The U.S. House passed a major tax reform package known as the “One Big Beautiful Bill” (H.R.1). This bill is packed with tax changes that could impact fund managers, investors, and businesses. Here’s what you need to know.
Making the 2017 Tax Cuts Permanent
The biggest headline? The bill proposes making the 2017 Tax Cuts and Jobs Act (TCJA) permanent. Without this move, the TCJA cuts would expire at the end of 2025. These cuts include lower corporate and individual income tax rates, expanded business deductions, and increased estate tax exemptions.
If this bill passes the Senate, it will provide long-term certainty for tax planning. Businesses and investors could see sustained benefits from reduced tax liabilities.
No Federal Tax on Tips
The “No Tax on Tips Act” is now part of this bill. It would eliminate federal income taxes on cash tips for workers earning under $160,000. Service industry workers could see higher take-home pay, and businesses would need to update payroll systems to reflect this change.
Higher SALT Deduction Cap
The bill also proposes increasing the state and local tax (SALT) deduction cap from $10,000 to $40,000 for taxpayers earning under $500,000. This would benefit residents in high-tax states like New York and California.
What’s Next?
The bill passed the House on May 22, 2025, and now moves to the Senate. If it becomes law, it will bring sweeping changes to the tax landscape. For fund managers, investors, and financial professionals, it’s crucial to stay updated. These changes could affect fund structures, tax planning strategies, and client advice.
Stay tuned. Our team is watching these developments closely and is here to help you navigate what’s next.
Need help preparing for these tax changes? Contact us today.