The One, Big, Beautiful Bill: Comprehensive Look at 2025 Tax Cuts

In a move that has ignited fierce debate across the United States, the House Ways and Means Committee has advanced a sweeping tax bill officially titled "The One, Big, Beautiful Bill." This legislation, a flagship initiative of President Donald Trump’s economic agenda, seeks to make permanent the tax cuts introduced by the 2017 Tax Cuts and Jobs Act (TCJA)—set to expire at the end of 2025—while rolling out an array of new tax relief measures for workers, families, and businesses. As it heads toward a full House vote, the bill has emerged as a pivotal issue, raising questions about economic growth, fiscal responsibility, and equity in the tax system.

Genesis of the Bill

2017 Tax Cuts and Jobs Act was a landmark overhaul of the U.S. tax code. It reduced individual income tax rates, nearly doubled the standard deduction, expanded the child tax credit, and slashed the corporate tax rate from 35% to 21%. However, many of its individual and small business provisions were temporary, designed to sunset after 2025 to meet budget reconciliation rules. As that deadline looms, lawmakers face a stark choice: let the cuts expire, effectively increasing taxes for millions of Americans, or extend them, potentially at a steep fiscal cost.

President Trump and Republican leaders argue that the TCJA spurred significant economic growth, job creation, and wage increases, pointing to pre-pandemic data as evidence of its success. They view "The One, Big, Beautiful Bill" as a way to lock in those gains while delivering on campaign promises to further ease the tax burden on workers and businesses. Critics, however, see it as an expensive and inequitable measure that could strain the federal budget, already burdened by a $36.6 trillion national debt.

With Republican majorities in both the House (220-213) and Senate (51-49), the bill’s supporters are pushing for swift passage. Yet, opposition from Democrats, fiscal conservatives, and regional interest groups suggests a contentious road ahead.

What’s in the Bill?

Spanning 389 pages, "The One, Big, Beautiful Bill" is a complex piece of legislation with far-reaching implications. Below, we outline its major components and their intended effects on taxpayers and the economy.

Permanent Extension of the 2017 Tax Cuts

Lower Income Tax Rates:

The bill locks in the TCJA’s reduced tax brackets, ranging from 10% to 37%. Without this extension, rates would revert to pre-2017 levels (e.g., a top rate of 39.6%), increasing taxes for most filers.

Standard Deduction:

The TCJA’s near-doubled standard deduction—currently $15,000 for single filers and $30,000 for married couples—would become permanent. If allowed to expire, it would drop to roughly $16,525 for married couples by 2026.

Child Tax Credit:

The credit, expanded from $1,000 to $2,000 per child under the TCJA, would remain in place. The bill also proposes a temporary boost to $2,500 per child from 2025 to 2028.

New Tax Relief for Workers and Families

No Tax on Tips:

Workers earning less than $160,000 annually in tip-reliant industries (e.g., hospitality) would be exempt from income taxes on tips.

No Tax on Overtime Pay:

Similarly, workers under the $160,000 threshold would see overtime pay—earnings beyond a 40-hour workweek—excluded from taxable income.

Tax Relief for Seniors:

A new $4,000 additional standard deduction would apply to taxpayers over 65, easing the tax burden on retirees.

Auto Loan Interest Deduction:

Interest on loans for American-made cars would become deductible, aiming to support domestic automakers.

Business and Investment Incentives

Increased Small Business Deduction:

The Section 199A deduction for pass-through businesses (e.g., sole proprietorships, partnerships) would rise from 20% to 23%, lowering their effective tax rate.

100% Deductions for New Factories:

Businesses could immediately deduct the full cost of new U.S.-based manufacturing facilities, incentivizing domestic production.

Opportunity Zones Reestablished:

The bill revives Opportunity Zones—tax-advantaged investments in distressed areas—from 2027 to 2033, expanding on the TCJA’s original program.

Offsets and Revenue Raisers

Repeal of Green Energy Tax Credits:

The bill eliminates many clean energy incentives from the 2022 Inflation Reduction Act, including credits for electric vehicles and renewable energy projects, to offset costs.

Limits on State and Local Tax (SALT) Deduction:

The $10,000 SALT deduction cap, a contentious TCJA provision, would be made permanent but adjusted for inflation starting in 2026.

Increased Taxes on Foreign Entities:

New taxes would target residents of countries imposing "unfair" levies on U.S. firms, such as digital services taxes.

Growth vs. Debt

The bill has reignited a perennial argument about tax cuts as an economic driver. Supporters tout its potential to boost prosperity, while critics warn of fiscal peril and unequal benefits.

The Case for the Bill

Advocates, including President Trump and House Speaker Mike Johnson, assert that the TCJA proved tax cuts work. They cite economic growth of 2.9% annually in 2018-2019, historic low unemployment, and wage gains, particularly for lower earners. They argue the new bill will:

Increase Take-Home Pay:

The White House estimates a median household could see up to $5,000 more annually, with real wages rising by $3,300.

Create Jobs:

The Tax Foundation predicts extending the TCJA would preserve 4.1 million jobs, with new incentives adding more in manufacturing.

Spur Investment:

Full deductions for factories and Opportunity Zones could channel billions into U.S. communities.

The Case Against the Bill

Opponents, including Democrats and fiscal hawks, call the bill unsustainable and regressive. They cite:

Deficit Impact:

The Congressional Budget Office (CBO) estimates a $4.1 trillion deficit increase over 10 years, ballooning to $5.3 trillion with interest if all provisions are permanent.

Distributional Effects:

The Tax Policy Center finds 60% of benefits would flow to the top 20% of households, with minimal gains for lower earners.

Public Service Risks:

The Center on Budget and Policy Priorities warns that the cost could force cuts to Medicaid, education, and other programs, hitting vulnerable groups hardest.

Skeptics also question the growth claims, noting that much of the 2017 corporate tax cut fueled stock buybacks rather than broad investment or wage hikes.

Can the Bill Pass?

Despite GOP control, the bill’s passage is uncertain given slim majorities and internal divisions. Key flashpoints include:

SALT Cap:

Republicans from high-tax states want a higher cap, but raising it would inflate costs, risking conservative support.

Medicaid Cuts:

Proposed eligibility changes could save $715 billion but remove 7.7 million from coverage, drawing bipartisan concern.

Green Energy Repeal:

Scrapping clean energy credits has alienated environmentalists and some business leaders.

House Speaker Johnson aims for passage by Memorial Day, but the Senate’s 51-49 split leaves little room for error. A single GOP defection could derail it unless compromises emerge.