Unpacking the New Draft Tax Bill: Key Provisions & Potential Impacts

Congress’s House Ways and Means Committee released a 389-page draft bill on May 12 that aims to lock in and expand key provisions of the 2017 Tax Cuts and Jobs Act, while introducing new incentives for families, businesses and savers. Below is a deeper look at the most significant proposals and what they could mean for your organization:

Permanence and Enhancement of Major Individual Provisions

The draft makes permanent the nearly doubled standard deduction created in 2017 and adds an extra year of inflation indexing for all filing statuses. For tax years 2025 through 2028, it further boosts the deduction by $1,000 for single filers, $1,500 for heads of household and $2,000 for married couples filing jointly. Under the proposed changes, a married couple could claim a standard deduction of $32,600 in 2026, a dramatic increase from today’s $16,600 level .

At the same time, the bill preserves and enlarges the expanded child tax credit. It makes permanent the $2,000-per-child base credit, maintains the higher income phase-out thresholds and the refundable portion, and indexes the credit for inflation beginning after 2026. For 2025 through 2028, it even raises the credit to $2,500 per qualifying child .

Expanded Business Incentives to Fuel Investment

To encourage capital spending, the proposal reinstates 100 percent bonus depreciation for qualified property placed in service after January 20, 2025, and makes immediate expensing of domestic R&D costs permanent through 2029 . It also simplifies Section 179 expensing by raising the annual limit to $2.5 million (indexed) and broadening the definition of eligible assets.

Pass-through businesses would see their qualified business income deduction increase from 20 percent to 23 percent, with a new phase-in formula designed to avoid punitive marginal rates. A host of other targeted credits, from enhanced employer-provided child care to a permanent paid family and medical leave credit, offer additional planning opportunities for employers.

Relief for High-Tax States and New Savings Vehicles

One of the draft’s most debated items is the SALT cap increase. The current $10,000 limit on state and local tax deductions would be raised to $30,000 for single filers and married couples filing jointly, phasing down for taxpayers with adjusted gross income above $400,000.

The bill also proposes creating “MAGA accounts” (Money Accounts for Growth and Advancement), a tax-advantaged savings vehicle for children under age eight. Parents and other entities could contribute up to $5,000 per year (indexed) toward education, entrepreneurship or homeownership expenses. A federal pilot program would seed each eligible child’s account with $1,000, a benefit available to children born between 2024 and 2028.

Next Steps and How We Can Help

This draft will undergo committee markup and potential amendment before reaching the Senate. Given the breadth of these proposals, from permanent rate cuts and boosted credits to novel savings accounts, businesses and families should begin assessing how timing of purchases, credit elections and savings strategies may shift under the new rules.

Our team at Strategic Tax Planning is ready to help you interpret these changes, model their impact and craft a tailored plan to maximize benefits and manage risks. Reach out today at (202) 455-6010 or submit our form to schedule a consultation.