Latest news with #taxreform
Forbes
7 hours ago
- Business
- Forbes
The Big Beautiful Bill Moves Forward: A First Look At 10 Key Tax Cuts
WASHINGTON, DC - MAY 22: U.S. Speaker of the House Mike Johnson (R-LA) speaks to the media after the ... More House narrowly passed a bill forwarding President Donald Trump's agenda at the U.S. Capitol on May 22, 2025 in Washington, DC. The tax and spending legislation, in what has been called the "One, Big, Beautiful Bill" Act, redirects money to the military and border security and includes cuts to Medicaid, education and other domestic programs. Johnson was flanked by House Committee Chairmen who helped craft the legislation. (Photo by) During his presidential campaign, Donald Trump vowed to make major changes to U.S. economic policy. That effort began with significant shifts in tariff strategy, but tax reform remained the cornerstone of his agenda. This week, the House of Representatives approved the initial version of new tax and spending legislation, dubbed the "Big Beautiful Bill." The proposal includes tax changes that reflect many of Trump's original campaign promises. Although the bill is still in its early stages and subject to change, the current version outlines substantial tax cuts that aim to benefit Americans across all income levels. Below is a summary of the top 10 tax cuts and breaks featured in the bill. The new legislation makes the lower income tax rates created during the first Trump Administration in the 2017 Tax Cuts and Jobs Act (TCJA) permanent. These tax rates are currently due to expire at the end of 2025, and the current bill extends these rates indefinitely. The current bill extends the increased standard deduction at the rate provided in the TCJA. Here's a breakdown of the increases in the standard deduction created by TCJA, which will remain with the passing of the current bill. Further, the bill will increase the standard deduction for all filing types by an additional $1,000 to $1,500 until 2029 in an effort to combat inflation. Beginning with the 2026 tax year, the new bill provides for the qualified business income deduction to be permanently increased from 20% to 23%. This provision is currently set to expire at the end of 2025 and would result in a significant tax increase for small business owners when combined with the elevated tax brackets that will be created by the expiration of the TCJA. This provision would save a business owner earning $1 million over $111 thousand in taxes, as illustrated in the table below. The Proposed enhancement of the Qualified Business Income (QBI) deduction saves business owners a ... More significant amount in taxes. Prior to the TCJA, the child tax credit was up to $1,000 per child under the age of 17 as of the end of the tax year. Trump's TJCA increased the credit to $2,500; however, this increase was set to expire at the end of the year. The new bill extends this increase to the child tax credit until 2029, and keeps it at a minimum of $2,000 indefinitely. Further, the value of the credit is indexed to inflation to ensure it continues to provide a meaningful benefit to parents. The bill provides for an extension of the increased alternative minimum tax (AMT) exemption. AMT is applied in addition to regular income tax for taxpayers who are subject to it. When it was established in 1969, it aimed to ensure that high-income taxpayers paid a minimum amount of tax, even after using various deductions and tax preferences. However, the calculation was not indexed to inflation; therefore, after 5 decades, the calculation began affecting middle-income earners. The TCJA increased the exemption amount for AMT to protect middle-income taxpayers, and this extension maintains that protection. In addition to the standard deduction increases, the new legislation provides for an additional $4,000 deduction for eligible senior taxpayers aged 65 years or older. This deduction can be applied if the senior taxpayer takes the standard deduction or elects to itemize deductions. The full deduction would be available for single filers with a modified adjusted gross income (MAGI) of $75,000 or less, and for married couples filing jointly with a MAGI of $150,000 or less. The U.S. Bureau of Labor Statistics estimates that the total amount of overtime and premium pay in the United States was approximately $5.7 trillion in 2024. This additional income may cause a taxpayer's income to exceed higher tax brackets, resulting in a higher tax rate for hourly workers. In contrast, the exemption for taxes on overtime pay is projected to increase take-home pay and contribute to economic growth. The No Tax on Tips Act was initially introduced in January 2025 by Texas Senator Ted Cruz. That bill was proposed and passed the U.S. Senate on May 20, 2025. The bill was passed unanimously and would create a tax deduction on tips up to $25,000. The components of this original bill were incorporated into the larger spending and tax reform bill that was passed by the House of Representatives days later. However, the latest bill included no cap on the deduction amount, allowing all tip income to be excluded. The bill explicitly states that Income from tips claimed must be from an occupation "which traditionally and customarily" has received tips. This change would allow taxpayers to deduct a larger portion of their state and local tax payments on their federal returns. The existing tax law limits deductions for state income taxes, property taxes, and sales taxes to $10,000. The proposed bill raises that cap by 400%, with benefits phasing out for households that make more than $500,000. This is arguably one of the most unexpected features of the new legislation. If passed in its current state, children born in the United States between January 1, 2025, and January 1, 2029, will be eligible to receive $1,000 via a federal government contribution in the child's "Trump Accounts.' The money will be invested in financial markets on their behalf, and they will be able to access it when they reach adulthood. The funds can be used for specific purposes, such as education expenses, purchasing a first home, or capital to start a business. These accounts will be established and funded by the US Treasury. Parents and third parties will also be allowed to contribute up to $5,000 per year. Earnings grow tax-deferred, and qualified withdrawals are taxed at the more favorable long-term capital gains rate. Children can withdraw up to 50% of the account balance at 18 years old. Between the ages of 25 and 30, they can access their full balance for approved uses. After the age of 30, the funds are available without restriction. The Big Beautiful Bill has passed the House, but lawmakers have signaled that it will undergo changes as it moves through the Senate. Most expect the Senate to revise the bill, after which the updated version will return to the House for a second vote. Legislators have expressed their intention to finalize and pass the legislation by July 4th.
