June 2025 - Monthly Newsletter

The so-called Big Beautiful Bill has a number of provisions that may affect U.S. expats if and when it becomes law. The following is a summary of some of the key provisions:

• The standard deduction would be increased (until Jan. 1, 2029) by $2,000 for joint returns, $1,500 for heads of households, and $1,000 for individual filers, amounting to a tax cut for most American taxpayers for the duration of the Trump’s second term.
• The Qualified Business Income (QBI) deduction would be permanently extended, and the bill increases the deduction from 20% to 23%, amends income limits, and extends the deduction to certain interest dividends of qualified business development companies.
• The overall child tax credit would grow from $2,000 to $2,500 through 2028 (although there is no mention of a change to the refundable portion).
• The Social Security Number requirement for the child tax credit would be extended to both the child and the parent.
• There would be a permanent increase in the threshold triggering the tax on a person’s estate upon their death to $15 million starting in 2026, which would float with inflation in the years after.
• The bill makes the state and local tax (SALT) deduction cap permanent at a higher threshold of $40,000, phasing down to $10,000 at a rate of 30 percent beginning at modified adjusted gross income of $250,000 for single filers and $500,000 for joint filers. The cap and income thresholds increase by 1 percent per year over the next 10 years.
• The bill creates a deduction for qualified tips for individuals in traditionally and customarily tipped industries, excluding highly compensated employees, beginning in 2025 through 2028. The deduction is available to itemizers and non-itemizers.
• The bill creates a deduction for qualified overtime compensation (not including qualified tips), excluding highly compensated employees, beginning in 2025 through 2028. The deduction is available to itemizers and non-itemizers.
• The bill reinstates 100% bonus depreciation for property acquired after Jan. 19, 2025, and placed in service after Jan. 19, 2025, but before 2030.
• The bill decreases the FDII deduction rate from 37.5% to 36.5% and the GILTI deduction rate from 50% to 49.2% on a permanent basis, eliminating the previously scheduled 2026 decrease in the deductions. This would in effect reset the effective rate on corporate GILTI income to just above the 2025 level at 10.668%.