President Trump signs the One Big Beautiful Bill (OBBB) into law, impacting finances
President Donald Trump signed the One Big Beautiful Bill (OBBB) into law, impacting millions of Americans’ finances. The bill includes tax cuts and changes to social safety net programs, expected to add $3.1 to $3.5 trillion to the national debt over 10 years.
The OBBB creates a dual-class tax system, benefiting wealthy Americans more than lower-income earners. Analysis shows future generations will be worse off financially, with significant losses for all income levels.
The bill allocates funds for deportation efforts and could result in a $700 income decrease for the lowest earners, while the wealthiest 1% could see a $30,000 increase.
Financial experts predict potential economic growth and positive effects on the economy despite the bill’s potential negative impacts on individuals.
The OBBB includes temporary tax cut provisions, lasting until 2028, and makes permanent certain provisions from the 2017 Tax Cuts and Jobs Act.
The bill eliminates personal exemptions, some deductions, and doubles the standard deduction, with rates ranging from 10% to 37%.
Wealthy individuals benefit from the doubling of the estate tax exemption, providing certainty for major wealth transfers.
Under the bill, the child tax credit increases, and those 65 or older receive a temporary tax deduction on Social Security income.
Car buyers can deduct up to $10,000 of interest on new auto loans, subject to income limits and assembly in the US.
The bill offers deductions for tip income and overtime pay, fulfilling a campaign promise, with restrictions based on income. The new tax bill allows for a deduction of up to $25,000 for married couples filing jointly for overtime pay, available for tax years 2025-2028. Tipped workers must still pay state and employment taxes on their tips, impacting workforce dynamics and potentially causing tension among employees.
Changes to federal student loan programs starting in 2026 include higher payments for borrowers, reduced income-based repayment plans, and a new Repayment Assistance Plan. The bill also lowers limits on graduate school loans and eliminates the Grad PLUS program, potentially forcing borrowers to rely on private loans.
The bill also increases the cap on state and local tax deductions to $40,000, benefiting taxpayers in California, Illinois, New Jersey, and New York. This provision is temporary and reverts to $10,000 in 2030. The bill establishes Trump accounts for newborns, and makes significant cuts to Medicaid, affecting millions of Americans.
Medicaid recipients will face new work requirements and more frequent eligibility checks, potentially leading to around 16 million Americans losing health coverage. The bill also impacts those with ACA health insurance, requiring annual re-verification for tax credits, adding an additional hurdle to renewing coverage. President Trump signs a bill into law that does not extend ACA subsidies, causing health insurance costs to rise substantially. This will impact many Americans, including legal immigrants, who may lose access to subsidies. Small business owners relying on ACA coverage will also face increased costs, potentially hindering entrepreneurship in the field.
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