Trump's ‘Big Beautiful Bill' set to transform your taxes: Here's how
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1. Individual tax rates locked in- no increases for a decade
2. SALT deduction cap quadrupled, but with new limits
3. Bigger child tax credit and new 'Trump accounts' for kids
4. Tax breaks for tips, overtime, and car loan interest
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5. Extra relief for seniors and heirs
Fiscal impact and controversy
In a razor-thin 216-214 vote, the House has passed the Senate's version of President Donald Trump 's sweeping tax legislation, known as the 'One Big Beautiful Bill Act.' The bill, which now heads to the president's desk, brings $4.5 trillion in tax breaks and spending cuts, promising major changes for millions of American taxpayers. Here are the five most significant ways this bill will reshape your taxes, according to verified details from Forbes and other leading sources.The bill makes permanent the individual income tax rate cuts first enacted under the 2017 Tax Cuts and Jobs Act. This means the top tax rate remains at 37%, and lower rates for other brackets are also locked in for at least 10 years. Taxpayers will not face a scheduled rate hike in 2026, translating to continued savings for many households.A major win for residents of high-tax states: the state and local tax (SALT) deduction cap jumps from $10,000 to $40,000 starting in 2025. This cap will increase by 1% annually through 2029. However, the benefit phases out for those earning over $500,000, with the cap reverting to $10,000 in 2030. Taxpayers can only claim this deduction if they itemize, and the standard deduction will be $30,000 for joint filers and $15,000 for singles in 2025.The child tax credit rises to $2,200 per child starting in 2025. This directly reduces your tax bill, though the refundable portion for lower-income families remains capped at $1,600. The phase-out for high earners also continues. Additionally, the bill introduces $1,000 'Trump Accounts' for children born between 2024 and 2029, which can be invested for education, a first home, or starting a business, with favorable tax treatment on qualified withdrawals.A headline-grabbing feature: tips are now tax-free up to $25,000 for workers in eligible professions, with income limits of $150,000 for singles and $300,000 for couples. Overtime pay is also deductible up to $12,500 ($25,000 for couples), and there's a new $10,000 deduction for car loan interest for those earning under $100,000 ($200,000 for couples). These deductions are federal only—state taxes may still apply.Seniors over 65 get a new $6,000 tax deduction (income limits apply), while the federal estate tax exemption jumps to $15 million. This means more wealth can be passed to heirs tax-free, though state estate taxes may still apply. These changes are expected to prompt new estate planning strategies for affluent families.While the bill brings substantial tax relief, it is projected to increase the federal deficit by up to $4.5 trillion over the next decade. Critics argue the bill disproportionately benefits the wealthy, with the top 0.1% expected to receive average annual tax cuts of $309,000, while some lower-income households could see tax increases beginning in 2029.
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