Understanding the 2025 Tax Reform Bill: Key Takeaways for Accounting Professionals

On May 22, 2025, the U.S. House of Representatives passed a comprehensive tax reform package, informally referred to by proponents as the "One Big Beautiful Bill Act." The legislation aims to extend and expand upon provisions in the 2017 Tax Cuts and Jobs Act (TCJA). 

As the bill proceeds to the Senate, accounting professionals should prepare for its potential implications on tax planning, compliance, and advisory services. This overview highlights the bill’s key provisions and examines how the proposed changes could impact clients, tax planning, and advisory strategies. 

Key provisions of the proposed legislation 

Extension of 2017 Tax Cuts 

This bill seeks to make permanent several key elements of the TCJA, currently scheduled to expire at the end of 2025. These provisions include:  

• Maintaining lower tax rates across multiple income brackets. 
• Preserving the increased standard deduction and providing a temporary additional increase of $1,000 for single filers and $2,000 for married couples from 2025 through 2028, with adjustments for inflation thereafter. 
• Continuing the cap on the mortgage interest deduction. 
• Making permanent the increased exemption amounts and income phaseout thresholds for the Alternative Minimum Tax (AMT), reducing the number of taxpayers subject to it.  

New Tax Deductions and Credits 

Several new provisions are proposed to enhance benefits for individual taxpayers:  

• Exempt Tip and Overtime Income: Tip income and overtime pay may become tax-exempt, potentially benefiting workers in service industries. 

• Expanded Child Tax Credit: An increase to $2,500 per child through 2028, reverting to $2,000 thereafter. 

• Increased SALT Deduction Cap: For taxpayers earning under $500,000, the cap on state and local tax (SALT) deductions would increase from $10,000 to $40,000. 

• Savings Incentives: Introduction of "Money Accounts for Growth and Investment," offering $1,000 per child to encourage savings.  

Business Incentives 

The legislation includes several incentives designed to promote capital investment and innovation:  

• Bonus Depreciation: Restoration of 100% bonus depreciation for qualified property acquired after January 19, 2025, and placed in service before January 1, 2030. 

• R&D Expensing: Restoration of immediate deductibility for domestic research and development investments. 

• Interest Deductions: Adjustments to expand limitations on business interest expense deductions. 

• Expanded Pass-Through Deduction: The deduction for qualified business income for pass-through entities would increase from 20% to 23%. Additionally, the bill eases limitations on high-income taxpayers, expanding eligibility for the deduction. 

• IRS Reporting Thresholds: The threshold for IRS Form 1099 reporting would rise from $600 to $2,000 starting in 2026, easing administrative burdens for businesses using independent contractors. 

Reforms to Social Program Requirements 

The bill proposes changes to federal assistance programs:  

• Medicaid: Introduction of work requirements for able-bodied adults under 65, mandating 80 hours of work, education, or community service monthly. 

• SNAP: Similar work requirements imposed on Supplemental Nutrition Assistance Program recipients. 

• Clean Energy Incentives: Adjustments to certain clean energy tax credits established under previous legislation. 

Implications for accounting professionals 

Strategic Tax Planning 

Should these provisions become law, both individual and business clients may require significant updates to their tax strategies. Accounting professionals should begin modeling various tax scenarios to help clients maximize available deductions and credits.  

Advising on Public Assistance Impacts 

Clients affected by new Medicaid and SNAP eligibility criteria may need guidance. While direct financial planning may fall outside the scope of traditional accounting services, advisors can play a vital role in connecting clients to appropriate resources and offering educational support on the tax-related aspects. 

Business Investment Recommendations 

The proposed continuation of bonus depreciation and R&D expensing could encourage clients to accelerate planned investments. Accountants should review capital expenditure forecasts and consider the timing and classification of qualifying assets.   

Broader fiscal considerations 

Estimates from the Congressional Budget Office project that the legislation, if enacted as written, would increase the federal deficit by approximately $3.8 trillion over the next decade. Supporters suggest that lower taxes and greater private-sector investment will drive economic growth. Others raise concerns about the long-term fiscal sustainability and distributional impacts of the tax changes. 

Next steps and staying informed 

As the Senate takes up consideration of the bill, it may undergo further amendments. Accounting professionals should monitor legislative updates and assess how evolving provisions may affect both personal and corporate tax clients. Establishing a proactive communication plan with clients now can ensure they are prepared for any potential changes before the 2025 tax season.