In August’s edition of Tax Talk Live, NSA’s member forum for timely tax and practice discussions, members gathered to examine the early details and potential implications of H.R. 1—referred to by some as the “Big Beautiful Bill.” While still in flux, the bill outlines significant proposed changes to U.S. tax law that could alter how you serve your clients, especially small businesses and individual filers.
Here’s a summary of what was discussed, what remains unclear, and where tax professionals may need to adapt.
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Key Themes from the Session
A Push Toward Standardization
The bill’s structure suggests an emphasis on simplification. Multiple members noted that H.R. 1 appears to mirror some design elements from the Tax Cuts and Jobs Act (TCJA), particularly in encouraging more taxpayers to take the standard deduction. If passed, this could drastically reduce the number of clients itemizing, altering both workflow and how professionals add value in the preparation process.
Business Deduction Changes
There was strong concern over the broad reduction or elimination of existing small business deductions, including potential impacts on pass-through income. Specifics remain sparse in the language of the bill, and attendees flagged this as an area that could significantly affect their client base. Some attendees questioned whether the goal is to compress taxable income brackets or push more taxpayers into W-2 arrangements over 1099 contracting.
Practical Impacts on Tax Professionals
Participants debated whether H.R. 1 would lead to a reduction in demand for professional tax services. Some suggested software companies may be the main beneficiaries of simplified returns, potentially cutting out professionals for more straightforward cases. Others emphasized the increasing need for advisory services—helping clients understand how policy shifts affect their planning and financial decisions.
Concerns were also raised about the impact on IRS systems and third-party software. If the bill passes late in the year, the IRS may struggle to implement changes in time for the 2026 filing season. That creates a high-risk environment for practitioners reliant on accurate and timely updates from software providers.
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Lingering Questions and Uncertainties
Several important elements of the bill remain unclear, and NSA members highlighted the following as key questions needing answers:
1. What are the effective dates of proposed changes?
As of the session, no definitive effective dates were included in the text of H.R. 1. Members expressed concern over possible retroactive application or last-minute implementation timelines that would make planning and compliance more difficult for both professionals and their clients.
2. Will any changes be retroactive?
This question generated significant concern during the session. If provisions are backdated to January 1, 2025, practitioners could be forced to revise strategies already deployed this year.
3. How will this affect IRS systems and software developers?
Attendees noted that the IRS is already under pressure from its modernization efforts. A late-breaking tax reform bill would stretch their capacity further, and major software developers may struggle to implement necessary changes by filing season without clear guidance.
4. Are any deductions or credits explicitly preserved?
So far, the language is vague. It does not appear that major small business credits or specific deductions have been preserved, though it is still early in the legislative process.
5. Will there be separate carve-outs for gig workers or the self-employed?
This was not addressed directly in the legislation, but it remains a major area of concern among tax professionals, particularly those serving clients with freelance or contract income.
6. What role will tax professionals play in educating the public?
Multiple participants stressed that taxpayers will be confused by these changes, especially if they take effect quickly. Tax professionals will likely be called on to help interpret new rules, ensure clients aren’t under- or over-reporting, and guide strategy.
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Advocacy and Next Steps
There is still time for professionals to influence how the bill is shaped—particularly in pushing for clarity on deductions, implementation timelines, and IRS guidance.
The session closed with a reminder: tax professionals remain essential not just in preparing returns, but in providing clarity, support, and planning through periods of policy upheaval.
For those with concerns, ideas, or unanswered questions, NSA encourages continued dialogue on its member forum and through upcoming TTL sessions!