Yahoo
12 hours ago
- Business
- Yahoo
'Good deal' budget bill offers smart tax policy and relief for Ohio families
As the state's operating budget works its way through the General Assembly, I want to bring to your attention legislation that I've reintroduced with my colleague from Cleveland, Sen. Kent Smith. Senate Bill 190 is a mini-budget bill entitled "A Good Deal for Ohio." It's named in honor of two past presidents and the work they did while in office: Theodore Roosevelt and the "Square Deal"; and Franklin Delano Roosevelt and the "New Deal." This effort is bipartisan and reflects what we believe would be a great budget. The bill is roughly $2 billion in revenues and expenditures and is, of course, balanced. It raises revenue by revising our tax code to close some overly generous tax loopholes and align other taxes with those of similar states. For example, the business income deduction has been in place for well over a decade. The first $250,000 of business income is tax-free, and it is taxed at a flat 3% above that level. For reference, Ohio's top income tax rate is 3.5%. This tax policy costs the state about $1.2 billion every year. The change we've made is to simply say that to receive this benefit, you need to materially participate in the business and employ at least one non-owner employee. In other words, you have to create jobs and not be a passive investor. This saves the state hundreds of millions per year and is consistent with many Ohio tax incentives that have a job creation requirement. Alaska, North Dakota and Texas have either no income tax or a very low income tax. They also have some of the highest severance taxes in the country − a severance tax is a tax on oil and gas extraction. Ohio's severance tax is one of the lowest in the country, and we have a thriving oil and gas industry. These high taxes haven't hampered Alaska, North Dakota and Texas; they're all red states, and their tax regimes exist with at least the tacit approval of Republicans. Moreover, John Kasich tried to increase the severance tax to underwrite an income tax cut. To simply do what these three states are doing will not destroy the oil and gas industry, and it would raise $500 million per year. There are many other changes on the revenue side, but let's talk about the expenditure side. Consistent with what we've heard from the electorate, the bill would deliver $900 million per year in property tax relief. It would do this by paying for the entirety of bipartisan, property tax "circuit-breaker" legislation: SB 22. It is means-tested, and goes to renters and homeowners alike, irrespective of age. It holds local political subdivisions harmless and is the only property tax relief legislation to earn the support of OASBO, which represents school treasurers. You should make up your mind on the proposal, but briefly here are the other elements: a refundable earned income tax credit (EITC); universal school breakfast and lunch; a major boost to the Ohio Housing Trust Fund; increases to the local government and public library funds; and an increase to 200% of FPL for initial eligibility for publicly funded childcare. What has made America and Ohio truly exceptional, and what this legislation supports, is a large and vibrant middle class combined with world-class social mobility. Though the chances of this legislation passing in its entirety are slim, that's not the point. It is to demonstrate what you could have, and serve as a blueprint for the future. To show that this makes better economic sense, as it will drive demand from the poor and middle classes, which will in turn drive business activity to meet that demand, all while strengthening our social safety net. And, finally, to restore faith in our public institutions that, while imperfect, are often the only entities in our corner when we fall on tough times. Louis W. Blessing III, R-Colerain Township, is serving his second term in the Ohio Senate. He currently represents Ohio's 8th Senate District, which encompasses a portion of Hamilton County. This article originally appeared on Cincinnati Enquirer: Ohio's budget can be balanced and bold | Opinion
Washington Post
18 hours ago
- Business
- Washington Post
Ernst draws groans at Iowa town hall after retort on Medicaid cuts, saying 'we all are going to die'
DES MOINES, Iowa — Republican Sen. Joni Ernst was met with shouts and groans when she said 'we all are going to die' as she addressed potential changes to Medicaid eligibility at a town hall in north-central Iowa on Friday. She had been consistent in her message throughout the contentious forum at a high school in Parkersburg, Iowa, as she defended the tax and immigration package that has passed the House and is now under consideration in the Senate. Facing several constituents concerned about cuts to Medicaid, she defended the $700 billion in reduced spending, saying it would keep immigrants in the U.S. illegally and those who have access to insurance through their employers off the rolls.
