What Trump’s 'one big beautiful' tax-and-spending bill means for your money
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Congress has passed President Donald Trump’s tax and spending package. Here’s what the megabill could mean for your money.
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July 3, 2025
07:57 PM
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House of Representatives Speaker Mike Johnson and other Republican House members celebrate ing the signing of U
President Donald Trump's sweeping spending and tax bill, on Capitol Hill in Washington, D. , July 3, 2025
Jonathan Ernst | ReutersHouse Republicans on Thursday voted to apve President Donald Trump's "one big beautiful" tax-and-spending bill, which will bring sweeping changes to Americans' finances
After the Senate passed its version on Tuesday, the House vote sends the multi-trillion-dollar domestic policy legislation to Trump's desk for signature
The final bill makes permanent Trump's 2017 tax cuts while adding new relief, including a senior "bonus" to offset Social Security taxes and a bigger state and local tax deduction
The plan also has tax breaks for tip income, overtime pay and auto loans, among other visions
The GOP's marquee legislation will also enact deep spending cuts to social safety net grams such as Medicaid and food stamp benefits, end tax credits tied to clean energy and overhaul federal student loans
Trump's legislation could benefit higher earners while hurting the lowest-income Americans who rely on Medicaid and SNAP, according to a Yale Budget Lab analysis released on Monday
Here are some of the megabill's key visions — and how those measures could impact your wallet
How to read this guide along from start to finish, or use the table of contents to jump to the section(s) you want to learn more
Need a refresher on key tax terms
Trump's 2017 tax cut extensionsDuring Trump's first term, the Tax Cuts and Jobs Act of 2017, or TCJA, enacted sweeping changes to the U
Tax code that lowered taxes for many households
Some of the key visions included lower tax brackets, bigger standard deductions, a more generous child tax credit, a higher estate and gift tax exemption and a 20% deduction for pass-through es, among other measures
These visions were scheduled to expire after 2025 without action from Congress. (Absent extensions for the TCJA visions, more than 60% of taxpayers could have seen higher taxes in 2026, according to a 2024 report from the Tax Foundation. )watch now3:0803:08The size of Trump's megabill will be the size of the debt, says Capital Alpha's James LucierThe ExchangeTrump's new legislation makes permanent the 2017 tax cuts while increasing these tax breaks:Standard deduction: Up from $15,000 to $15,750 (single) and $30,000 to $31,500 (married filing jointly) in 2025
Indexed for inflation
Estate and gift tax exemption: Up from $13. 99 to $15 million (single) and $27. 98 to $30 million (married filing jointly) in 2026
Indexed for inflation
Child tax credit: Up from $2,000 to $2,200 per child and $1,700 is refundable in 2025 (more below)
Indexed for inflation
State and local tax deduction (SALT) limit: Up from $10,000 to $40,000 in 2025, with 1% increases through 2029
Reverts to $10,000 in 2030 (more below). — Kate Dore'SALT' deductionWhen you itemize tax breaks, the state and local tax deduction, known as SALT, vides a federal deduction for state and local income taxes and perty taxes
Trump's 2017 tax cuts added a $10,000 SALT deduction cap, which has been a critical issue for certain lawmakers in high-tax states such as New York, New Jersey and California
The SALT deduction was unlimited before 2018
But the alternative minimum tax reduced the benefit for some wealthier Americans
The new legislation temporarily lifts the SALT cap to $40,000 starting in 2025
That benefit begins to phase out, or decrease, for consumers with more than $500,000 of income
Both figures would increase by 1% yearly through 2029, and the $40,000 limit would revert to $10,000 in 2030
Zoom In IconArrows pointing outwardsIn 2022, the average SALT deduction was close to $10,000 in states Connecticut, New York, New Jersey, California and Massachusetts, according to a Bipartisan Policy Center analysis with the IRS data
Those high averages indicate "that a large portion of taxpayers claiming the deduction bumped up against the $10,000 cap," reers wrote
Meanwhile, the states and district with the highest of SALT deduction claimants were Washington, D. , Maryland, California, Utah and Virginia, the analysis found. "If you raise the cap, the people who benefit the most are going to be upper middle-income," since lower earners typically don't itemize tax deductions, Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, previously told CNBC
The legislation also preserves a SALT cap workaround for pass-through es, which allows owners to avoid the $10,000 SALT limit. — Kate DoreChild tax creditThe child tax credit is for families who have qualifying children under age 17 with a valid Social Security number
