The tax bill passed by the House of Representatives on May 22, called the “One Big Beautiful Bill Act,” has more than 1,000 pages of tax-related changes, including several breaks for high earners. It extends many provisions of the Tax Cuts and Jobs Act of 2017, which was scheduled to expire at the end of 2025, and adds some new benefits, too.
“The group that benefits the most are high-income households but not the very highest,” says Kyle Pomerleau, a senior fellow at the American Enterprise Institute focusing on federal tax policy. “Most of the tax cuts are focused on households that earn between $250,000 and $600,000.”
These changes are not law yet – the Senate will debate the tax bill next. However, the following four sections of the House bill could have the most significant impact on high-income taxpayers if they are included in the final version.
1. Reduced Tax Rates from the Tax Cuts and Job Act
The TCJA reduced income tax rates for almost all tax brackets from 2018 through 2025, expanded the income levels within most tax brackets and cut the top rate from 39.6% to 37%. However, the rates were scheduled to increase back to their 2017 levels starting in 2026, unless Congress took action.
The House bill extends the current rates and brackets. “The proposal makes the lower income tax rates permanent,” says Miklos Ringbauer, founder of MiklosCPA in Southern California.
On May 19, the Urban-Brookings Tax Policy Center estimated that the tax provisions of the legislation would reduce taxes on average by about $2,900 in 2026, with about 60% of the benefits going to those in the top quintile (with incomes of about $217,000 or more). The bill was changed slightly after their analysis.
The biggest change was that the SALT cap in the bill was increased from $30,000 to $40,000 after the study came out, but the other changes were pretty small. The results would still be similar, according to Joseph Rosenberg, senior fellow at the Tax Policy Center.
2. Increased SALT Tax Cap
People who itemize can deduct state and local taxes, including real estate taxes and either income taxes or sales taxes paid to state and local governments.
But as one of the cost-cutting measures to help fund the TCJA tax breaks, that original law capped the SALT deduction at $10,000 from 2018 through 2025. This reduced the tax break available for many people in high-tax states who had eligible tax bills above that cut-off.
The SALT cap was scheduled to expire after 2025, but the new tax bill would increase the cap to $40,000 starting this year, in 2025, for people earning less than $500,000.
The cap is gradually reduced for people above that income level, and people with incomes over $600,000 would still face the original $10,000 SALT cap, says Garrett Watson, director of policy analysis at the Tax Foundation. The cap and income limit would rise by 1% each year for 2026 to 2033.
Many people in California earning less than $600,000 pay more than $10,000 in income and property taxes and will benefit from the higher cap, says Ringbauer.
However, this is the provision of the tax bill that Pomerleau thinks is most likely to change in the Senate version.
“While the political dynamics in the House meant that they were going to have to increase the SALT cap to pass the bill, no such dynamics exist in the Senate,” he says. “In fact, Republican Senators do not represent high-income, high-tax states, so it is not a priority – they actually are more likely to oppose the higher cap.”
3. Higher Estate Tax Exemption
The new tax bill increases the estate tax exemption to $15 million per person, effective beginning in 2026, with annual adjustments for inflation.
The TCJA had doubled the estate tax exemption from 2018 through 2025, and with inflation adjustments, it had reached $13.99 million in 2025. However, without action by Congress, the amount of money each person could pass on to heirs without federal estate taxes was scheduled to revert to the pre-TCJA level.
“This will benefit wealthier estates since, if the TCJA had been allowed to expire, the estate tax exemption would have fallen approximately in half, to around $7 million,” says Mark Luscombe, the principal federal tax analyst for Wolters Kluwer.
4. Caps Itemized Deductions for the Highest Bracket
The House bill caps itemized deductions for taxpayers in the top bracket. “This is a new policy that reduces the value of itemized deductions for high-income households,” Pomerleau says.
“For those with taxable income in the top tax bracket [37%], this provision reduces the value of each dollar of itemized deduction by two percentage points. Instead of receiving $0.37 for a dollar of charitable contributions, taxpayers will get $0.35,” he explains.
The tax bill also reduces the value of the SALT deduction for people in the top bracket by five percentage points, he says. Instead of being worth 37%, that deduction would be capped at 32%. That means a $10,000 SALT deduction would lower federal income taxes by $3,200 rather than $3,700.
