10 ways Trump's 'big beautiful bill' could affect your wallet

Time of India

23-05-2025

US House Republicans advanced a multitrillion-dollar tax and spending package that could have sweeping impacts on household finances. It includes extended tax cuts, added requirements for federal benefits eligibility, and an increase to the national debt ceiling.
The more than 1,000-page bill now heads to the Senate which will have the chance to approve or change provisions of the bill before it reaches Trump's desk.
The proposed bill could significantly impact the financial well-being of many Americans. Without its passage, the expiration of existing tax cuts could cost the average household over $1,000. This figure doesn't even account for potential reductions in social service programs. Additionally, failing to act could contribute to a sharp rise in the national debt, which has already surpassed $36.2 trillion.
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Here are ten ways how Trump's tax cut bill could affect your wallet:
Your tax rate won't go up:
In the US, the individual tax rates are set to expire at year's end and this means most households would see higher tax bills next year unless lawmakers act. This bill aims to maintain current tax rates while increasing the standard deduction to $16,000 for individuals and $32,000 for couples. According to an analysis by the Tax Policy Center, the combination of extended lower rates and new tax benefits would result in an average savings of $2,900 per household in 2026. Although about 80% of households would benefit, the top 20% are projected to receive the majority of those savings.
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Bigger
child tax credit
:
Trump's 'big, beautiful bill' aims to increase the maximum child tax credit by 25%, raising it to $2,500 per child. This enhancement would benefit approximately 75% of income-eligible households. However, the lowest-income families would not receive the full amount, while parents earning up to $400,000 annually would qualify. The credit would remain at $2,500 for the next four years, after which it would be adjusted for inflation beginning in 2029. In 2024, about 40 million households claimed the credit. But undocumented immigrants would no longer qualify for the child credit, even if their children are U.S. citizens.
Bigger deduction for older people:
Senior citizens are already eligible for a higher tax deduction. Under the proposed bill, this deduction would increase by an additional $4,000 for the next four years for individuals with an adjusted gross income below $75,000, or $150,000 for couples.
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Break for entrepreneur or gig worker:
The 2017 law introduced a "pass-through" deduction aimed at specific types of business income. This tax break benefits individuals whose earnings aren't derived from traditional salaries—such as freelancers, Uber drivers, wealthy business owners, and partners in law, accounting, or medical firms. The new bill passed by the House would raise that deduction from 20 to 23 percent.
No tax on tips
or overtime pay:
The no tax on overtime proposal aims to exempt overtime pay from federal income tax. This would mean that workers who log extra hours would not have to pay federal taxes on their overtime earnings, potentially allowing them to take home more of their total pay. The proposal has caught fire among politicians since Trump floated it on the campaign trail.
No tax on social security:
The House bill fell short of delivering on that promise, but it did temporarily increase the standard deduction of up to $4,000 (£2,983) for individuals 65 and over. That deduction would be in place from 2025 to 2028. The deduction extensions begin to decrease after $150,000 for married taxpayers filing jointly and $75,000 for individual filers.
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No tax credit claim for buying an EV:
Trump's tax bill does away with major portions of former President Joe Biden's Inflation Reduction Act, known as the IRA, which includes tax credits of up to $7,500 for EV purchases among many other incentives. Republicans are rolling back many Biden-era tax incentives for confronting climate change, including the credit of as much as $7,500 for buyers of electric vehicles.
What about
Medicaid
:
Republicans have added additional restrictions and requirements for Medicaid, the health care programme relied upon by millions of elderly, disabled and low-income Americans. The legislation would require Medicaid recipients living above the federal poverty line to start paying part of their health-care costs, add work requirements for many able-bodied childless adults, increase processes for recipients to verify their eligibility and more. The Post has reported that the nonpartisan Congressional Budget Office predicts the plan would cause 8.7 million people to lose their Medicaid benefits.
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Student loan won't likely be forgiven:
Although President Biden did not fully implement his most ambitious proposal to eliminate student debt for millions of Americans, he did establish several loan forgiveness programs benefiting many borrowers. However, a Republican-backed bill aims to reverse these initiatives, potentially saving the government $295 billion over the next ten years.
You might lose food stamps:
The proposed bill would mandate that 28 states cover a greater portion of the expenses for delivering and managing SNAP benefits. These states would face a choice: either increase funding or reduce benefit levels. According to the nonpartisan Congressional Budget Office, the reductions in Medicaid and SNAP would ultimately lead to a decrease in overall household resources for low-income Americans, despite the inclusion of a modest tax cut.