President Trump's new tax bill provides the wealthy with tax breaks and extensions
From CNBC: 2025-07-03 12:15:00
President Trump’s new tax bill is set to provide the wealthy with numerous tax breaks and extensions of 2017 tax cuts. Taxpayers earning $1 million or more could see a 3% boost in after-tax income, equating to an average increase of $75,000. The bill is expected to be approved by the House on Thursday.
One key change in the bill involves the state and local tax (SALT) deduction. The Senate version increases the SALT cap to $40,000 for those earning less than $500,000, allowing for a loophole known as the pass-through entity tax to avoid the cap. This benefit mainly aids top earners in blue states and certain business owners.
Another important change in the bill relates to qualified small business stock (QSBS). Investors in small businesses will benefit from a higher threshold for small business qualification, increased capital gains tax exemptions, and a new tiered system for tax breaks when selling before five years. The rules aim to encourage investment in small businesses.
The bill also addresses the estate and gift tax by making the estate tax permanent with an increased exemption of $15 million per estate or $30 million for couples, indexed for inflation. This change provides stability for ultra-wealthy individuals in estate planning and gifting strategies.
Additionally, the bill includes a limit on itemized deductions, affecting mostly top earners who still itemize their taxes. Top taxpayers will see a reduction in the value of their deductions, receiving 35 cents for every dollar instead of 37 cents. The provision aims to streamline the tax code and reduce deductions for high-income individuals.
For charitable giving, the bill offers both positive and negative implications. Lower- and middle-income earners can benefit from a provision encouraging charitable donations, allowing them to claim a charitable deduction even when taking the standard deduction. However, high-income donors face a reduction in the value of the charitable deduction, with a new floor of 0.5% of adjusted gross income and a cap on itemized deductions, impacting tax breaks for wealthy donors.
Read more at CNBC: Top five tax changes for the wealthy