Trump’s ‘big beautiful bill’ includes these key tax changes for 2025 — what they mean for you
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President Donald Trump’s "big beautiful bill" includes key tax changes that are effective for 2025. Here is how they could impact you.
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personal finance
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July 20, 2025
10:30 AM
CNBC
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President Donald Trump’s "big beautiful bill" includes several tax changes that are effective for 2025
Visions include permanent extensions of Trump’s 2017 tax cuts, along with boosts for the standard deduction and child tax credit
This leads to the conclusion that re are also new temporary deductions for older Americans, tips, overtime income and auto loan interest (an important development), considering recent developments
Moreover, Speaker of the House Mike Johnson (R-LA) (C) signs the One Big Beautiful Bill Act during an enrollment ceremony with fellow Republicans in the Rayburn Room at the U (an important development)
Capitol on July 03, 2025 in Washington, DC (an important development)
Chip Somodevilla | Getty Images News | Getty ImagesIt's been two weeks since President Donald Trump's "big beautiful bill" became law, and financial advisors and tax fessionals are still digesting what the sweeping legislation means for clients
Meanwhile, several changes are effective for 2025, which will impact tax returns filed in 2026
While the Trump administration has been moting "working family tax cuts," the legislation's impact depends on your unique situation — and some are complex, experts say
Nevertheless, "There are just so many moving pieces," said certified financial planner Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts (an important development)
In contrast, He is also a certified public accountant
However, More from Personal Finance:Trump's 'big beautiful bill' caps student loans
What it means for youTax changes under Trump's 'big beautiful bill' — in one chartTrump's 'big beautiful bill' adds 45, in light of current trends. 5% 'SALT torpedo' for high earnersCurrently, many advisors are running jections — often for multiple years — to see how the new visions could impact taxes
In contrast, Without income planning, you could reduce, or even eliminate, various tax benefits for which you are otherwise eligible, experts say
Moreover, When it comes to tax strategy, "you never want to do anything in a silo," Guarino said
Here are some of the key changes from Trump's legislation to know for 2025, and how the could affect your taxes
Trump's 2017 tax cut extensionsThe Republicans' marquee law made permanent Trump's 2017 tax cuts — including lower tax brackets and higher standard deductions, among other visions — which broadly reduced taxes for Americans
Without the extension, most filers could have seen higher taxes in 2026, according to a 2024 report from the Tax Foundation
However, the new law enhances Trump's 2017 cuts, with a few tax breaks that start in 2025:The standard deduction increases from $15,000 to $15,750 (single filers) and $30,000 to $31,500 (married filing jointly)
There's also a bump for the child tax credit, with the maximum benefit going from $2,000 to $2,200 per child
Additionally, If you itemize tax breaks, there is also a temporary higher cap on the state and local tax deduction, or SALT
For 2025, the SALT deduction limit is $40,000, up from $10,000, given current economic conditions
The higher SALT benefit phases out, or reduces, for incomes between $500,000 to $600,000, which can create an artificially higher tax rate of 45. 5% that some experts are calling a "SALT torpedo (an important development)
However, "This creates a "sweet spot" for the SALT deduction between $200,000 and $500,000 of earnings, based on other visions in the bill, CPA John McCarthy wrote in a blog post this week
Trump's new tax changes for 2025Trump's tax and spending bill also introduced some temporary tax breaks, which are effective for 2025
Some of these were floated during his 2024 presidential campaign
These visions include a $6,000 "bonus" deduction for certain older Americans ages 65 and over, which phases out over $75,000 for single filers or $150,000 for married couples filing jointly
There are also new deductions for tip income, overtime earnings and car loan interest, with varying eligibility requirements
Meanwhile, This chart shows a breakdown of some of the key individual visions that are effective for 2025 compared to previous law
In contrast, Premium tax credit 'subsidy cliff' returns During the pandemic, Congress boosted the premium tax credit through 2025, which made Marketplace health insurance more affordable (which is quite significant)
But Trump's legislation didn't extend the enhanced tax break, which could raise Affordable Care Act premiums for more than 22 million enrollees if no action is taken, according to KFF, a health policy organization
That could impact enrollees when choosing ACA health plans this fall, according to Tommy Lucas, a CFP and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, given current economic conditions
Watch now4:0204:02Private equity in retirement plans: Here's what 401(k) owners need to knowPower LunchStarting in 2026, enrollees need to prepare for the ACA subsidy cliff, where enrollees lose the premium tax credit when income exceeds the earnings thresholds by even $1, he said
Furthermore, Currently, most ACA enrollees receive at least part of the premium tax credit
Furthermore, However, the subsidy cliff means enrollees lose the benefit once earnings exceed 400% of the federal poverty limit
On the other hand, For 2025, that threshold was $103,280 for a family of three, according to The Peterson Center on Healthcare, a nonfit for healthcare policy, and KFF.
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