Trump’s “One Big Beautiful Bill”: Which Provisions May Impact You
On July 4th, President Trump signed the “One Big Beautiful Bill Act,” which includes a broad range of tax reform provisions. The provisions listed in the bill may help offer the middle- and working-class Americans much-needed tax relief, which may help to boost take-home pay. According to the Whitehouse.gov, it is estimated that take-home pay for families could increase as much as $10,000+ annually.[i]
Advantages of the “One Big Beautiful Bill Act”:
- A deduction for overtime and tips: The bill gives eligible workers a temporary deduction for overtime income up to $12,500 and tip income up to $25,000 until 2028.
- SALT Deduction: The deduction limit for State and local taxes (SALT) is temporarily increased from $10,000 to $40,000 for individuals earning less than $500,000. The change in the deduction limit will stay in effect until 2029, after which the limit returns to $10,000.
- Permanently increasing the Child Tax Credit for more than 40 million families:
- Increased Credit – The limit for the Child Tax Credit has increased from $2,000 to $2,200 per child.
- Eligibility – Both the taxpayer claiming the credit and the child must have a Social Security number to qualify.
- Inflation Adjustment – The credit will be adjusted for inflation beginning in 2026. The goal is so that the value of the credit keeps pace with rising costs.
- Potential Refund – The portion of the credit that is refunded, known as the Additional Child Tax Credit, has also been made permanent and adjusted for inflation.[ii]
- A Negative Impact on Some Families – One potential downside is that the lowest-income families may not benefit from the full credit due to the way it is structured.[iii]
- Tax deduction on auto loan interest paid on vehicles assembled in the United States: A portion of your car interest is deducted from your taxable income if you own a vehicle made in the United States.
- Tax Cuts and Jobs Act (TCJA) brackets are staying the same and an increased standard deduction: The legislation will keep the increased TCJA brackets and the higher standard deduction (which you will file in 2026).
- Single filers – The standard deduction will increase from $15,000 to $15,750.
- Married filing jointly – The standard deduction will increase from $22,500 to $23,625.
- Heads of household – The standard deduction will increase from $22,500 to $23,625.[iv]
- Temporary expansion of senior tax (social security) deductions: For tax years 2025 through 2028, taxpayers aged 65 and older will receive an additional $6,000 deduction. This is available for both individuals who itemize and those who take the standard deduction, and phases out for higher earners, primarily those with incomes above $75,000 (single filers), or $150,000 (married filing jointly).[v] Taxes on social security were not fully eliminated as that could have dramatically reduced the program’s revenue and potentially accelerated the projected insolvency date of the trust fund that pays Social Security benefits.[vi]
- Increased estate tax exemption: The bill provides permanent enhanced death tax relief by increasing the estate tax exemption from $13.99 (2025) to $15 million per individual and $27.98 (2025) to $30 million per couple, beginning in 2026.[vii]
- Eligible family farms can be safeguarded from punitive double taxation: Family farmers and ranchers may benefit from a permanent small business deduction increase to 23 percent as well as one hundred percent immediate expensing (meaning they can deduct the full cost of qualifying business investments such as machinery and equipment in the year of purchase rather than depreciating it over time). They can now immediately expense new production facilities. Lastly, they are also given more flexibility to secure farming loans at lower costs.[viii] Farmers and ranchers can reach out to a financial professional to determine if there are any other provisions they may benefit from.
- Trump accounts for new babies: The introduction of a new savings vehicle is the “Trump accounts,” an incentive program that includes a $1,000 government-provided baby bonus for children born in the next four years. The accounts also permit taxpayer contributions up to $5,000 annually that will be able to grow tax-free until the beneficiary turns 18. The account will then transition into a traditional individual retirement account (IRA).[ix]
- Enhanced Qualified Small Business Stock (QSBS) Rules: The bill expands the benefits of Section 1202, which allows investors to exclude a portion of the gain from the sale of qualified small business stock.[x]
Potential Disadvantages of the Bill:
The tax disadvantages of the bill are a little more difficult to individually pinpoint. There are arguments that taxpayers will have to navigate a maze of new rules and pages of IRS legalese. Several grievances include:
- Changes to Inflation Reduction Act (IRA) credits: Modifications made to IRA credits don’t include the simplification of the complicated rules, such as prevailing wage and apprenticeship requirements, and new “foreign entity of concern” restrictions that could potentially make the credits cost-prohibitive.[xi]
- Credits for electric vehicles (EV) and residential energy products repealed: Various tax credits related to EVs and residential energy products are either being repealed or curtailed at some level.
- EVs – The $7,500 tax credit for new EVs and the $4,000 credit for used EVs is being eliminated by the end of 2025.
- Residential Clean Energy Credit – The 30% federal solar tax credit for homeowners will be eliminated entirely, with no phase-out option after Dec. 31, 2025.[xii]
- New Energy-Efficient Home Credit – A credit benefiting developers of energy-efficient homes will be eliminated for homes acquired after 2025.[xiii]
- Energy-Efficient Home Improvement Credit – A credit that helps homeowners make energy-efficient upgrades will be eliminated after 2025.[xiv]
Schedule a meeting with your financial professional
With all the changes reportedly taking form after the signing of Trump’s “One Big Beautiful Bill,” you may consider scheduling a meeting with your financial professional to learn about how these modifications could impact you and your financial strategy and goals. There may be advantages where you could benefit or disadvantages that you can prepare for as 2025 comes to an end, when most take effect.
Transform Your Money-Fears into Money-Loves!
Unlock your patterns, gain clarity and focus, and become supremely confident with money using my simple 8-step approach to changing your financial future.
