TAX TIP: PROPOSED HR 1: BIG, BEAUTIFUL BILL/ ACT:
- Dr. Mark Lee Levine, Professor
- Jun 2
- 4 min read
It is common knowledge that Congress is working very aggressively to pass what is known in the House of Representatives as H.R. 1, which is known by President Trump, et al, as “One, Big, Beautiful Act.” In this Tip, I will refer to it as H.R.1 or the Bill.
Most taxpayers know that HR 1 narrowly passed the House and is being discussed in the Senate. (Once the Senate agrees or modifies various parts of H.R. 1, moving to the Senate’s own position, there will be an attempt to reconcile the positions of the House and the Senate, with appropriate votes from the House and Senate, moving the final Bill to the President for his signature.)
The following is only a smattering of some of the key positions taken by the House in H.R. 1. (I have included some of the items below with particular emphasis in most cases on the impact of the proposed change relative to real estate issues.)
A Few Important Proposed Changes Under H.R. 1
The H.R. 1 position was passed, as noted, on 5/22/2025. Congress is now working as quickly as possible, especially with the Senate, to meet the self-imposed deadline for passing a new bill prior to the July 4th, 2025, holiday.
Rates: the Bill makes changes in the permanent income tax rates which under the Tax Cuts and Jobs Act of 2017 (TCJA) was to terminate the current rates as of the end of 2025. The new rates will have a ceiling rate of 37%. It will provide lower rates that are adjusted for inflation after 2025. With these bracket changes, the rates for those below 37% will be effectively lowered.
The personal exemption that had existed for years and that was frozen by the TCJA of 2017 as been eliminated.
The standard deduction for years after 2025 is increased for the various groups for single filing and joint filing of returns.
The Qualified Business Income deduction under Code Section 199A is made permanent, increasing the possible deduction amount to 23%, up from 20%. This is for years commencing after 2025.
The alternative minimum tax (AMT) exemption is made permanent.
The estate and gift tax exemption and the generation-skipping transfer exemption were increased to 15 million per person up from the current (rounded) 14 million amount. These exemptions are indexed for inflation adjustments.
The deduction for personal casualty losses is eliminated, unless the loss can qualify as a disaster loss. See Code Section 165 (c). Thus, deducting personal casualty losses is gone for most purposes.
Itemized deductions that are personal in nature under Code Section 167 are generally barred. This means, for example, that unreimbursed employee business expenses are not deductible, such as the cost for an office in the home or educational expenses for business.
The deduction of interest for the loan connected with the qualified residence can be deducted, if at all, for interest on the loan of up to $750,000. (Other proposals are considering allowing the deduction even if one does not itemize.)
Itemized deductions, if allowable, will no longer be subject to the prior limits on such deductions. (These were sometimes labeled as the Pease limitations.)
Except for the military, moving expenses are not deductible. This limit was made permanent under the Bill.
With various restrictions, some taxpayers can qualify for a deduction, above line, for tips. There is a very restricted definition of what will qualify for a “tip” to gain the tip deduction.
Likewise, there is a new above-line deduction for Overtime. However, the overtime definition restricts a taxpayer from qualifying for this deduction in many instances.
Where the taxpayer has lower income, as defined in the Bill, the taxpayer may qualify to deduct part of the interest on a qualified passenger vehicle loan.
The opportunity to delay the payment of taxes and/or to reduce the amount of taxes when investing in an Opportunity Zone (OZ) is extended generally through 2033. The changes also allow for reduced tax on income from the investment in the OZ.
An additional benefit from depreciation for qualified property involved as Production Property allows for an election to expense the cost for the production property.
Interest can be excluded from income up to 25% of interest income where it was generated from real estate loans from banking institutions that are insured under the FDIC. Additional requirements apply to the loans and the timing of the same.
Low Income Housing Credit (LIHC) was changed by allowing additional amounts of credit to be allocated by the states. Other changes in LIHC were made to increase credits to support low-income housing.
Many tax credits related to clean air and energy related credits were terminated.
The now famous SALT limits that came in under the TCJA of 2017 have been modified to allow a maximum deduction of up to $40,000 as opposed to the existing limit of a maximum deduction ceiling of $10,000. (With the increased standard deduction, this change on SALT will not help many taxpayers that are not otherwise benefitting by the home loan interest deduction.) This change is not effective until after 2025!
Recent concerns with the actions by universities as to political issues have generated greater support to tax universities on their income on endowments and other areas. With large endowments, this tax could move as high as 21% of net investment income.
(This summary is based on many outlines of H.R. 1, such as my reading of parts of H.R. 1, the presentation by the Tax Foundation, May 2025 and the Brownstein Summary of 5/27/2025, which can be found in Lexology dated 5/27, 2025.)
There are many more parts to H.R 1 that have not been addressed in this Tip. Look for more developments in this tax area as the Senate acts to address issues that are important to many Senators and within their given state.
Dr. Mark Lee Levine, Professor and Chair Holder, University of Denver
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