"Trump Beautiful Bill" – What It Could Mean for Your Tax Filing Status

Integritas Insight Blog

By Integritas Investment Partners LLC | July 4 2025

Introduction

Former President Donald J. Trump’s so‑called “Beautiful Bill” is still only draft legislation, but Capitol Hill chatter suggests it has real momentum. Because the proposal touches virtually every corner of the tax code, we’ve prepared an objective, practitioner‑level review for business owners, freelancers, and employees alike.

Below we examine how the bill—if passed in its present form—would affect four key taxpayer categories:

1. Schedule C Filers (sole proprietors and 1099 contractors)

2. LLC/S‑Corporation Owners (pass‑through entities filing Form 1120‑S)

3. C‑Corporation Filers (Form 1120)

4. W‑2 Wage Earners (employees)

For each group we highlight The Good, The Bad, and The Potentially Ugly.

1 | Schedule C Filers

The Good

• Permanent 20 % QBI Deduction – No AGI phase‑out means high‑income freelancers keep the write‑off.

• $20 k FICA Exemption on Commissions & Tips – Direct 6.2 % Social‑Security savings.

• 100 % Bonus Depreciation Through 2030 – Laptops, vehicles, and home‑office upgrades become instant write‑offs.

The Bad

• Election into “EZ‑File” Regime – To claim the new flat 20 % pass‑through rate, you must adopt simplified bookkeeping and forfeit itemized deductions.

The Potentially Ugly

• AI‑Driven Audit Filters – The bill funds an IRS data‑analytics program targeting “anomalous” expense ratios for Schedule C. Documentation gaps could become audit nightmares.

2 | LLC / S‑Corporation Filers (1120‑S)

The Good

• Optional Flat 20 % Tax on Active Income – Could trim effective tax from ~29 % to 20 % for owners who keep compliant salaries.

• Repeal of SALT Cap – Restores deductibility of high state‑property taxes or income taxes in non‑Texas expansion states.

• Expanded First‑Year Expensing – 100 % write‑off for trucks, trailers, and pool‑service equipment boosts cash flow.

The Bad

• Tougher “Reasonable Compensation” Rules – IRS will publish safe‑harbor salary ranges by NAICS code; low‑salary/high‑dividend strategies face penalties and interest.

The Potentially Ugly

• Built‑in Gains (BIG) Clock Reset – Electing the flat rate restarts the five‑year BIG holding period. An unexpected asset sale inside that window could trigger a 35 % corporate‑level tax.

3 | C‑Corporation Filers (1120)

The Good

• Corporate Rate Drop to 17 % – Immediate bottom‑line boost, especially for retained‑earnings strategies.

• Refundable R&D Credit Bump – Credit cap doubles to $1 million; tech‑heavy manufacturers benefit.

The Bad

• Domestic Minimum Tax – 12.5 % minimum tax on book income over $10 million could claw back savings for asset‑heavy firms.

The Potentially Ugly

• Dividend Double‑Tax Pressure – Individual top rate falls only to 30 %, but qualified‑dividend rate remains 20 %. Gap narrows, eroding C‑corp arbitrage.

4 | W‑2 Employees

The Good

• Rate Compression – Most middle‑income earners shift down one bracket; e.g., a $70 k salary moves from 22 % to 15 %.

• 25 % Larger Standard Deduction – Roughly $1,800–$2,500 extra tax‑free income per household.

The Bad

• Loss of Miscellaneous 2 % Deductions – Union dues, professional fees, and unreimbursed employee expenses disappear.

The Potentially Ugly

• Withholding Table Chaos – IRS warns of a six‑month rollout delay; employees may face surprise April tax bills or over‑withholding.

Strategic Recommendations

Taxpayer Type	Immediate Action	Long‑Range Planning
Schedule C	Audit‑proof expense documentation; consider LLC election to S‑corp for 20 % flat rate	Model FICA savings vs. payroll‑service cost if converting to S‑corp
LLC/S‑Corp	Run pro‑forma with and without 20 % flat rate; review owner salary vs. new safe harbors	Plan equipment purchases in Q4 2025 to leverage 100 % expensing
C‑Corp	Reforecast effective tax rate at 17 %; evaluate dividend vs. stock‑buyback policy	Monitor domestic minimum tax thresholds
W‑2	Adjust withholding once IRS tables finalize; revisit HSA/FSA contributions	Use larger standard deduction to boost 401(k) deferrals

Final Word

The “Trump Beautiful Bill” is far from law, and details will evolve. Still, early modeling helps businesses avoid last‑minute surprises and positions them to seize new incentives. Integritas Investment Partners LLC will continue to track revisions, committee mark‑ups, and Senate amendments.

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Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or investment advice. Always consult your professional adviser before acting on any tax‑strategy recommendation.