What the One Big Beautiful Bill Means for Your Taxes in 2025
In July 2025, President Trump signed the One Big Beautiful Bill into law. This sweeping tax and spending bill brings real changes to the U.S. tax code that will affect how you file, what you deduct, and how much you owe or receive in refund. Whether you're a W-2 worker, entrepreneur, parent, or retiree, here’s a breakdown of the most important updates.
🔒 1. 2017 Tax Cuts Are Now Permanent
The Tax Cuts and Jobs Act of 2017, originally set to expire in 2026, is now permanent. This means:
Lower federal tax brackets stay in place
Standard deduction remains nearly doubled
The 20% Qualified Business Income (QBI) deduction continues for small business owners, S-corps, and freelancers
This move locks in more predictable taxes for individuals and small business owners — at least for the near future.
🏠 2. SALT Deduction Cap Increase
If you live in a high-tax state, this one’s big. The State and Local Tax (SALT) deduction cap was raised from $10,000 to $40,000 for those earning under $500,000.
This could push more people back into itemizing deductions — especially homeowners with high property taxes. Just note: this higher cap will expire in 5 years unless extended.
💼 3. New Deductions for Workers
a. Tip & Overtime Deduction
Workers earning under $150,000/year can now deduct up to $25,000 of their tip and overtime income. This targets working-class and service-based employees, helping them keep more of their extra earnings.
b. Auto Loan Interest Deduction (New Vehicles Only)
You can now deduct up to $10,000 in interest on new auto loans — but only for vehicles purchased and financed on or after January 1, 2025. The vehicle must be assembled in North America (U.S., Canada, or Mexico).
Not sure if your car qualifies? Check the VIN — the first digit tells you the country of assembly:
1, 4, or 5 = USA
2 = Canada
3 = Mexico
A letter (like J, K, or W) = foreign-built (not eligible)
This could offer real relief for those $750–$1,500 monthly car notes a lot of folks are carrying.
👵 4. New Senior Deduction
Seniors age 65 and up can now deduct an additional $6,000 (or $12,000 for married couples). This change is aimed at reducing federal taxes owed on Social Security and retirement income.
But here’s the catch: it begins to phase out at $75,000 for individuals and $150,000 for couples. So high-earning retirees may see reduced benefits.
👶 5. Child Tax Credit Increase
The Child Tax Credit (CTC) increases slightly — from $2,000 to $2,200 per child.
While any increase helps, it falls short of campaign promises. Trump previously floated raising the CTC to $5,000 per child. Democrats pushed for $3,000–$3,600. Politicians gonna politic — and this modest bump won’t move the needle much for lower-income families unless other rules change.
🍼 6. Trump Accounts for Newborns
Children born between Jan 1, 2025 and Dec 31, 2028 will receive a $1,000 Trump Account, a tax-deferred savings account funded by the government.
Parents can contribute up to $5,000 per year. Funds grow tax-deferred and follow this access schedule:
No withdrawals before age 18
At 25, you can withdraw up to 50% of the balance
At 30, full withdrawal allowed, taxed as income or capital gains depending on usage
This doesn’t replace a 529 Plan, but it adds another tool for long-term wealth building.
🌍 7. 1% Remittance Tax
Sending money abroad? Be prepared to pay a 1% tax on international remittances.
This new rule applies whether you're a U.S. citizen, green card holder, or visa holder. There are limited exemptions, but in general, if you send money to family overseas, you’ll be hit with a tariff-style fee. Many are calling it a “tax on love.”
📆 Final Thoughts
This bill introduces a mix of benefits and headaches. Some families will gain from deductions like the new auto interest rule or tip income write-offs. Seniors and business owners may also find wins. But the remittance tax, the modest child tax credit bump, and the expiration of SALT relief in 5 years all raise big questions.
Want to know how this affects your personal tax situation?
Let’s talk. Book a consultation or send me a message — and we’ll run through your numbers together.
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🖊️ CoachXJosh — Financial strategist for everyday wins
📧 tax@coachxjosh.com
📲 @coachxjosh