Breaking Down the House's New Tax Bill

By Zach Lundak | June 10, 2025

What the Proposed Legislation Could Mean for Your Finances in 2025 (and Beyond)

Understanding the nuances of ever-changing tax legislation can feel like a full-time job. Right now, a significant piece of legislation – what I'm calling the "one big beautiful bill" – is working its way through Congress. It's currently in the House Ways and Means Committee, and while it doesn't have a final bill number yet, a draft of nearly 400 pages was recently released.

I'm Zach, and I've pulled out the most important topics from this draft bill that could impact your financial planning. This is a long way from being done, but it's crucial to stay informed.

The Proposed Legislation: Key Provisions and Their Potential Impact

This draft bill touches on several areas that could significantly affect individuals and business owners. Here's a breakdown of the key proposed changes:

1. SALT Deduction Cap Adjustments

The State and Local Tax (SALT) deduction cap has been a hot topic for years.

  • Current Cap: $10,000

  • Proposed Increase: The draft bill proposes to raise this cap to $30,000.

  • Phase-Out: However, for married couples filing jointly who make over $400,000 annually,
    this increased cap begins to phase out. Once your income crosses $500,000, the cap
    reverts to the current $10,000.

  • Who Benefits: This change would significantly benefit many individuals, especially those in high-tax states or those with valuable properties and higher property tax bills, who quickly hit the existing $10,000 limit.

  • PTE Elections: Interestingly, I did not see any reference to Pass-Through Entity (PTE) elections being impacted by this proposed legislation. These strategies involve working with your state to have your pass-through entity pay certain taxes, often as a way to circumvent the $10,000 SALT deduction cap (availability depends on your state).

2. Qualified Business Income (QBI) Deduction (Section 199A)

This is a big one for business owners with pass-through entities. The draft bill proposes
significant changes to the QBI deduction:

  • Permanence: The deduction would become permanent, removing the uncertainty
    of it being sunsetted (as many other provisions are subject to in reconciliation bills).

  • Increased Deduction: The deduction rate would increase from 20% to 23%.

  • Simplification & Expansion:

    • Threshold Elimination for Service Businesses: Under current law, professional service businesses (like doctors, lawyers, and accountants) lose this deduction entirely once their income crosses a certain threshold. The proposed legislation would eliminate this limitation, meaning these businesses could continue to claim the deduction even above the income threshold (around $400,000 for married filing jointly).

    • Simplified Calculation for Other Businesses: For non-professional service businesses, the current calculation involves a complex formula based on wages and qualified assets, which often results in a deduction far less than 20%. The new bill aims to simplify this calculation, making it easier and potentially more beneficial to claim the full deduction.

3. Roth Conversions and Tax Brackets

Many individuals have been aggressively performing Roth conversions in anticipation of the
current lower tax brackets sunsetting at the end of 2025.

  • Proposed Extension: This new bill proposes an extension of these current tax
    brackets    .

  • Impact on Conversions: With the potential extension of lower tax brackets, the urgency for some to complete large Roth conversions in the near future may decrease. This could allow for more strategic timing of conversions based on individual circumstances rather than an impending tax hike.

4. Standard Deduction

The bill does mention the standard deduction, but specific details on proposed changes were
not readily apparent in my initial review of the draft. It's an area to watch as the legislation evolves.

What This Means for Your Financial Plan and What's Next

It's important to remember that this is a draft bill and a long way from becoming law. It still needs to navigate its way through the House, then the Senate, likely undergo rounds of negotiations between the two chambers, and finally receive the President's signature. We will likely see many updates and changes over the summer.

Staying informed about these potential tax changes is crucial for proactive financial planning. Understanding how these proposals could impact your income, deductions, and business strategies allows you to prepare and adapt.

Complex tax legislation often requires expert interpretation to understand its specific impact on your unique situation.

At Barrett FP LLC, we offer expert financial planning on an hourly basis, focused entirely on helping you achieve your goals.

Learn more about how we can help you navigate tax changes and see if we're a good fit.