Decoding the "One Big Beautiful Bill Act": What it Could Mean for South Jersey & PA Taxpayers
In the ever-evolving landscape of federal legislation, a new, comprehensive proposal dubbed the "One Big Beautiful Bill Act" is making waves in Washington, having recently passed the House and now moving to the Senate. While this ambitious package covers a wide range of policy areas, its potential impact on individual income taxes is a primary concern for everyday Americans, including those of us here in South Jersey and PA.
At KBI Consulting, your trusted Philadelphia tri-state area tax preparation experts in Haddonfield, NJ & West Chester, PA, we're closely monitoring these developments to help you understand what this "big beautiful bill" could mean for your financial future. Here's a look at the key income tax provisions being discussed for everyday people:
1. Making 2017 Tax Cuts Permanent & More
A central pillar of the "One Big Beautiful Bill Act" is to make many of the individual tax cuts from the Tax Cuts and Jobs Act (TCJA) of 2017 permanent. As you may know, many of these provisions, including current individual income tax rates and the increased standard deduction, are currently set to expire at the end of 2025.
What it means for you: If enacted, this bill aims to prevent those sunsets, maintaining generally lower tax rates and a higher standard deduction than would otherwise revert. This could offer long-term stability and continued tax relief for many South Jersey taxpayers.
2. Boosted Standard Deduction & Child Tax Credit (Temporary Increases)
Beyond making the TCJA provisions permanent, the proposed bill also includes temporary boosts to key deductions and credits:
Increased Standard Deduction: The bill proposes a temporary increase to the standard deduction (e.g., a $1,000 increase for individuals, $2,000 for joint filers) for several years (e.g., 2025-2028).
Expanded Child Tax Credit (CTC): The CTC would see a temporary increase (e.g., an additional $500, bringing it to $2,500) for a period (e.g., through 2028), before potentially reverting to $2,000. It also includes provisions aimed at ensuring only children with Social Security Numbers can access the credit, which could impact mixed-status households.
What it means for you: These temporary enhancements could offer additional tax savings for many South Jersey families and individuals in the short term. However, it's important to note their temporary nature, as they could revert after their specified expiration dates.
3. Ending Taxes on Tips and Overtime Pay (Temporary)
A new and noteworthy proposal within this bill is the elimination of income taxes on certain types of earned income:
No Tax on Tips: For workers in occupations that traditionally receive tips (like those in our vibrant South Jersey restaurant scene), this bill proposes to exempt qualified tips from federal income tax.
No Tax on Overtime Pay: Overtime wages would also be exempt from federal income tax under this proposal.
What it means for you: If you're a service industry professional or frequently earn overtime in South Jersey, these provisions could significantly boost your take-home pay. However, these tax breaks on tips and overtime are also proposed as temporary, set to expire after a few years (e.g., 2028).
4. Adjustments to the SALT Cap (Potentially Good News for NJ!)
The State and Local Tax (SALT) deduction cap of $10,000, introduced by the 2017 TCJA, has been a significant concern for taxpayers in high-tax states like New Jersey. The "One Big Beautiful Bill Act" reportedly includes an increase to the SALT cap (e.g., to $40,000 for incomes up to $500,000 for married couples filing jointly).
What it means for you: This change could be very beneficial for many South Jersey homeowners with high property taxes and state income taxes. An increased SALT cap could allow more residents to significantly reduce their federal taxable income.
5. Other Proposed Changes to Monitor
Beyond these key income tax provisions, the "One Big Beautiful Bill Act" is a comprehensive package that includes various other proposals with potential indirect impacts on your financial situation, such as:
New Deduction for Auto Loan Interest: A temporary deduction for interest on auto loans, but generally only for U.S.-made vehicles.
Changes to Medicaid and SNAP: Significant spending cuts to assistance programs like Medicaid and SNAP, which could indirectly affect the financial stability of some households.
Estate Tax Exemption: Potential increases to the estate tax exemption.
Staying Informed in a Changing Tax Landscape
The "One Big Beautiful Bill Act" represents a significant potential shift in federal tax policy. As this legislation progresses through Congress, its final form and exact impacts will become clearer. It's crucial for South Jersey residents to stay informed, especially given the temporary nature of many of the proposed benefits.
At KBI Consulting, your dedicated South Jersey tax preparation specialists located right here in Haddonfield, NJ, we are committed to keeping our clients up-to-date on all legislative changes. We provide expert analysis and personalized tax planning services to help you navigate new rules, understand potential savings, and ensure compliance.
Don't wait for tax season to understand how "big bills" might affect your bottom line. Contact KBI Consulting today at (610) 420-4952 or email us at KBI@kbiconsultants.com, for expert tax advice and personalized preparation tailored to the needs of South Jersey residents.
