By Kenneth Corbin

Republican lawmakers are moving forward with a tax and spending package to deliver what President Donald Trump has dubbed a "big, beautiful bill."

It remains to be seen exactly which parts of the legislation will make it into law, but some of its provisions could have a significant impact on clients of financial advisors.

The bill began advancing this week, with a blueprint passing out of the tax-writing House Ways and Means Committee on Wednesday, followed by a separate committee passing the healthcare portion of the legislation, which would provide for steep cuts to Medicaid.

There are many moving parts to the bill, and House Republicans, who hold a slender majority, have wrangled among themselves over it. Meanwhile, whatever the House ultimately produces must be reconciled with a Senate version.

As the legislation advances, here are a few key provisions that financial advisors should watch:

"Permanent" tax cuts. The House bill would preserve all of the basic income-tax rates included in the 2017 Tax Cuts and Jobs Act, Trump's signature piece of domestic legislation from his first term.

Notably, that includes retaining the reduced rate for the highest earners. Trump had floated the idea of extending the 2017 cuts for all but the top earners, though he also suggested that could be a bad political move for congressional Republicans.

Congress faces an end-of-year deadline to extend the 2017 rates. At that point, with no action, they would revert to their prior, higher levels. The current proposal would make those rates permanent, though Ben Rizzuto of Janus Henderson Investments notes that "permanent" in this case has a very Washington meaning.

"It's important to understand that 'permanent' in this case means until another Congress passes another tax bill in the future," Rizzuto says. "So, yes, these tax brackets and other permanent provisions...could continue ad infinitum, but I am confident that we'll see tax policy changes in the future."

A bigger deduction for some seniors. The tax bill would make permanent the 2017 standard deduction levels, while offering temporary increases (through 2028) of $2,000 for joint filers, $1,500 for head-of-household filers, and $1,000 for all others. The bill would also increase the standard deduction for filers age 65 and older by $4,000. Single seniors making less than $75,000 and senior couples making less than $150,000 wouldn't be eligible for the increased standard deduction, which would expire after 2028. (Politico has compiled a list of provisions in the bill, finding that many of the perks kick in immediately but phase out at the end of Trump's term, while many of the more painful "pay-for" provisions of the bill don't take effect until 2029. The news outlet quoted Sen. John Cornyn (R., Texas) saying: "This needs to be a serious effort, not a card trick. We have a chance to fix that in the Senate version.")

The increased standard deduction for seniors comes in lieu of exempting all Social Security benefits from taxation, as Trump has proposed.

MAGA accounts. The bill includes a provision to create and fund tax-advantaged investment accounts for children under 8 years old. The proposal for so-called MAGA accounts -- "money account for growth and advancement" in longhand -- would provide $1,000 of seed money from the government and allow families to contribute $5,000 a year, which would be invested in diversified equity funds. The child couldn't make withdrawals from the account until turning 18, at which point the money would be taxed either at the capital-gains rate if used for qualified expenses such as college tuition, or at the ordinary income-tax rate.

Tax breaks for tips and overtime. Two of Trump's campaign promises that did make it into the bill would exempt most income from tips from taxation and provide for the deduction of most overtime pay. Both of those provisions would expire at the end of 2028.

Estate-tax exemption. The House bill would extend and increase the higher estate-tax exemptions included in the 2017 law that are set to expire at the end of the year. The current exemption levels of $14 million for individuals and $28 million for married couples would be cut roughly in half next year if Congress did nothing. The House bill would bump those levels up in 2026 to $15 million and $30 million, respectively, and calibrate future exemption rates to inflation.

SALT in play. The debate over the deduction cap for state and local taxes, known as SALT, has emerged as a major flashpoint in the tax bill. The version passed by the Ways and Means Committee this week would cap the SALT deduction at $30,000, an increase from the $10,000 level set by the 2017 law. Republicans from high-tax states have protested that that level needs to be higher and have threatened to derail the bill if the SALT cap isn't raised.

One of those members, New York Republican Mike Lawler, took to X on Wednesday to reiterate his opposition to the bill:

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May 16, 2025 11:06 ET (15:06 GMT)

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