcorporationsandthewealthy.

Howdiditallshakeout?

WhentheActpassed,theCBOestimateditwouldreducefederalrevenuesbyapproximately$1.5trillionover10years(2018–2027).Afteraccountingformacroeconomiceffects(suchasmoregrowthleadingtomoretaxrevenue),thenetcostwoulddropslightlytoaround$1.0–$1.1trillionoveradecade.Inotherwords,thecutswouldn’tquitepayforthemselves.

Therevenuelosscamefrom:

•Lowerindividualincometaxrates($1.2trillion)

•Lowercorporatetaxratecuts($650billion)

•ThenewQualifiedBusinessIncomededuction($400billion)

•Estateandgifttaxchanges($83billion)

•Bonusdepreciationandexpensing($86billion)

•RepealingtheACA’sindividualmandatepenalty($314billion)(indirecteffectviahigherhealthsubsidies)

Atthesametime,theActoffsetsomeofthelostrevenuebycappingtheSALTdeductionandotheritemizeddeduction

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($700billion),andthroughlowerinflationindexing(thechainedCPIgimmickwediscussedacoupleofpagesago).

Inpractice,theTCJAsignificantlyincreasedannualdeficits,especiallyinthefirstfewyearsafterpassage.Here’showitplayedout:

•Forfiscalyear2017–thelastyearbeforetheTCJA–thedeficitwas$665billion.

•Forfiscalyear2018–thefirstyearunderthenewrules

–thedeficitwas$779billion.

•Forfiscalyear2019,thedeficitwas$984billion.

•Forfiscalyear2020thedeficitsoaredto$3.1trillion.Ofcourse,mostofthatwasduetoCovid,nottheTCJA.

Thenon-COVIDtrajectorystillshowedarisinggapbetweenwhatthegovernmentcollectedandwhatitspent,largelydrivenbytheTCJA’srevenuelosscombinedwithnomajorspendingcuts.

So,whatabouttherevenuegrowth?Didthetaxcutspayforthemselves?That’sthemillion-dollarquestion–orinthiscase,literally,thetrillion-dollarquestion.

•TheTCJAdidgenerateshort-termgrowth.GDPgrowthhit2.9%in2018,upfrom2.2%in2017.

•Butby2019,growthhadalreadyslowedbackto2.3%.That’sbarelyabovethepre-TCJAtrend.

•Corporateprofitssurged,butwagegrowthwasmodest,andmuchofthetaxsavingswenttostockbuybacksanddividends.

•Businessinvestmentroseinitially,thenflattenedbylate2019.

Mosteconomistsagree:TheTCJAdidn’t“payforitself.”Itgavetheeconomyamodestshort-termbump.Butthatwasnowherenearenoughtooffsetthelostrevenueloss.EventheTrumpAdministration’sownTreasuryanalysisquietlywalkedbackitsearlierclaimsoffullself-financing.

AndhowdidtheActaffectindividualtaxpayersatdifferentincomelevels?Intheshortterm,mostAmericanssawcuts.Butthedistributionaleffectsheavilyfavoredhigher-incomehouseholds,especiallyinthelongrun.

•Middle-incomehouseholdsreceivedmodestrelief,mainlythroughlowerrates,adoubledstandarddeduc-tion,andincreasedchildtaxcredits.Onaverage,theysavedafewhundredtoacouplethousanddollarsannually.

•Low-incomehouseholdsgotsmallerbenefits,largelythroughexpandedcredits.However,theirshareofthetotaltaxcutwassmall.

•High-incomehouseholds,speciallythetop1%,sawthelargestgains,bothindollartermsandasashareoftotalcuts.Thiscamefromthereductioninthetopindividualrate,the20%pass-throughdeduction(Section199A),andthesharpcutinthecorporatetaxrate(from35%to21%),whichmostlybenefitedshareholdersandbusinessowners.

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Havingsaidallthat,thetop1%ofearnersactuallypayahighershareoftaxespost-2017.AccordingtotheCatoInstitute,theypaid38.5%ofallindividualincometaxin

2017.Thefollowingyear,theypaid40.1%.Andby2022,theirsharehadclimbedto40.4%.ThatprobablycomesasabigsurprisetotheAct’scritics!

