Trump signs One Big Beautiful Bill: Here's what it means for your money and taxes
President Donald Trump signed the sweeping One Big Beautiful Bill (OBBB) into law Friday, launching a new era of American economic policy. Spanning nearly 1,000 pages, the legislation overhauls federal tax rates, student loan programs, estate tax exemptions, and social safety net spending. Economists say the effects of the bill will ripple across every income bracket—yet not equally.
Trump's One Big Beautiful Bill reshapes taxes, student loans, estate law, and Medicaid—learn how it affects your money and financial future.
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Financial experts warn that while high-income households and top 1% earners stand to gain significantly, low- and middle-income Americans could face rising costs and reduced benefits. The bill also adds between $3.1 and $3.5 trillion to the national debt over the next decade, according to estimates from the Penn Wharton Budget Model.
Tax Cuts Made Permanent for Individuals and Estates
Provisions from the 2017 Tax Cuts and Jobs Act (TCJA), including lower federal income tax brackets, are made permanent. Taxpayers will continue to file under rates ranging from 10% to 37%. However, personal and dependent exemptions are eliminated, as are some itemized deductions.
The standard deduction remains doubled: for 2025, it will be $15,750 for individuals and $31,500 for joint filers. These numbers will adjust annually for inflation.
High-net-worth individuals benefit from a permanent doubling of the estate tax exemption. Estates up to $15 million for singles and $30 million for couples will now pass on tax-free. This locks in certainty for wealth transfers and legacy planning.
Middle- and Working-Class Provisions Include Mixed Outcomes
The bill introduces a modest increase to the child tax credit, raising it to $2,200 per child with annual inflation indexing. The taxpayer, spouse, and child must all have valid Social Security numbers to qualify.
For seniors, a temporary $6,000 income tax deduction becomes available from 2025 to 2028. It applies to single filers earning up to $75,000 and joint filers earning up to $150,000.
A car loan interest deduction allows buyers to deduct up to $10,000 annually if the vehicle is assembled in the U.S. This phases out at incomes above $100,000 for individuals and $200,000 for couples.
Tipped workers and those earning overtime will gain above-the-line deductions: up to $25,000 for tips and $12,500 for overtime. These provisions expire after 2028 and phase out for high-income earners. Still, analysts say the benefit may be limited, as most low-wage tipped workers already owe no federal tax on tips.
Major Changes to Student Loans
Starting in July 2026, current repayment options like PAYE, SAVE, and ICR will be phased out. Borrowers will be required to switch to the standard Income-Based Repayment plan or a new Repayment Assistance Plan (RAP), which comes with a minimum monthly payment and a 30-year forgiveness timeline.
New federal graduate student loans will face stricter limits. The Grad PLUS program is eliminated, and Parent PLUS loans are capped, forcing more students into private loan markets with fewer protections and higher interest rates.
Experts warn this will likely increase long-term education costs and limit access to advanced degrees—especially for those pursuing law, medicine, or research.
Social Safety Net Cuts: Medicaid, ACA, and Food Assistance
The OBBB slashes Medicaid funding, increases eligibility verification, and imposes strict work requirements. About 16 million Americans may lose coverage, including many who would still qualify but struggle with the red tape.
The Affordable Care Act (ACA) also takes a hit. Annual re-verification for tax credits is now mandatory, and subsidies that helped millions afford premiums are not extended. Many legal immigrants and small business owners may lose access to affordable plans or be priced out entirely.
Nutrition assistance programs face steep funding cuts as well. These reductions, combined with Medicaid and ACA changes, are projected to disproportionately affect low-income households and rural communities.
SALT Deduction and “Trump Accounts”
The State and Local Tax (SALT) deduction cap is raised from $10,000 to $40,000 through 2029. This disproportionately benefits taxpayers in high-tax states like California, New York, and New Jersey. The cap reverts to $10,000 in 2030 unless Congress intervenes.
The bill also creates new “Trump Accounts”—$1,000 tax-favored savings accounts automatically granted to every U.S. child born between 2025 and 2028. Though symbolically powerful, the accounts’ financial impact is limited unless supplemented.
A Dual-Class Tax Structure Raises Concerns
One of the most controversial elements of the OBBB is the creation of a dual tax system. Households with at least one immigrant member—regardless of legal status—face different tax rules and fewer benefits. This could further complicate tax compliance and create legal challenges related to discrimination and due process.
What Financial Experts Say
Financial modeling from Penn Wharton and Yale Budget Lab projects a decline in income for the bottom 20% of Americans and long-term welfare losses across all future generations. By 2033, the lowest earners may lose over $1,300 per year, while the top 1% may see gains exceeding $30,000.
Former tax counsel Marc Gerson sees long-term potential for economic growth but acknowledges “implementation uncertainty” as the IRS develops the necessary regulations.
Kate Wood at NerdWallet warns of a “looming affordability crisis” for student borrowers, while Kate Ashford raises red flags for both small business owners and rural Americans relying on Medicaid funding.
What’s Next?
The full impact of the One Big Beautiful Bill will unfold in the coming months and years. Some provisions, such as the tax cuts and estate exemptions, offer immediate clarity. Others, like tip deductions and student loan plan changes, will require IRS guidance and significant administrative planning.
Americans across income levels should consult with tax professionals and financial advisors to understand how the OBBB will affect their personal finances.