Associated Press
a day ago
- Business
- Associated Press
Ernst draws groans at Iowa town hall after retort on Medicaid cuts, saying 'we all are going to die'
DES MOINES, Iowa (AP) — Republican Sen. Joni Ernst was met with shouts and groans when she said 'we all are going to die' as she addressed potential changes to Medicaid eligibility at a town hall in north-central Iowa on Friday. She had been consistent in her message throughout the contentious forum at a high school in Parkersburg, Iowa, as she defended the tax and immigration package that has passed the House and is now under consideration in the Senate. Facing several constituents concerned about cuts to Medicaid, she defended the $700 billion in reduced spending, saying it would keep immigrants in the U.S. illegally and those who have access to insurance through their employers off the rolls. Then someone in the crowd yelled that people will die without coverage. 'People are not ... well, we all are going to die,' Ernst said, drawing groans. 'So, for heaven's sakes. For heaven's sakes, folks.' 'What you don't want to do is listen to me when I say that we are going to focus on those that are most vulnerable,' Ernst went on. 'Those that meet the eligibility requirements for Medicaid we will protect.' House Republicans last week muscled through the massive spending and tax cut package, dubbed 'the big, beautiful bill' at the urging of President Donald Trump, by a single vote. It now moves to the Senate. Ernst made clear Friday that any measure that emerges from the Senate will look different from the House version. Republicans have defended the new work requirements for able-bodied adults without dependents and stepped up eligibility verification, saying the generated savings will sustain the program for vulnerable populations. Democrats warn that millions of Americans will lose coverage. A preliminary estimate from the nonpartisan Congressional Budget Office said the proposals would reduce the number of people with health care by 8.6 million over the decade. Video of Ernst's comment started making the rounds among Democrat elected officials and candidates. Ernst is up for reelection in 2026. 'This morning, Joni Ernst said the quiet part out loud:" Republicans do not care 'about whether their own constituents live or die as long as the richest few get richer,' said Ken Martin, chair of the Democratic National Committee, in a statement.
Coin Geek
a day ago
- Business
- Coin Geek
India's digital asset sector lobbies for tax cuts
Getting your Trinity Audio player ready... India's digital asset industry is lobbying for cuts to taxes that have driven crypto trading offshore, in a bid to take advantage of a perceived softening of approach toward the industry from New Delhi, according to a report by the Financial Times (FT). Executives at digital asset exchanges reportedly told the FT that Prime Minister Narendra Modi's government had become more receptive and engaged with them following the return to office of United States President Donald Trump and his unprecedented embracing of digital assets. 'Thanks to Trump, the positive momentum that has happened in crypto has impacted India as well,' said Ashish Singhal, co-founder of CoinSwitch, one of India's largest digital asset exchanges, according to the report. Singhal also noted that industry meetings with policymakers now take place 'monthly, if not weekly,' up from little more than once every six months until recently. He said that in these increased meetings, the industry's 'big ask' was a reduction in 'very harshly' imposed taxes. Specifically, in India, digital asset transactions are currently subject to a 30% capital gains tax and a 1% levy on every transaction, introduced in 2022 to help authorities combat the illicit use of digital assets for criminal purposes. According to a study by the New Delhi-based think tank Esya Centre, the imposition of these taxes caused virtual digital asset (VDA) exchanges to lose 81% of their trading volume in four months. Further, the study found that 'the total VDA assets held by Indians in VDA exchanges globally amount to USD 13.38 billion, of which only 9.02 percent are held on compliant domestic platforms.' The implication is that the taxes effectively pushed more than 90% of digital asset trading by Indians offshore. In addition to the 'harsh' taxes, the Reserve Bank of India (RBI)—the country's central bank—has been a vocal digital asset critic to the extent that it banned banks from providing services to digital asset companies in 2018—a measure that was reversed by the Supreme Court in 2020—and in 2023 sought a complete ban on digital assets in India. However, in another indication of a changing approach, the RBI's new governor, Sanjay Malhotra, has avoided direct criticism of the sector, instead saying it is awaiting the government's industry paper. Singhal from CoinSwitch told the FT that the relationship with the RBI 'has gone from negative to neutral. I will still not quite call it positive yet,' adding that 'we are still maybe a couple of years away from proper regulation… which could help the industry gain further steam.' In February, Economic Affairs Secretary Ajay Seth stated that the government was reviewing its discussion paper on digital assets, originally set for release in September 2024, to reflect changing international regulations. 'More than one or two jurisdictions have changed their stance towards cryptocurrency in terms of the usage, their acceptance, where do they see the importance of crypto assets. In that stride, we are having a look at the discussion paper once again,' Seth said in an interview. Watch: 'Disruptive' blockchain can be useful for India title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen=""> Ashish Singhal Donald Trump India Narendra Modi Regulation Tax United States