2024:TheChallenge

KeyChangestoExtend

1LowerRates

2Deductions/Exemptions 3ChildTaxCredit

4QualifiedBusinessIncome 5OpportunityZones

6Depreciation

7EstateTax

So,theTCJAgaveusthebiggesttaxchangessince1986.But–andthisisanawfullyimportantbut–mostofthosechangeswerescheduledtoexpireatmidnightonDecember31,2025.Callitthe“Cinderella”problem,withtaxcutssteppinginfortheproblemofhercarriageturningintoapumpkinatmidnightattheball!

2025probablysoundedalongwayawaywhentheActfirstpassed.Theearthwasyoung,anddinosaursroamedtheplains!Butasthewitchinghourdrewnear,theUrban-BrookingsTaxPolicyCenterestimatedthatifthoserulesexpired,nearly70%ofAmericanswouldseehighertaxes.Thatwasobviouslyunacceptableforbothparties.Andso,theonlyrealdebatewasoverhowmuchofthelawwouldsurvive.CongressmanJasonSmith,whochairstheHouseWaysandMeansCommittee,calledit“theSuperBowloftaxes.”

IftheTCJAhadn’tbeenextended,here’swhatwewouldhaveseen:

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•Individualtaxrateswouldreverttohigher,pre-2018levels.

•Thestandarddeductionwouldshrink,andpersonalexemptionswouldreturn.

•Thechildtaxcreditwoulddropfrom$2,000backto$1,000perchild.

•ThecaponSALTdeductionswouldexpire,allowingunlimiteddeductionsforstateandlocaltaxes.

•Theestatetaxexemptionwouldfallfromnearly$14milliontoabout$7millionperperson.

•Manybusinessprovisions,suchasthe20%deductionforpass-throughincome,woulddisappear.

FormillionsofAmericans,thiswouldhavemeantasignificanttaxincreasestartingin2026.Theexpirationwouldalsohavecomplicatedtaxplanningforbusinessesandindividuals,potentiallyreducingeconomicgrowthandincreasinguncertaintyinfinancialmarkets.TheCBOprojectedthatallowingtheTCJAtoexpirewouldhaveincreasedfederalrevenuesbutatthecostofhighertaxesformosthouseholds.

Campaign2024:ExpandingtheTaxCutAgenda

AsTrumplaunchedhis2024campaign,taxpolicyreclaimedcenterstage.BuildingontheTCJA,hepromisedtomakeitsexpiringprovisionspermanent.Andheproposedaraftof

newtaxbreakstargetingworkers,families,andfavoredconstituencies.Thosenewpromisesincluded:

•Eliminatingtaxesontips,overtimepay,andSocialSecuritybenefits,

•ExpandingoreliminatingtheSALTdeductioncap,•Creatingadeductionforautoloaninterest,

•Exemptingactive-dutymilitary,veterans,police,andfirefightersfromincometaxes,

•EndingtaxationofAmericanslivingabroad,and

•ProvidingtaxbreaksforgoodsmadeinAmerica.

Healsofloatedtheideaofreplacingincometaxeswithtariffs,thoughtheseproposalswereoftendeliveredoff-the-cuffandlackeddetailedplans.

Ifenacted,thesepromiseswouldexempttensofmillionsmoreAmericansfrompayingincometaxes–amajordeparturefromtraditionalRepublicangoalsofbroadeningthetaxbase.Estimatessuggestedthefullpackagecouldreducefederalrevenueby$5–11trillionovertenyears,significantlyincreasingthenationaldebtifnotoffsetbyspendingcuts.Suchapackagecouldalsoleadtosignificantincomeshiftingandtaxavoidance,weakentheMedicareandpossiblySocialSecuritytrustfunds,dramaticallyboostinterestcosts,andincreasetheriskofadebtspiral.

Trump’scampaignrhetoricemphasizedhelpingmiddleclassandworkingfamilies,oftenattheexpenseoftraditionalRepublicanorthodoxy.Hepromisedthat“my

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planwillmassivelycuttaxesforworkersandsmallbusinesses,andwewillhavenotaxontips,notaxonovertimeandnotaxonSocialSecurity.”Theseproposalsweredesignedtoappealtoworking-classvotersandkeyconstituencies,evenascriticswarnedtheywoulddisproportionatelybenefitthewealthyandincreasedeficits.

