Top five tax changes for the wealthy in Trump's 'big beautiful bill'
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Taxpayers earning $1 million or more are expected to see a boost in after-tax income of about 3% under Trump's megabill.
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July 3, 2025
06:36 PM
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Taxpayers earning $1 million or more are expected to see a boost in after-tax income of 3% under President Donald Trump's "big beautiful bill. "The existing $10,000 cap on SALT deductions will rise to $40,000 for those making less than $500,000, with the income threshold rising 1% a year
The Senate version of the bill raises the threshold to qualify as a “small ” from $50 million to $75 million
There are also changes to the estate and gift tax, itemized deductions and charitable deductions
A view of the US Capitol in Washington, DC, on June 30, 2025
Jim Watson | Afp | Getty ImagesThe wealthy will ly see a host of new tax breaks in President Donald Trump's "big beautiful bill," along with permanent extensions of many of the 2017 tax cuts, according to tax experts
Taxpayers earning $1 million or more are expected to see a boost in after-tax income of 3% in the Senate version of Trump’s bill, according to the Tax Policy Center
That compares with the nationwide average of 2
In dollar terms, millionaire earners will see an average after-tax income increase of $75,000 in 2026, according to the Tax Policy Center
Virtually all the core visions of the 2017 tax cut are expected to be ext in the final bill, which was passed in the House on Thursday and now heads to Trump's desk, with some visions becoming permanent
There are also several new tax breaks or benefits added in the bill that further lower tax bills for those at the top — especially for investors in small es
Here are the five most important changes in the bill that affect high earners and the wealthy
SALTSurprisingly, the Senate bill largely s the House's version of the state and local tax, or SALT, cap increase
The existing $10,000 cap on SALT deductions will rise to $40,000 for those making less than $500,000, with the income threshold rising 1% a year
Initially the Senate was opposed to a change that largely benefits blue-state top earners
Yet after threats from the House, the Senate agreed to the $40,000 level
Un the original House version of SALT, however, the Senate bill preserves a loophole to get around the cap
Dozens of states allow a workaround, called the pass-through entity tax, or PTET, that encourages pass-through owners and partners to avoid the cap at the state level
It benefits everyone from car dealers and dentists to accounting and law partners, but not employees of those firms
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The initial House version of the bill eliminated the loophole benefit for service industries and most white-collar firms, such as accountants, lawyers and doctors, according to Kyle Pomerleau at the American Enterprise Institute
Yet the Senate didn’t the House change. “The Senate version has no limitation on the workarounds,” Pomerleau said, “effectively allowing these taxpayers to utilize an unlimited SALT deduction. ”Qualified small stock benefitEntrepreneurs and investors in small es will cheer a change in qualified small stock, or QSBS
Created during the Clinton administration and expanded under President Barack Obama, the gram is designed to encourage investments and creation of small companies
Under current law, investors or owners of a qualifying C Corp for more than five years get reductions in capital gains taxes when they sell
A qualifying company is defined as a “small ” if its total assets are $50 million or less
When a is sold, owners or investors are exempt from capital gains taxes up to $10 million, or 10 times the original basis of the investment, whichever is greater
The Senate bill raises the threshold to qualify as a “small ” from $50 million to $75 million
It also increases the exclusion from $10 million to $15 million, and it creates a new, tiered system for allowing tax breaks for those who want to sell before five years
Justin Miller, partner and national director of wealth planning at Evercore, said the new rules would allow an investor to put $74. 9 million into a small and have up to $749 million exempt from capital gains if it sold for more than 10 times the original basis. “It’s encouraging wealthy investors in qualified small es with enormous potential,” Miller said
Estate and gift tax the version the House put forward, the Senate bill makes the estate tax permanent, which in Washington means it won’t have a built-in expiration date
The exemption would increase to $15 million per estate or $30 million for couples, and the exemption will be indexed for inflation
For the ultra-wealthy, the estate tax is the most important of all the major tax code visions
So having some stability, at least until the next election, will make for calmer estate planning and gifts
Itemized deductionsThe Senate bill includes a limit on the value of itemized deductions that was also included in the original House bill
Only 10% of Americans — mostly the wealthy — still itemize their taxes, since the standard deduction is now $15,000 for single filers and $30,000 for joint filers
Under both the House and Senate versions, taxpayers in the top bracket will have to subtract 2/37th from the value of each dollar deducted over the threshold
The net effect is that top taxpayers will only get a deduction benefit of 35 cents for every dollar, rather than 37 cents
PhilanthropyThere’s good news and bad news for charitable giving, depending on your income level
For lower- and middle-income earners, the Senate bill includes a vision to encourage more charitable giving by the 90% of Americans who no longer itemize
The 2017 tax cuts doubled the standard deduction, eliminating the incentive for the vast majority of taxpayers to itemize and claim the charitable deduction
The Senate bill allows taxpayers to take the standard deduction and still claim a charitable deduction of up to $1,000 for single filers and $2,000 for married joint filers
Yet for wealthy donors, who now account for the majority of charitable giving, the Senate bill is decidedly uncharitable
It decreases the value of the charitable deduction for high-income taxpayers by capping itemized deductions and sets a new floor of 0. 5% of adjusted gross income for the itemized charitable deduction
So someone with $1 million in adjusted gross income wouldn’t get a tax break on the first $5,000 of donations
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