How much will you save or lose with Trump's ‘big' tax bill?

Washington Post

4 hours ago

How much will you save or lose with Trump's 'big' tax bill?
President Donald Trump and Republicans in Congress are on the cusp of passing legislation to make permanent trillions of dollars of tax cuts enacted in 2017.
Besides extending those tax cuts, which disproportionately benefit high earners, the measure also would reduce spending on safety net programs, which benefit low-income households.
All told, the measure would mark a significant shift in federal benefits from low-income to high-income households, according to the nonpartisan Congressional Budget Office and other independent analyses.
See how your finances — and those of other Americans — would change using this calculator, which was developed in partnership with Penn Wharton Budget Model. The calculator shows the estimated effects of the House-passed bill compared with the 2024 tax year.
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Unmarried, 2 kids, $20K
Married, 2 kids, $60K
Married, 3 kids, $110K
Married, no kids, $450K
Senior, $90K
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Meet Tara
She makes $20,000 per year and has two kids. She files as single, and her whole family uses SNAP and Medicaid benefits. Because of benefit cuts in the bill, she would be about $870 worse off than last year.
HOUSEHOLD FINANCES Annual income $20,000 Household size 3 people Location California Government benefits Medicaid and SNAP
Effects of the tax bill
Tax changes
$751
Benefits/policy change
-$1,621 TOTAL CHANGE -$870
Key changes for Tara
Cuts to Medicaid and SNAP could hurt low-income earners
Families with low incomes, especially those that rely on SNAP and Medicaid, would have their finances hit hard. Republicans have proposed deep cuts to social safety net programs to try to reduce the bill's effect on the national debt.
The plans to cut Medicaid could lead to 16 million people losing health care coverage over 10 years, according to the Congressional Budget Office.
It would also add new qualification and cost-sharing requirements, including co-pays for beneficiaries above 100 percent of the federal poverty level and work requirements for some adults. The bill would cap the expansion of future SNAP benefits and pass more of the cost to state governments. States could be forced to either find room in their budgets to keep funding the program at its current levels, or cut benefits.
How the tax bill affects
Tara compared to others
+0 +10k +20k +30k $500K+ $450-499K $400-449K $350-399K $300-349K $250-299K $200-249K $180-199K $160-179K $140-159K $120-139K $100-119K $80-99K $60-79K $40-59K $20-39K $0-19K Household income Total change 20th percentile 80th percentile Median $23,093
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Unmarried, 2 kids, $20K
Married, 2 kids, $60K
Married, 3 kids, $110K
Married, no kids, $450K
Senior, $90K
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Other key bill impacts
The One Big Beautiful Bill extends tax cuts from Trump's first term, implements new campaign proposals — including no taxes on tips and overtime wages — and seeks to offset the cost with large cuts to Medicaid and SNAP, the Supplemental Nutrition Assistance Program formerly known as food stamps.
'The bill creates a fair amount of new debt, and somebody has to pay for that. It's not true that everybody's going to be a winner from it,' said Kent Smetters, faculty director of the Penn Wharton Budget Model, which built a model for The Washington Post that shows how people's financial outcomes would be better or worse under the bill.
The legislation is expected to help many middle- and high-income earners, but it could deal a blow to low-income earners, especially those who rely on Medicaid and SNAP.
Republicans have argued that the bill will usher in a broad economic boom, while Democrats have expressed concern that the legislation would add trillions to the already high national debt.
No taxes on tips and overtime
One of Trump's campaign pledges, this provision would exempt overtime wages from taxes through a new deduction. The legislation wouldn't allow 'highly compensated employees,' or people without a Social Security number to claim the deduction.
Trump also campaigned on ending taxes on tips. The legislation would allow a deduction for the total amount of tipped income received. It contains some guardrails to prevent 'highly compensated employees' from claiming their earnings as tips and specifically identifies food service, hair care, nail care, aesthetics, and body and spa treatments as applicable professions that would be eligible for the deduction.
Boost to child tax credit
The bill includes a temporary $500 increase in the child tax credit, bringing it to $2,500 through 2028. It would then return to $2,000 and increase to account for inflation. The legislation limits eligibility to parents or guardians with Social Security numbers.
A deduction for seniors
The bill adds $4,000 to the standard deduction for taxpayers 65 or older, giving a financial boost to many seniors. The policy would be in place for four years and taper off as a recipient's income increases. Trump originally pledged to end taxes on Social Security benefits, which the bill did not include.
High income-earners benefit from many parts of the bill
High-income earners are among the biggest winners of the One Big Beautiful Bill Act. The measure extends the tax cuts enacted in 2017 and includes several provisions that benefit wealthy Americans, such as expanding the estate tax exemption, extending a tax cut for the highest income bracket and increasing a deduction for certain 'pass-through' business entities.
Specific provisions, such as the expanded child tax credit and a higher cap on the state and local tax deduction, or SALT, also benefit those with higher incomes.
House Republicans rejected a push to raise taxes on top earners, which Trump and some allies had suggested.
SALT deduction
One of the biggest issues dividing lawmakers during negotiations has been the cap on the state and local tax deduction, or SALT, which allows itemizing filers to write off what they paid in local taxes from their federal tax return. The legislation raises the cap from $10,000 to $40,000 for taxpayers earning up to $500,000.
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