UponreturningtotheWhiteHouseinJanuary2025,TrumpandRepublicancongressionalleadersprioritizedacomprehensivetaxandspendingbilltofulfillhiscampaignpromisesandsecurehislegacy.TheycraftedtheBBBasanomnibusmeasure,combiningtaxcuts,spendingreforms,andpolicychangesacrossmultipledomains.

AswiththeTCJA,Republicansknewtheywouldhavetorelyonbudgetreconciliationtopasstheiragenda.WithonlyaslimSenatemajority,reconciliationallowedthebilltopasswithasimplemajorityandlimitedtheabilityofDemocratstofilibuster.However,theprocesscarriedthesamefundamentalrestriction.Anythingthatwouldincreasethedeficitbeyondthe10-yearbudgetwindowhadtobetemporaryoroffsetelsewhere.Andonlymeasuresdirectlyaffectingspendingorrevenuescouldbeincluded.

ThisforcedRepublicanleaderstostructurethebillcarefully,phasinginorsunsettingcertainprovisionsandmakingdifficultchoicesaboutwhichpromisestoprioritize.Thereconciliationprocessalsolimiteddebateandamendments,expeditingthebill’spassagebutreducingopportunitiesforbipartisaninput.

TheBBBdidn’tjustfaceoppositionfromDemocratsacrosstheaisle.ItfacedcontentiousdebateswithintheRepublicancaucus,too.Fiscalconservativeswereaghastathowitblewupthedeficit,andtheypushedfordeeperspendingcuts.

Moderatesraisedconcernsaboutdeductionsforstateandlocaltaxesandtheimpactonhealthcareandanti-povertyprograms.Bothofthosefactionsthreatenedtoholdtheirbreathuntiltheirfacesturnedblue,spurringconcernsthatholdoutsmightdoomtheircolleaguestoalong,drawn-outfight.Oh,andjusttomakethingsevenmorechallenging,PresidentTrumpgavehiscaucusanarbitrarydeadlineofJuly4togetthebilltohimforhissignature.

Afteraseriesofcommitteemarkupsandflooramendments,theHousenarrowlypassedtheirversiononMay22byavoteof215-214.Thiswasoneofthoserarevotesindoubtuntilthefinalgavel.Infact,threeDemocraticrepresentativesactuallydiedshortlyintotheirterms,beforethebigvotes.Ifevenjustoneofthemhadlived,youmightnotbereadingthisbook.

TheSenatemadeseveralsignificantchanges,particularlyonthestructureoftaxcreditsandthephase-inofMedicaidworkrequirements.(NobodywantedtothrowanyoneoffMedicaidbeforethe2026midtermelections.)Theproblemwasthatmerelyextendingthe2017cutsusedupallthespendingroomfromtheearlierbudgetresolution.Andso,theyusedabudgetgimmickcalleda“currentpolicybaseline”toreducetheapparentdeficitimpact.Thismovesimplyassumedthatpreviously“temporary”taxcuts,suchasthosefromtheTCJA,wouldalreadybeextendedinthebaselineprojections.That,inturn,meantthatpermanentlyextendingthepreviouscutswouldmeanlittleornoadditionalcost,becausethebaselinealreadycountedontheircontinuation.UsingthismethodlettheSenateeffectively“zeroout”the$3.8trillioncostofextendingtheTCJAprovisions,thuscomplyingwithreconciliationrules.

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(Ifthe“currentpolicybaseline”hasyourspideysensetingling,patyourselfontheback.SenateDemocratsquicklypromisedtouseitthemselvesnexttimethey’reincharge.Severalobservershavesaidtheycoulduseittopasssomethingasmonumentalas“MedicareforAll”tofitinoneyear’slimits–thencry“currentpolicybaseline!”toextenditpermanently.)

TheSenatepassedtheiramendedversiononJuly1andsentitbacktotheHouse.Ordinarily,whenthetwohalvesofCongresspassseparateversionsofthesamebill,theyconveneaconferencecommitteetoironoutthedifferencesbetweenthetwo.Inthiscase,though,theHousepassedtheSenate’sversionjusttwodayslater.

