The House Republicans have unveiled a sweeping new tax plan aimed at extending former President Trump’s 2017 tax cuts while making some notable changes to deductions, energy incentives, and family benefits. As always, at BrilTax Advisors, we’re breaking it down for you—so you understand what this proposal could mean for your personal or business finances.
Key Features of the New Tax Plan
This new proposal, championed by the House Ways and Means Committee, is being framed as a pro-growth, pro-family, “America First” tax initiative. Here are the major elements you should know:
1. Extension of the 2017 Trump Tax Cuts
One of the headline items is the proposed extension of the Trump-era tax cuts, which are currently set to expire at the end of 2025. This includes keeping the top individual tax rate at 37% and preserving various deductions and credits that benefit both individuals and businesses.
2. Bigger SALT Deduction (But With Limits)
The plan raises the cap on the state and local tax (SALT) deduction from $10,000 to $30,000—but begins phasing it out for incomes over $400,000. This is a nod to lawmakers from high-tax states who’ve long pushed for SALT relief.
3. New Tax Breaks for Tipped and Overtime Income
In a move targeting service industry workers and hourly employees, the bill proposes eliminating federal income tax on tips and overtime pay from 2025 to 2028. Even independent contractors like rideshare drivers could qualify.
4. Boosts to the Standard Deduction and Child Tax Credit
Middle-income families stand to benefit from a temporary increase in the standard deduction and an enhanced child tax credit. Child tax credit could increase from $2,000 to $2,500. Seniors would also receive an extra $4,000 deduction, starting in 2025.
5. Creation of “MAGA” Accounts
The bill introduces a new savings vehicle: the Money Account for Growth and Advancement (“MAGA”)—a tax-preferred savings account seeded with $1,000 for U.S. citizens born between 2025 and 2028.
Paying for It: Where the Cuts are Coming
To fund these proposals, Republicans are targeting several areas for cutbacks:
1. Reducing or Elimination of Clean Energy Tax Credits
The bill rolls back many of the clean energy incentives created under the Inflation Reduction Act, including credits for electric vehicles, hydrogen, and renewable energy production. These changes could slow new clean-energy projects.
2. Higher Taxes on Endowments and Remittances
Wealthy university endowments and private foundations could see a significant increase in taxes—from 1.4% to as high as 21% for the largest funds. Additionally, certain international money transfers would face a new 5% excise tax.
3. Changes to Corporate and High-Income Deductions
Corporate charitable deductions would only apply to donations exceeding 1% of taxable income, and individuals in the highest tax bracket would see a reduced benefit from their itemized deductions. However, the controversial carried interest loophole for private equity remains unchanged.
Other Notable Provisions
- Car Loan Interest Deduction: : A new deduction for car loan interest on American made cars would be available to non-itemizers earning under $100,000 (single) or $200,000 (married).
- Private Education Credit : A proposed $5 billion annual cap on tax credits for donations to scholarship funds that support private, religious, or homeschooling expenses.
- Employee Retention Credit : Retroactively cuts off new claims for the pandemic-era Employee Retention Tax Credit after January 31, 2024.
What Happens Next?
While this bill has cleared the first hurdle, it still faces internal GOP debate. The bill is expected to move quickly, with House Republicans aiming for a vote by the end of next week and hoping to deliver it to President Trump’s desk by July 4.
What Should Taxpayers Do Now?
This proposal is not yet law, but it gives us a preview of where tax policy may be headed if Republicans regain full control in Washington. At BrilTax Advisors, we’re monitoring developments closely. Whether you’re an individual looking to plan around these changes or a business owner evaluating your energy tax credits, our team is here to help you stay one step ahead.
Contact us today or schedule a consultation if you need help preparing for potential changes.
