House Passes “One Big Beautiful Bill Act”: What San Diego Business Owners and Estate Planners Need to Know

Preovolos Lewin, ALC – Legal Insights for Entrepreneurs and Families

On May 22, 2025, the U.S. House of Representatives passed HR 1—the “One Big Beautiful Bill Act”—by a narrow 215–214 vote. This sweeping legislation, championed by the Trump administration, proposes to expand the 2017 Tax Cuts and Jobs Act with major implications for small businesses, high-net-worth individuals, and estate planners.

Below is a breakdown of how this bill may affect San Diego business owners, families, and estate planning professionals.

Key Business Tax Changes

🔹 Section 199A QBI Deduction Increased and Made Permanent

The Qualified Business Income (QBI) deduction increases from 20% to 23%, now made permanent. This is a major win for small and mid-sized businesses—except for Specified Service Trades or Businesses (SSTBs), including law and accounting firms, which remain excluded from critical pass-through benefits.

🔹 100% Bonus Depreciation Restored Through 2029

Business owners can now fully expense capital investments, including R&D expenditures, through 2029—offering significant tax-saving opportunities on equipment and innovation.

🔹 Auto Loan Interest Deduction

A new above-the-line deduction for interest on loans for U.S.-assembled vehicles applies through 2028. Income limits apply based on adjusted gross income (AGI).

Estate Planning & Family Wealth Provisions

🔹 Gift and Estate Tax Exemption Raised

The federal estate and gift tax exemption increases to $15 million per individual, indexed for inflation with no sunset provision—a major advantage for high-net-worth families engaging in wealth transfer planning.

🔹 “Trump Accounts” for Newborns

Eligible U.S.-born children receive a $1,000 federally seeded tax-advantaged account. Annual contributions of up to $5,000 are permitted. Qualified uses include:

  • Education
  • First-time home purchases
  • Small business formation

Key Individual Tax Relief Measures

🔹 SALT Deduction Cap Raised

The cap on State and Local Tax (SALT) deductions increases to $40,000, gradually phasing out for households earning over $500,000. The change is indexed for inflation through 2033, but the Senate may challenge this provision.

🔹 Child Tax Credit Temporarily Increased

The Child Tax Credit will rise to $2,500 per child through 2028, offering temporary relief for middle-income families.

🔹 Senior Deduction Introduced

Taxpayers over age 65 with income under $75,000 ($150,000 for joint filers) receive a new $4,000 deduction through 2028.

🔹 Federal Tax Exemption for Overtime Pay

Overtime wages are now federally tax-exempt through 2028—though payroll and state taxes still apply.

Controversial Provisions & Criticisms

🔹 Professional Services Excluded from Benefits

SSTBs are again excluded from critical SALT workaround strategies and entity-level tax deductions, frustrating many legal, medical, and financial professionals in California.

🔹 IRS Workforce Reduction

The bill anticipates a 25% reduction in IRS staffing, with no plan to backfill positions—raising concerns over enforcement capabilities and taxpayer service delays.

🔹 Uneven Economic Impact

According to Congressional Budget Office (CBO) projections:

  • Bottom 10% of households may see a 4% decrease in resources
  • Top 10% are expected to gain 2%, primarily from tax breaks and spending reductions

What Happens Next?

The bill now advances to the U.S. Senate, where revisions are likely—particularly concerning Medicaid cuts and other politically sensitive provisions. The GOP aims for final reconciliation by July 4, 2025.

How San Diego Business Owners and Families Should Prepare

If you operate a business, manage a trust, or anticipate estate transfers in the coming years, these proposed changes could significantly affect your tax planning strategies.

Preovolos Lewin, ALC is here to help. Our experienced tax and estate planning attorneys can:

  • Evaluate how HR 1 impacts your business structure or estate plan
  • Recommend strategic adjustments to capitalize on new deductions
  • Help navigate compliance as IRS staffing levels shift

📞 Schedule a Free Consultation Today

If you’re a business owner or planning your legacy, stay ahead of the law. Contact Preovolos Lewin, ALC today to speak with a tax or estate planning attorney in San Diego.