What Trump’s Megabill Means for Your Wallet

The One Big Beautiful Bill, which President Donald Trump signed on Independence Day, ushers in significant changes to Americans’ personal finances.

Spanning nearly 1,000 pages, the legislation locks in Trump’s 2017 tax cuts and introduces new tax breaks—including deductions for tips, overtime pay, and auto loan interest—while also offering a special $6,000 deduction for seniors who receive Social Security.

At the same time, the Republican-backed bill enacts significant cuts to social programs such as Medicaid and food assistance, eliminates tax incentives for clean energy, and overhauls the federal student loan system.

Speaking ahead of the final vote, House Speaker Mike Johnson (R-La.) said, “For everyday Americans, this means real, positive change that they can feel.”

Here’s what the measure could mean for your wallet.

Tax Cuts

At the heart of the legislation is the permanent extension of the tax cuts first enacted under the Tax Cuts and Jobs Act of 2017 during Trump’s first term. That law reduced marginal tax rates across the board, with most brackets seeing cuts of roughly 2 to 4 percent.

Those tax cuts were set to expire after 2025 without congressional action, which could have resulted in higher taxes for more than 60 percent of taxpayers by 2026, according to a 2024 Tax Foundation report. The One Big Beautiful Bill not only preserves those tax reductions but enhances several key provisions.

The standard deduction will increase to $15,750 for single filers and $31,500 for married couples filing jointly. The estate and gift tax exemption rises to $15 million for individuals and $30 million for couples. The child tax credit grows to $2,200 per child starting in 2025, with up to $1,700 refundable, and future increases indexed to inflation.

New Parents

One of the bill’s novel features is the creation of new “Trump Accounts” for children born between 2025 and 2028.

Under the provision, the federal government will make a one-time $1,000 deposit for every eligible child who is a U.S. citizen. Parents can contribute up to $5,000 annually, with investments growing tax-deferred in a fund that tracks a U.S. stock index. Employers can also chip in up to $2,500, contributions that won’t count as taxable income for the employee.

Withdrawals from the accounts will be taxed as long-term capital gains if used for qualified purposes.

Families With Children

Families raising kids under 17 will see expanded tax relief under the bill.

The child tax credit will increase from $2,000 to $2,200 per child starting in 2025 and will be indexed for inflation going forward. Up to $1,700 of that amount will be refundable, providing cash back even for families who owe little or no income tax.

This change builds on Trump’s 2017 tax cuts, which had doubled the credit from $1,000 to $2,000 but were scheduled to expire after 2025 without congressional action. With the One Big Beautiful Bill, the higher credit becomes permanent.

Service Workers

Workers in industries where tips make up a significant part of income will benefit from new tax breaks.

The legislation allows individuals to deduct up to $25,000 of tip income annually from federal taxes between 2025 and 2028. The deduction phases out for individuals earning more than $150,000, or $300,000 for joint filers.

Similarly, those working long hours will benefit from a temporary tax deduction for overtime pay. Single filers can deduct up to $12,500 in overtime income, while joint filers can deduct up to $25,000. The deduction phases out for higher earners and expires after 2028.

Car Buyers

The bill also provides relief for consumers purchasing American-made vehicles.

Taxpayers will be able to deduct up to $10,000 in interest on new auto loans taken out between 2025 and 2028. The deduction phases out for individuals earning over $100,000, or $200,000 for married couples filing jointly.

Eligible vehicles must be assembled in the United States, aligning the provision with Trump’s broader focus on supporting domestic manufacturing.

Taxpayers in High-Tax States

The legislation raises the cap on state and local tax (SALT) deductions, which allow taxpayers who itemize to subtract what they’ve paid in state and local income and property taxes from their federal taxable income. This is particularly relevant for residents of high-tax states such as New York, New Jersey, and California.

The bill raises the SALT cap from $10,000 to $40,000 starting in 2025. It will then rise by one percent annually through 2029 before reverting to $10,000 in 2030. However, the expanded deduction begins phasing out for taxpayers with income above $500,000.

Lawmakers from high-tax states had pushed for the increase for years, arguing that the original $10,000 cap disproportionately impacted their constituents.

Seniors

Instead of fully eliminating taxes on Social Security benefits, as Trump once floated, the bill provides a $6,000 annual deduction for Social Security income.

The deduction phases out for individuals earning over $75,000 and couples earning over $150,000, and is unavailable to single filers earning $175,000 or more or joint filers above $250,000.

The Social Security Administration estimates that nearly 90 percent of beneficiaries will see no federal taxes on their benefits under this change, describing the One Big Beautiful Bill as providing “meaningful and immediate relief to seniors who have spent a lifetime contributing to our nation’s economy.”

The expanded tax breaks under the bill will reduce the overall tax burden on Social Security recipients by roughly $30 billion each year, according to an estimate by the Tax Foundation, which noted that this could accelerate the projected insolvency dates for the Social Security and Medicare trust funds by about a year.

Student Borrowers

For student loan borrowers, the legislation offers a mix of benefits and new restrictions.

On the plus side, Pell Grants will expand to cover short-term, workforce-focused programs, broadening access for students pursuing nontraditional education paths. Yet the bill also imposes new borrowing caps.

Graduate students will be restricted to $20,500 per year and a lifetime maximum of $100,000 for unsubsidized loans, while professional degrees such as law and medicine will face caps of $50,000 annually and $200,000 over a lifetime.

Parent borrowing through Parent PLUS loans will be limited to $20,000 per year per child, with a lifetime ceiling of $65,000. Meanwhile, Grad PLUS loans—which once allowed graduate students to borrow up to the full cost of attendance—will be eliminated altogether.

New borrowers will also have only two repayment options starting in mid-2026, either a standard fixed-payment plan or an income-driven repayment plan. The bill also eliminates deferments for unemployment or economic hardship, narrowing options for struggling borrowers to pause payments.

Medicaid Recipients

The legislation imposes significant changes to Medicaid, with about $1 trillion in cuts projected over the next decade, in part due to the fact that some 10 million people will lose coverage.

The largest cuts stem from new work requirements for able-bodied adults ($326 billion), tighter limits on how states can fund their programs through provider taxes ($191 billion), and stricter rules for state-directed Medicaid payments ($149 billion), according to an analysis from the Kaiser Family Foundation.

The bill allocates $50 billion to support rural hospitals that could be affected by the cuts.

People on Food Stamps

Food assistance under the Supplemental Nutrition Assistance Program (SNAP) is also facing substantial changes.

States will be required to contribute between 5 and 15 percent of SNAP benefit costs, depending on their payment error rates, and must now cover 75 percent of administrative costs, up from the current 50 percent.

Work requirements will be expanded to include adults aged 55 to 64 and parents with children aged 14 and older. According to the Urban Institute, around 5.3 million households could see their benefits drop by at least $25 per month, with average monthly losses estimated at $146.

Small Businesses and Gig Workers

Small business owners, contractors, and gig economy workers will benefit from the permanent extension of the Section 199A pass-through business deduction.

Originally enacted in Trump’s 2017 tax cuts, this provision allows certain business owners to deduct up to 20 percent of their qualified business income. The deduction, previously set to expire after 2025, is now permanent under the new law.

Taken together, the One Big Beautiful Bill promises tax relief and new financial perks for millions of Americans—from young families to seniors—while tightening the belt on federal spending for programs such as Medicaid and SNAP.