6 Tax Reforms Favoring Wealthy Americans Unveiled by ‘Beautiful Bill’

As tax season approaches, affluent Americans are feeling optimistic thanks to a series of favorable tax reforms. These changes were enacted by the Republican-led Congress in July as part of President Trump’s “One Big Beautiful Bill.” Tax and estate consultant Gary Phillips from Cole Schotz P.C. reported a positive mood among his clients, attributing it to the newfound certainty in tax regulations.

Key Provisions of the Tax Reforms Favoring Wealthy Americans

The reforms largely benefit high-income individuals and families. While middle-income households might see modest relief, the primary advantages are tailored for those with significant earnings, investment income, or large estates. Here are six crucial provisions introduced by the tax reforms:

• Lower Tax Brackets: The top marginal tax rate has been maintained at 37%, benefiting single filers earning above $626,350 and married couples above $751,600.
• Pass-Through Exemption for Business Owners: The 20% permanent pass-through deduction reduces the effective tax rate for qualifying business income from 37% to 29.6%.
• Bonus Depreciation: Businesses can now deduct 100% of qualifying asset costs in the year of purchase, a permanent feature that supports both large and small firms.
• Higher Federal Deduction for State and Local Taxes: High-income households can deduct state and local taxes up to $40,000, up from $10,000, providing significant savings until 2029.
• Increased Estate and Gift Tax Exemption: Starting next year, the lifetime exemption rises to $15 million for individuals and $30 million for couples, exponentially reducing the number of taxable estates.
• Higher Exclusion on Capital Gains: For qualified small business stock sold after July 4, 2025, the capital gains exclusion increases from $10 million to $15 million, incentivizing long-term investments.

These provisions highlight a trend towards reinforcing tax breaks for the wealthy, as noted by tax policy experts. Joseph Rosenberg from the Urban-Brookings Tax Policy Center and Zane Sanchez from Snyder Cohn emphasized that these changes predominantly favor individuals earning over $200,000 annually.

The long-term impacts of these tax reforms may deepen existing wealth disparities. Nevertheless, the reforms have solidified a more favorable tax environment for wealthy Americans, enhancing economic confidence as the 2023 tax season approaches.