State and Local Tax Deduction Limitation (SALT Cap):

• Increased to $40,000 ($20,000 for married filing separately)

• Indexed for inflation through tax year 2029

• Reverts to $10,000 ($5,000 for married filing separately) after 2029

• Phase-down for modified AGI over $500,000, reducing the $40,000 limit by 30% of excess income, not below $10,000

Pass-Through Entity Tax (PTET) Elections:

• No new limitations imposed on PTET elections

Excess Business Loss (EBL) Limitations:

• Current limitations on business losses used to offset other income are made permanent

• EBLs continue to be treated as net operating losses (NOLs)

Personal Income Tax Rates:

• TCJA tax rates and brackets made permanent effective after December 31, 2025

• Adjustments continue annually for inflation

Standard Deduction:

• Permanent extension of TCJA standard deductions

• Further increased to:

  • $15,750 for single filers

  • $23,625 for head of household

  • $31,500 for married filing jointly

• Adjusted for inflation after 2025

Itemized Deductions:

• Simplifies the overall limitation

• Eliminates most miscellaneous itemized deductions

• Expands educator expense deductions

• Introduces a percentage cap on deductions for high-income taxpayers

Personal Exemptions:

• Permanently eliminates personal exemptions

• Introduces a temporary $6,000 senior deduction for individuals over age 65

• Phases out at $75,000 modified AGI ($150,000 married filing jointly)

Alternative Minimum Tax (AMT):

• Increased exemption and phaseout thresholds made permanent effective December 31, 2025

• Phaseout thresholds revert to 2018 levels of $500,000 (single) and $1,000,000 (joint), indexed for inflation

• Exemption phases out faster for high-income taxpayers

Child Tax Credit:

• TCJA increased child tax credit made permanent

• Additional child tax credit set at $1,700 in 2025, adjusted for inflation

• Nonrefundable credit increases to $2,200 effective 2026

Charitable Deductions:

• Beginning in 2026, non-itemizers can deduct up to $1,000 ($2,000 married filing jointly) for charitable donations

• For itemizers, contributions deductible to extent they exceed 0.5% of AGI, with carryforward allowances

• 60% AGI limitation for cash contributions to public charities is made permanent

Tips and Overtime Pay Deductions:

• Above-the-line deductions allowed for 2025–2028 tax years

• Up to $25,000 for tips per individual

• Up to $12,500 for overtime pay per individual ($25,000 for joint filers)

• Subject to AGI phaseouts

Individual Trust Accounts (“Trump Accounts”):

• New tax-favored accounts for children under age 18

• Annual contribution limit of $5,000

• One-time $1,000 government deposit for qualifying children born between Dec. 31, 2024, and Jan. 1, 2029

• Employers can make tax-free contributions annually

• Funds may be used for education, small business investments, or first home purchases

Qualified Elementary and Secondary Scholarships Tax Credit:

• Tax credit equal to qualified contributions to scholarship-granting organizations

• Includes various requirements and restrictions

Please note: These are over view highlights of the bill’s provisions. There may be additional details, exceptions, and complexities not covered here. We recommend consulting with your Enrolled Agent for guidance on your specific situation.