Tax Talk Thursday: Who Wins with the New Tax Bill? Breaking Down H.R. 1 for Individuals and Businesses (Updated)

Congress has officially passed H.R. 1 – the “One Big Beautiful Bill”, and it’s now law. This sweeping tax legislation makes many of the 2017 Trump-era tax cuts permanent while introducing new benefits for individuals, families, and businesses. Here’s a breakdown of who benefits the most, and how this bill could impact your income, your business, and your international reporting—all in plain English.

1.    For Individuals: Lower Taxes, Bigger Deductions (Mostly)

High-Income Earners - If you’re earning over $250,000 (single) or $500,000 (joint), this bill is a big win.

• Top rate stays at 37% (instead of rising back to 39.6%)

• The Net Investment Income Tax (3.8%) and Additional Medicare Tax (0.9%) have been eliminated

• The federal estate tax has also been removed, allowing individuals to pass their entire estate to heirs without incurring federal estate tax, regardless of size. Previously, estates over $13.6 million (in 2024) were taxed up to 40%, but now all estates are exempt from federal taxation upon death.

• SALT cap raised to $40,000 for incomes under $500,000

Example: A California couple with $600,000 in income and $100,000 in capital gains could save $4,700 or more just from repealed surtaxes and full SALT deductibility.

Families & Parents

• Child Tax Credit increases to $2,200 per child

• “Trump Account”: $1,000 contribution allowed per child born between 2024–2028, tax-deferred

• Standard deduction remains high and adjusted for inflation

Good news if you’re raising a family or planning one.

New Deduction for Overtime & Tipped Workers

From 2026–2028, workers can deduct up to $25,000 of overtime or tipped income—a unique break for lower-wage earners.

2.    For Businesses: Major Write-Offs, Lower Rates

 C Corporations

• Corporate tax drops to 15% (down from 21%)

• Corporate AMT is gone

• Full bonus depreciation is back: expense 100% of equipment, vehicles, and property

• R&D costs are fully deductible again (no amortization required)

Example: A business with $1.5 million in net income will save over $90,000 in taxes under the new 15% flat rate.

Pass-Through Businesses (LLCs, S Corps, Sole Props)

• 20% Qualified Business Income (QBI) deduction becomes permanent. Thresholds increase to $75,000 (single) / $150,000 (MFJ), meaning more people qualify

• Business meals fully deductible again

• Business interest deduction limits expanded. That same business might now be allowed to deduct 50% or more of its ATI—or even the full amount of its interest—depending on industry classification and size, allowing it to immediately deduct more of its interest payments and reduce current-year taxes.

Example: An S-Corp owner with $200,000 income and $60,000 in equipment purchases

could deduct more upfront and keep more profit tax-free.

3.     International Tax Changes: More Complex, But More Credit

• Foreign tax credit limit raised from 80% to 90%. U.S. businesses that pay taxes abroad can now claim a larger credit—up to 90% of foreign taxes paid, up from the previous 80%—to offset their U.S. tax liability. This change helps reduce double taxation and benefits multinational companies repatriating foreign earnings.

• GILTI and FDII are tweaked with minimum rates of 10.5%–14%. These changes slightly increase the U.S. tax burden on controlled foreign corporations (CFCs) while preserving incentives for export-driven U.S. companies.

• High-Tax Exclusion for GILTI Expanded (Due to Lower U.S. Rate) - The high-tax exclusion lets U.S. shareholders of CFCs avoid GILTI if the foreign income is taxed at a sufficiently high rate abroad. Because the U.S. corporate tax rate has now dropped from 21% to 15%, the threshold for this exclusion also drops—from 18.9% to 13.5%.

• Stricter rules on how businesses allocate U.S. deductions to foreign income. Under the new law, businesses must follow tighter rules when applying U.S.-based expenses (such as R&D, interest, and overhead) against foreign income for tax credit purposes. This can reduce the benefit of FTCs by limiting what qualifies as foreign-source income. 

  
  

  Result: More foreign income qualifies to be excluded from GILTI, allowing companies to avoid U.S. tax on profits already taxed overseas at moderate rates.

• Permanent anti-inversion and profit-shifting rules - Provisions to discourage tax-motivated offshore restructuring—like inversions (moving a U.S. corporation’s domicile abroad)—are now permanent. These rules also close loopholes that allowed deferred tax treatment for income passed through certain foreign subsidiaries. This means multinational businesses may save more when repatriating profits but will need stronger documentation for deductions and credits.

Who Should Take Action?

Taxpayer Type	What to Watch or Do
High-income earners	Consider estate planning, investment timing, and SALT deductions
Business owners	Evaluate entity structure (S-Corp vs C-Corp), plan for depreciation
Startups & tech firms	Look into QSBS exclusions and R&D write-offs
Families	Consider funding Trump Accounts, track CTC changes
Expats or global entrepreneurs	Review GILTI, FTC changes, and deduction allocations

While this bill still faces hurdles, it’s a strong signal of where federal tax policy is heading: lower rates, bigger deductions, and greater rewards for business owners and high earners. We’re tracking updates closely. If you want to find out how the bill could impact your personal or business taxes, reach out to MKHS Tax Group at info@mkhstaxgroup.com for a personalized consultation.