The suspense is finally over: the Big, Beautiful Bill (BBB) has cleared both chambers of Congress and is set to be signed by the President on July 4th, right on schedule.
In true Washington, D.C. style, the process featured a vote-a-rama, filibuster, and a flurry of heated tweets. Still, the bill made it through Congress with all the discomfort of a kidney stone passing through the body politic
Setting theatrics aside, the BBB includes many tax and spending provisions that are of interest to the equine industry. It also serves as a vehicle for several components of the Farm Bill. Be advised the following tax provisions discussed are subject to change:
Individual Tax Provisions:
- Permanently increases standard deduction. Under the bill, in 2025 the new standard deduction would be $15,750 for single filers and $31,500 for married filers The standard deduction would be adjusted for inflation after 2025.
- Estate Tax Exemption: The estate and lifetime gift tax exemption would be permanently increased to $15 million for single filers and $30 million for joint filers, indexed for inflation, beginning in 2026.
- The bill proposes raising the state-and-local-tax deduction (SALT) cap to $40,000 with a 1% increase every year through 2029, then reverting to $10,000 in 2030. It sets the income threshold at $500,000 and increases it by 1% annually through 2029.
- Contains a new, temporary deduction for seniors that would be in effect for the 2025 to 2028 tax years. Individuals 65 and older would be able to deduct up to $6,000 from their taxable income. The maximum deduction starts decreasing once income crosses $75,000 a person, or $150,000 for married couples.
- Includes a no tax on tips provision, but only for the 2025 to 2028 tax years. Workers can deduct up to $25,000 worth of tips, and up to $12,500 worth of overtime pay, from their taxable income. Only certain professions would qualify for the tips deduction.
- Expands 529 education savings accounts to cover career and technical education in skilled trades, such as farriers.
- Child tax credit would raise to $2,200 from $2,000 starting in 2026, index it for inflation at the $2,000 base and extend it permanently.
- Auto loans will be allowed a $10,000 deduction on new U.S.-made cars. Tax credits for purchasing some electric vehicles would expire.
Business Tax Provisions
- Permanently restores 100 percent bonus depreciation for short-lived investments.
- Makes the Section 199A pass-through deduction permanent, with a deduction rate at 20 %. Many small businesses are organized as “pass through” entities whereby the business income is considered on personal tax returns, rather than being taxed at the corporate level. Examples include sole proprietorships, partnerships, and S corporations.
- Limitation on business interest: The Senate bill would bring back a rule that limits how much interest businesses can deduct from their taxes. This rule is based on a calculation called Earnings Before Interest, Taxes, Depreciation, and Amortization. It would apply for tax years starting after Dec. 31, 2024. Therefore, for interest deduction limitation for these years, adjusted taxable income would be computed without regard to the deduction for depreciation, amortization, or depletion. The bill would also modify the definition of “motor vehicle” to allow interest on floor plan financing for certain trailers and campers to be deductible.
Farm Bill
Elements of Farm Bill programs typically found in an agriculture omnibus bill were included in the BBB, such as support for livestock disease prevention, commodity support, supplemental food assistance, and conservation. These programs are budgetary in nature, so they could be included.
Senator Amy Klobuchar (D-MN), Ranking Member of the Senate Agriculture Committee is quoted as saying there less of an incentive to move a standalone Farm Bill because the BBB funds many programs including those addressing animal health and welfare, yet she expressed hope that something would be fashioned into a “skinny” Farm Bill to address policy concerns such as tariffs and other pressing issues. The 2018 extension of the Farm Bill is set to expire September 30, 2025, for most programs. The AHC continues to advocate for a new, stand-alone Farm Bill.