What's the One Big Beautiful Bill Act (OBBBA)?

Congress passed andthe President signed into law on July 4, 2025, a nearly 900-page tax and spending package known as the One Big Beautiful Bill Act (OBBBA). It makes many of the 2017 Tax Cuts and Jobs Act provisions permanent, while introducing new tax benefits—and cutting many federal programs and benefits.

Major Tax Changes for Families

1. Child Tax Credit Boosted

• The Child Tax Credit increases from $2,000  to $2,200 per child beginning in 2025, with a slightly higher House proposal —$2,500 through 2028
• The refundable portion rises to around $1,700 per child

2. Standard Deduction Raised

• Standard deduction for single filers:   $15,750
• Married filing jointly: $31,500
• Head of household: $23,625
• Seniors (65+) and blind taxpayers get extra deduction amounts ($1,600–$4,000) through 2028

3. New Deductions on Work & Auto Financing

• No federal income tax on tips or overtime pay (via a new deduction), benefiting many service workers, although the cap is set at $25,000, and only applies to cash tips, not tips received by digital payment methods or other forms.
• Deduction available for interest paid on U.S.-made auto loans—another boost for working families

4. Expanded SALT Deduction Cap

• The cap on state and local tax (SALT) deductions rises from $10,000 to $40,000 for taxpayers earning under $500,000, phasing down for higher earners. The cap reverts back after five years.

5. Special Benefits for Seniors

• Seniors (65+) with income under $75k individually or $150k jointly can deduct up to $6,000, potentially eliminating federal income tax on some Social Security benefits—though it’s not a full exemption.

6. “Trump Accounts” for Newborns

• Government deposits $1,000 into a tax-deferred “Trump Account” for children born between 2025–2028. Parents can contribute up to $5,000/year for education, home down payment, or job training.

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Who Benefits Most—and Who May Lose?

• Low‑ and lower‑middle‑income families  (under ~$50k) see the largest proportional tax cuts—up to 27% reduction in taxes for those under $30k income.
• Middle‑income households (<$100k) receive moderate tax relief ($500–$1,000) and enhanced deductions.
• Wealthier earners and high-SALT taxpayers see the biggest absolute gains—an estimated 72% of tax cut benefits go to the top 20%.  Those earning over $500k benefit most from SALT cap, expanded deduction thresholds, and permanent TCJA rates.
• Low-income and benefit-reliant families risk losing far more in lost benefits than they gain in tax cuts—many could face net losses exceeding $1,600/year.

What This Means for Most Families

1. Keep more income in 2025–2028 via boosted credits, deductions, new exemptions for tips/overtime, and Trump Accounts.
2. Seniors with modest income may pay little to no federal income tax on Social Security.
3. Middle‑income families with kids and auto loans benefit.
4. But those relying on Medicaid, SNAP,  or public assistance may lose access to benefits due to new eligibility rules.
5. Higher-income households in high‑tax  states (NY, CA, NJ, IL) likely see the largest dollar‑value gains.
6. Clean energy investors and students lose out: credits are phased out, and loan aid diminishes.

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Final Thoughts

• The bill is one of the most sweeping tax reforms in recent decades, aimed at permanent relief for many taxpayers, especially families with children and service/weekend workers.
• But it comes at a cost: billions removed from public safety net and education, potentially increasing inequality and healthcare insecurity for vulnerable groups.
• The net impact depends on your circumstances: income level, family structure, state taxes, and reliance on federal benefits.
• Plan ahead: seniors, families with young children, gig workers, and auto buyers should consult a tax advisor to assess how to maximize benefits—while low-income families should prepare for potential healthcare or food aid loss.

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