Trump's 2017 tax cuts temporarily boosted the maximum child tax credit to $2,000 from $1,000, an increase that would have sunset after 2025 without an extension from Congress
The legislation permanently bumps the biggest credit to $2,200 starting in 2025 and indexes this figure for inflation starting in 2026
The higher refundable portion of the child tax credit will also become permanent and adjust for inflation
That part, known as the additional child tax credit, is worth up to $1,700 for 2025
Jacob Wackerhausen | Istock | Getty ImagesHowever, it won't help 17 million children from low-income families who don't earn enough to claim the full credit, according to Elaine Maag, senior fellow in the Urban-Brookings Tax Policy Center. — Kate DoreSenior 'bonus' deductionOlder Americans may receive an extra tax deduction under the legislation, which includes a temporary enhanced deduction for Americans ages 65 and over — dubbed a "bonus. "The full $6,000 deduction would be available to individuals with up to $75,000 in modified adjusted gross income, and $150,000 if married and filing jointly
It phases out for taxpayers who are above those thresholds
The temporary senior deduction would be in place for tax years 2025 through 2028
Ultimately, middle-income taxpayers may benefit most from the enhanced deduction, Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, recently told CNBC
The senior bonus is in lieu of eliminating taxes on Social Security benefits, which had been touted by the Trump administration, since changes to Social Security are generally hibited in reconciliation legislation
The senior "bonus" may indirectly help defray taxes on Social Security benefits that older taxpayers face
However, that may advance the depletion of the trust funds the gram relies on to pay retirement benefits, to late 2032 from early 2033, estimates the Committee for a Responsible Federal Budget. — Lorie KonishMedicaid funding cuts As Republicans seek to slash federal spending, Medicaid, which vides health coverage for more than 71 million people, has been a target for those cuts
The legislation cuts $1 trillion from Medicaid, according to Congressional Budget Office estimates
House Minority Leader Hakeem Jeffries, D-N. , at the House Democrats' news conference on Medicaid and SNAP cuts posed by the Republicans' reconciliation cess
Bill Clark | Cq-roll Call, Inc. | Getty ImagesNew federal work rules would require beneficiaries ages 19 to 64 who apply for coverage or who are enrolled through an Affordable Care Act expansion group to work at least 80 hours per month
Those start Dec. 31, 2026 for most states
Adults may be exempt if they have dependent children or other qualifying circumstances such as a medical condition; however, the legislation limits exemptions for parents to those with dependent children ages 14 and under
Medicaid changes would also require states to conduct eligibility redeterminations for coverage every six months, rather than every 12 months based on current policy
The legislation also limits states' ability to raise vider taxes, which may contribute to Medicaid coverage losses. 8 million people could become uninsured by 2034 due to Medicaid cuts, the CBO jected based on an earlier version of the legislation. — Lorie KonishReduced food stamp benefitsThe legislation enacts cuts to food assistance through the Supplemental Nutrition Assistance gram, or SNAP, formerly known as food stamps
The cuts may ultimately affect more than 40 million people, according to the Center on Budget and Policy Priorities
That includes 16 million children, 8 million seniors and 4 million non-elderly adults with disabilities, among others, according to CBPP, a nonpartisan re and policy institute
Many states would be required to pay a percentage for food benefits to make up for the federal funding cuts
If they cannot make up for the funding losses, that could result in cuts to SNAP benefits or states opting out of the gram altogether, according to CBPP
The legislation expands existing work requirements to include adults ages 55 to 64 and parents with children 14 and over
Based on current rules, most individuals cannot receive benefits for more than three months out of every three years unless they work at least 20 hours per week or qualify for an exemption
Eligibility for food stamp benefits would also be limited to U
Citizens and lawful permanent residents
An estimated 5. 3 million families would lose at least $25 in SNAP benefits per month as a result of the legislation's changes, according to the Urban Institute
On average, those families would lose $146 per month. — Lorie Konish'Trump accounts' for child savingsThe legislation includes a new savings account for children with a one-time deposit of $1,000 from the federal government for those born in 2025 through 2028
So-called "Trump accounts," a type of tax-advantaged savings account, would be available to all children who are U
Standret | Istock | Getty ImagesParents would then be able to contribute up to $5,000 a year and the balance will be invested in a diversified fund that tracks a U