PresidentTrumpsignedtheintolawonJuly4,2025.SupportershaileditasthemostsignificanttaxcutinAmericanhistory,promisinghighertake-homepay,jobcreation,andamorecompetitivebusinessenvironment.Criticswarneditwouldballoonthenationaldebt,underminethesocialsafetynet,anddisproportionatelybenefithigh-incomehouseholds.ItslegacyislikelytoshapeAmericanfiscalpolicyandpoliticaldebateforyearstocome,reflectingtheenduringinfluenceofTrump’staxvisionandtheevolvingprioritiesoftheRepublicanParty.

TheBBBstandsastheculminationofadecadeofRepublicantaxpolicyevolution,shapedbyDonaldTrump’spopulistpromises,thelegislativebattlesovertheTCJA,andthestrategicuseofbudgetreconciliationtoovercomepartisangridlock.Fromthecampaigntrailin2016tothesigningceremonyin2025,theBBBreflectstheambitions,compromises,andpoliticalstrategiesthathavedefinedtheTrumperainAmericanfiscalpolicy.Itsimpactonthetaxcode,federalspending,andthenationaldebtwillbedebated

foryearstocome,asthenationgrappleswiththeconsequencesofthissweepinglegislativeachievement.

EconomicExpectations

WepreviouslyglancedathowtheTCJAaffectedtheoveralleconomy,aswellasthedistributionaleffectsfordifferenttaxpayersatdifferentincomelevels.WhatshouldweexpectfromtheBBB?

TheCBOestimatestheBBBwilladdapproximately$2.4trilliontoprimarydeficitsoverthe2025-2034period.Wheninterestcostsfromincreasedborrowingareincluded,thatfigurerisesto$3.3trillion.OutsideanalyststendtoagreewiththeCBO:

•TheYaleBudgetLabprojectstheBBBwilladd$3trilliontothedeficitover10years.

•TheCommitteeforaResponsibleBudgetseesthedeficitrisingby$4trillionormore.

•TheTaxFoundationseesthetaxcutscostingUncleSam$5trillionoverthe10years.Afteraccountingforamodesteconomicboost,revenuelossshrinksto$4.1trillion.However,spendingcutsof$1.1trillionshouldneta$3trilliondeficitincrease.

AndhowshouldweexpecttheBBBtosliceanddicesavingsacrossincomegroups?

•Thetop1%ofearnerswillreapthebiggestrewards.

Theyreceivedroughly28-35%ofthebill’stotaltaxsavings,withaverageannualcutsrangingfrom$45,000

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toover$100,000.ThiscomesprimarilyfromextendingtheQualifiedBusinessIncomededuction,expandingtheSection1202exclusionsforqualifiedsmallbusinessstock,permanentlyloweringthetopindividualrate,andcontinuingtherecord-highestatetaxexemption.Businessowners,investors,andhigh-net-worthfamiliescomeoutwayahead.

•Middle-incomehouseholdsshouldseemodestsavings,typicallybetween$600and$2,000peryear,thankstoextendedratecuts,adoubledstandarddeduction,andasmallnewdeductionfornon-childdependents.Whilethesecutshelped,theypaledincomparisontothehigh-dollargainsatthetop.

•Low-incomehouseholdscanexpecttheleastbenefit,simplybecausetheyowelittleornofederalincometaxtobeginwith.They’lltypicallysavelessthan$250peryear,andinmanycases,nothing.Thebilldoesn’texpandrefundablecreditsliketheEITCorCTC,leavingmanyworking-classfamiliesuntouched.

Meanwhile,thebill’sestimated$3.5trillioncostover10yearswillbeabsorbedbyfuturedeficits.That’saburdenthathistoricallyfallshardestonthemiddleandlowerclassesthroughinflation,spendingcuts,orindirecttaxhikes.

Sidebar:What’sinaName?

The“BigBeautifulBill”wasneversupposedtobeitsofficialname.

TrumpfirstusedthephraseatarallyinFloridainFebruary2023whilepreviewi