Late in the evening on Friday, May 9, the House Ways and Means committee released a partial draft of the tax legislation we have all been waiting for. We expect the final bill to be much larger than this initial 28-page draft.
The three provisions containing the most important tax changes in the partial draft are:
- Increasing the IRC §199A deduction from 20% to 22% of qualified business income and expanding the deduction to include certain investment income;
- An increase in the Child Tax Credit from $2,000 per child to $2,500 per child for 2025 through 2028 (then reverting back to $2,000 with an annual inflation adjustment thereafter); and
- Permanently increasing the uniform estate and gift tax exemption to $15 million per taxpayer, with annual inflation adjustments starting in 2026.
Other provisions contained in the partial draft legislation include permanent extensions of less controversial TCJA items scheduled to expire at the end of 2025, including:
- Tax rate schedules with the highest marginal rate remaining at 37%;
- The higher standard deduction (with an additional temporary bump for tax years 2025 through 2028 of $2,000 for married taxpayers filing jointly, $1,500 for head of household, and $1,000 for single filers);
- Elimination of the personal exemption deduction;
- Alternative minimum tax exemption and exemption phase-out thresholds;
- Limitation on the deduction for qualified residence interest;
- Limitation on casualty loss deductions;
- Elimination of 2% miscellaneous itemized deductions; and
- Elimination of the overall limitation on itemized deductions.
This draft does not contain any provisions dealing with the state and local tax (SALT) provisions, which is expected to be a hotly contested issue, or any of the items promised by President Trump on the campaign trail, such as no tax on tips, overtime, or Social Security, among other provisions.
The 28-page partial draft bill is available at: www.caltax.com/files/2025/taxbilldraft.pdf
Sign up for Spidell’s 2025 Post-Tax Season Update and Review and get a breakdown of the provisions listed here, other provisions contained in the partial draft legislation, and breaking news as additional legislative provisions are released. Click here and register today.
Sign up for Spidell’s Flash E-mail — Get breaking news delivered to your inbox, plus other free analysis and information for tax professionals. Join our community and stay at the top of your game. Click here to sign up