Employers could also contribute up to $2,500 to an employee's account and it wouldn't be counted as income to the recipient
Earnings grow tax-deferred, and qualified withdrawals are taxed as long-term capital gains
Republican lawmakers have said these accounts will introduce more Americans to wealth-building opportunities and the benefits of compound growth
But some experts say a 529 college savings plan is a better alternative because of the higher contribution limits and tax advantages. — Jessica DicklerLower federal student loan limits, fewer benefitsKey changes are in store for student loan borrowers
For starters, the legislation expands access to Pell Grants, a type of federal aid available to low-income families, for students enrolled in short-term, workforce-focused training grams
However, the final bill also limits how much money people can borrow from the federal government to pay for their education
Among other measures, it:Caps unsubsidized student loans at $20,500 per year and $100,000 lifetime, for graduate students;Caps borrowing for fessional degrees, such as those for doctors and lawyers, at $50,000 per year and $200,000 lifetime;Adds a lifetime borrowing limit for all federal student loans of $257,500;Caps parent borrowing through the federal Parent PLUS loan gram at $20,000 per year per student and $65,000 lifetime;Eliminates grad PLUS loans
These allow grad students to borrow up to their entire cost of attendance minus any federal aid
Starting in mid-2026, there will be just two repayment plan choices for new federal student loan borrowers: They could enroll in either a standard repayment plan with fixed payments or an income-based repayment plan known as the Repayment Assistance Plan, or RAP
The legislation also eliminates the unemployment deferment and economic hardship deferment, both of which student loan borrowers use to pause their payments during periods of financial difficulty. — Jessica Dickler and Annie NovaCar loan interest deductionThe legislation creates a tax deduction for car loan interest
Certain households would be able to deduct up to $10,000 of annual interest on new auto loans from their taxable income
The tax break would be temporary, lasting from 2025 through 2028
There are some eligibility restrictions
For example, the deduction's value would start to fall for individuals whose annual income exceeds $100,000; the threshold is $200,000 for married couples filing a joint tax return
Cars must also be assembled in the U
In practice, the tax benefit is ly to be relatively small, experts said. "The math basically says you're talking [financial] benefit of $500 or less in year one," based on the average new loan, Jonathan Smoke, chief economist at Cox Automotive, an auto market re firm, recently told CNBC. — Greg Iacurci Tax break on tip incomeThe legislation creates a temporary federal income tax deduction of up to $25,000 per year on qualified tip income
The tax break would apply to workers who typically receive cash tips reported to their employer for payroll tax withholdings
It does not apply to taxpayers whose income exceeds $150,000, or $300,000 for joint filers
Sdi ductions | E+ | Getty ImagesThe temporary deduction for tip income would be in place for tax years 2025 through 2028
The Secretary of the Treasury will publish a list of occupations that typically received tips on or before Dec. — Ana Teresa SoláOvertime pay deductionThe legislation also vides a temporary tax break for overtime pay, which Trump called for during the campaign
It offers a maximum $12,500 above-the-line deduction for overtime pay, and $25,000 for married couples filing jointly, from 2025 to 2028
The tax break begins to phase out once earnings exceed $150,000, and $300,000 for joint filers. — Kate DoreEV, clean energy tax credits The legislation ends several consumer tax credits tied to clean energy
It ends a $7,500 tax credit for households that buy or lease a new electric vehicle, and a $4,000 tax credit for buyers of used EVs
These tax credits would disappear after Sept
Additionally, it would scrap tax breaks for consumers who make their s more energy-efficient, perhaps by installing rooftop solar, electric heat pumps, or efficient windows and doors
These credits would end after Dec
Mike Kemp | In Pictures | Getty ImagesMany tax breaks on the chopping block were created, ext or enhanced by the Inflation Reduction Act, a 2022 law signed by former President Joe Biden that vided a historic U
Investment to fight climate change
The tax breaks were slated to be in effect for another seven or so years, through at least 2032. — Greg IacurciCredit for private school scholarshipsUnder the legislation, individuals can receive a tax credit for donations they make to qualifying nonfits awarding scholarships for K-12 students to attend private schools
School voucher fund donors can claim a 100% credit on those donations, up to $1,700
The break will be available starting in.
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